<story><title>Amazon Coins Launching</title><url>https://developer.amazon.com/sdk/coins/landing.html?ref_=pe_132830_29076940</url></story><parent_chain><item><author>shmerl</author><text>I.e. it&apos;s a lock in trick? One should avoid such things.</text></item><item><author>jonnathanson</author><text>Think back to trips to Disneyland or Disneyworld as a kid. Remember Disney Dollars? Not only were they fun and kid-friendly, creating a distance between real currency and purchases within the park...but they were also &lt;i&gt;redeemable only at Disney parks&lt;/i&gt;.&lt;p&gt;This is the concept behind all loyalty programs, in a nutshell. It&apos;s about giving ostensible rewards to loyal customers in an attempt to create what economists call &quot;switching costs,&quot; i.e., the degree of hassle involved in moving from one service provider/vendor/business to another. If you&apos;ve got enough points built up with one provider (e.g., American Airlines), you&apos;ll be reluctant to spend money on other providers (Delta, for instance).&lt;p&gt;Side benefits include increasing customer basket size, increasing purchase frequency, converting customers across categories, and increasing share of wallet per customer.&lt;p&gt;As loyalty programs go, Amazon Prime has been stellar. It&apos;s very costly for the company, and it had Wall Street in a frenzy when it first launched. But it works (and it&apos;s also very beneficial to consumers who use it).&lt;p&gt;I can&apos;t say I see the value in this program as much as I do with Amazon Prime, but the logic makes sense.</text></item><item><author>buro9</author><text>So I&apos;m trying to work out why?&lt;p&gt;And off the top of my head it&apos;s probably combination of:&lt;p&gt;1) Helps with micropayments for low value in-app purchases&lt;p&gt;2) Creates a disconnect between the real cost and perceived cost&lt;p&gt;The latter helps Amazon create an artificial incentive that they can use to build their store. For example: Buy something physical off amazon.com and earn 100 free Amazon coins to spend on something digital (implicit: with Amazon).</text></item></parent_chain><comment><author>jonnathanson</author><text>It depends on how you define &quot;trick.&quot; If you&apos;re going into it with eyes wide open, you&apos;re using it to derive the benefits, and you&apos;ve got good self-control, then a loyalty program can be very valuable to you as a consumer.&lt;p&gt;If you&apos;re going into it expecting benefits, and you find yourself getting carried away and overspending, then it&apos;s less valuable to you.&lt;p&gt;I wouldn&apos;t call it a trick, so much as I&apos;d call it a loyalty program -- with all the potential risks and rewards that such a term entails. There&apos;s nothing necessarily shady or evil about a loyalty program. Indeed, if it makes Amazon a much better consumer experience for you, it can be a win-win.</text></comment>
<story><title>Amazon Coins Launching</title><url>https://developer.amazon.com/sdk/coins/landing.html?ref_=pe_132830_29076940</url></story><parent_chain><item><author>shmerl</author><text>I.e. it&apos;s a lock in trick? One should avoid such things.</text></item><item><author>jonnathanson</author><text>Think back to trips to Disneyland or Disneyworld as a kid. Remember Disney Dollars? Not only were they fun and kid-friendly, creating a distance between real currency and purchases within the park...but they were also &lt;i&gt;redeemable only at Disney parks&lt;/i&gt;.&lt;p&gt;This is the concept behind all loyalty programs, in a nutshell. It&apos;s about giving ostensible rewards to loyal customers in an attempt to create what economists call &quot;switching costs,&quot; i.e., the degree of hassle involved in moving from one service provider/vendor/business to another. If you&apos;ve got enough points built up with one provider (e.g., American Airlines), you&apos;ll be reluctant to spend money on other providers (Delta, for instance).&lt;p&gt;Side benefits include increasing customer basket size, increasing purchase frequency, converting customers across categories, and increasing share of wallet per customer.&lt;p&gt;As loyalty programs go, Amazon Prime has been stellar. It&apos;s very costly for the company, and it had Wall Street in a frenzy when it first launched. But it works (and it&apos;s also very beneficial to consumers who use it).&lt;p&gt;I can&apos;t say I see the value in this program as much as I do with Amazon Prime, but the logic makes sense.</text></item><item><author>buro9</author><text>So I&apos;m trying to work out why?&lt;p&gt;And off the top of my head it&apos;s probably combination of:&lt;p&gt;1) Helps with micropayments for low value in-app purchases&lt;p&gt;2) Creates a disconnect between the real cost and perceived cost&lt;p&gt;The latter helps Amazon create an artificial incentive that they can use to build their store. For example: Buy something physical off amazon.com and earn 100 free Amazon coins to spend on something digital (implicit: with Amazon).</text></item></parent_chain><comment><author>codex</author><text>Amazon can&apos;t really avoid doing stuff like this, because their business model (retail) sucks, and makes very little money due to razor thin margins.  So they trot out every trick in the book.</text></comment>