The Kindle Multiplier

Amazon has made no secret of the fact that a major reason for selling its family of Kindle devices for as low a price as possible is that once consumers have a device they will buy more products from the giant e-tailer. A new study of past month book buyers just completed by the Codex Group shows just how much Amazon gains when customers start using Kindle devices.

Overall, 26% of book buyers in the most recent survey now own at least one type of Kindle. Reflecting strong holiday sales, 60% of Fire owners are new to Kindle among book buyers, providing even more reach for Amazon’s digital retail strategy.

Over the past month, book buyers who own some kind of Kindle device increased their purchases with Amazon between 56% and 119% over book buyers who don’t own a device. The largest increase was among consumers who own both a Kindle Fire and an e-ink Kindle device, with those owners spending on average $199 in the past month across all Amazon product lines, more than double the Amazon spending of non-Kindle owners. Fire owners spent an average of $160 at Amazon in the most recent month, 76% more than nondevice owners, while owners of e-ink Kindle devices spent $142, 56% more than consumers who don’t have a Kindle.

The Kindle effect also boosts device owners’ book unit sales. Kindle e-ink device owners bought 5.6 books in the past month at Amazon, and Kindle Fire owners bought 4.5 books, compared to only 3.4 books for those without Kindles. Kindle Fire owners’ lower book buying is due to the much wider range of entertainment and shopping options available on the color tablet device. While the Kindle Fire has been on the market for just three months, Codex Group president Peter Hildick-Smith said it’s clear from the data that Fire owners “have the potential to become Amazon’s very best customers, putting even greater pressure on physical retailers in all categories, not just booksellers.” In Hildick-Smith’s view, the strong multiplier effect of Kindle ownership on Amazon’s overall business gives Amazon a very strong reason to open physical stores of its own featuring Kindle products, to further drive Kindle ownership.