Chromecast-2015-AH-05

The Cost Of Amazon Not Selling Competitor TV Boxes

October 22, 2015 - Written By David Steele

When we think “online shopping,” the first website that comes to mind is “Amazon.” Amazon have proven to be a very robust, resilient and pervasive website, able to sell many products quickly and easily. Through the years, Amazon have started as a bookseller and branched into many different kinds of goods including eBook readers and tablets, running an operating system based on Android: the Amazon Kindle Fire. Indeed, Amazon have a number of their own branded products that they are keen to encourage customers to buy. Furthermore, Amazon are not against pulling the rug out from their competitors. Amazon’s recent decision to stop selling the Apple TV and Google Chromecast from the website is a move designed to encourage customers to buy its own competing product. This decision was going to hurt both Apple and Google but the question of “how much?” has been answered by 1010data’s e-commerce Insights Panel. The figures make for grim reading for Apple and especially Google, given how Amazon shifted the majority of these set top boxes. For Apple, 1010data’s report shows that 60% of these boxes were sold from the website. For Google, this figure is 90%.

To put this into perspective and based on the last twelve months, the Apple TV realized $42 million of online sales. Around $25 million of these came through Amazon. For the Google Chromecast, Google sold around $67 million Chromecast dongles online, so a little over $60 million of these transactions were executed through Amazon. The short-term impact on both Amazon and Google looks like it’s in the millions camp already but 1010data’s report digs deeper and investigates how the set-top television boxes are a source of income for the manufacturers and how Amazon’s decision to stop selling them could impact on revenue streams. 1010data’s figures show that together Apple and Google could lose upwards of $100 million worth of revenue because Amazon has withdrawn their own set-top box sales.

When asked how 1010data collated and extrapolated this sales information, their Area Vice President information Samir Bhavnani said: “The data for the study came from our analysts’ study of 1010data’s eCom Insights panel that consists of millions of online shoppers who allow 1010data to anonymously track their online behavior for market research. The research is focused on the top 100 online mass retailers in the US.” He goes on to explain the uneasy relationship between Apple, Amazon and Google, “The reality is that Amazon, Apple, and Google are frenemies. Each relies on the other for customers and supports the others platforms to varying degrees. This move by Amazon helps its odds of winning the long-term benefit of access to customers televisions, while offering customers the best Amazon Experience.”

Going forwards, what does this mean for customers wishing to buy the Apple TV or Chromecast? There are other websites selling these products plus real, physical stores. Apple has something of an advantage here in that it has an established portfolio of Apple stores whereas Google has much less of a physical presence. For the Chromecast, however, it looks like Google’s online store is about to get busy.