Amazon In-App Purchases Now Allow Physical Goods

The Amazon announcement that they will be allowing developers to sell physical goods inside of their apps with one click is a clearly “firing one across the bow” of the good ship Apple by creating a point of differentiation on an issue that has frustrated Apple developers.

Late in 2011, Apple released a change to the Apple Developer Terms & Conditions which made the sale of physical goods from within an app an extremely difficult proposition. Where once Apple allowed apps the flexibility of selling physical goods or pushing users to a mobile website from within the app to undertake these actions, the T&C change in 2011 added some extreme limitations to this (which were mostly noticed by this writer when his Audible App for iPhone was hit by these limitations and they aren’t even selling physical goods).

Enough of the rant about Apple but it is great to see that Amazon is embracing one of their clear points of difference between Amazon and Apple, their physical warehouse, and also integrating proven web technology such as the 1-Click Purchasing.

The in-app physical goods purchasing is initially being rolled out within games with Activision’s Skylanders children’s game being the first. Skylanders Cloud Patrol which costs 99 cents to download then sells toys inside the game using Amazon’s 1-Click Purchasing. When players purchase the toy they will also unlock a digital version of the character that can be used immediately with the physical toy showing up in the mail a few days later.

This 3-way integration between physical toy, app and app characters is not only highlighting the Amazon in-app purchase functionality but the appearance of the same toy within the game is also adding an additional layer of functionality that further demonstrates the convergence between mobile and physical.

Activision is not the only app maker that has been able to expand their app business model into a line of physical merchandise. Rovio’s Angry Birds already has products available in major retail outlets and Zynga is working on a deal with Hasbro to develop a wide range of toy and gaming experiences based on FarmVille initially and possibly expanding to include CityVille or Words With Friends in the not too distant future which could see some action figures developed based on some of its in-game characters.

Merchandising around videogames is not new and there was an inevitable spread to mobile apps however while this might be the first step for Amazon, it would be expected that their 1-Click Purchasing and in-app purchases of physical goods should expand to other app categories in the future, thus further integrating Kindle Fire and Android Apps into the Amazon ecosystem.