The Crazy Stat That Explains Why Amazon Kindles Are so Cheap

Business Insider
Analyzing the top news stories across the web
Dec. 17 2013 1:06 PM

The Crazy Stat That Explains Why Amazon Kindles Are so Cheap

164086366
Kindles are cash cows for Amazon.

Photo by YASUYOSHI CHIBA/AFP/Getty Images

This post originally appeared in Business Insider.

These days, you can buy a new Kindle e-reader from Amazon for $49. Meanwhile, Amazon's Kindle Fire HDX with an 8.9 inch screen costs $379—much cheaper than a comparable $499 iPad from Apple. How and why does Amazon charge so little for its gadgets? Both questions are answered with one single stat.

Advertisement

During a single year, Kindle owners spend, on average, $443 more buying stuff from Amazon than the average Amazon shopper who does not own a Kindle.

Consumer Intelligence Research Partners derived that stat from a survey survey of 300 subjects who made a purchase at Amazon.com in the three-month period ending November 15, 2013. CIRP estimates that Amazon Kindle device owners spend approximately $1,233 per year buy stuff from Amazon, compared to $790 per year for other customers.

"Another way to look at Kindle Fire and Kindle e-Reader is as a portal to Amazon.com," said Mike Levin of CIRP, in a press release put out to announce the study results. "Kindle Fire provides access to everything Amazon sells, while Kindle e-Reader has become the way that Amazon customers buy books, Amazon’s original product line."

Amazon sells Kindles cheap—perhaps at a loss—because it knows getting a device into a customers hands means that customer will spend an extra $4,500 at Amazon over the next 10 years.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

Nicholas Carlson is chief correspondent at Business Insider. Follow him on Twitter.

  Slate Plus
Political Gabfest
Oct. 31 2014 1:29 PM You, The Gabfest, and a Hotel Room Win tickets to attend a taping of the Political Gabfest, live from David’s Chicago hotel room.