Amazon tests in-app purchase service to challenge rivals

Written by Bloomberg | Updated: Apr 4 2012, 06:05am hrs, the worlds largest online retailer, is testing a service that lets tablet users make purchases through mobile applications, a sign it may enter a market pioneered by Google and Apple.

The service being tested allows both subscriptions and purchases of individual items within apps, according to Maria Ly, co-founder of Skimble, a seller of physical fitness programs that has been involved in Amazons pilot for about a month.

Selling items from within downloadable software can generate revenue for developers as well as companies, such as Google and Apple, that distribute apps through online stores. Amazon could use the transactions to wring more sales from its Kindle Fire tablet and the widening array of applications that can be downloaded to the device. So-called in-app purchases will generate $5.6 billion in revenue in 2015, up from $970 million last year.

We really wanted to attack the Kindle Fire market, but also have access to the payment methods that support our business, Ly said.

Most of Skimbles sales come from subscriptions and in-app purchases, such as specific workout regimens, she said. Amazon plans to charge a 30% commission to clients for its in-app purchase service, the same rate as it charges developers for app sales, Ly said.

Skimble charges $24.99 for a three-month membership of its workout program and an average of $9.99 for individual programs. It would offer both packages with the new Amazon app service, Ly said.