Amazon Gains a New Advantage

On Wednesday, Amazon (NASDAQ: AMZN  ) officially launched "Login with Amazon," a new service to allow developers of apps, games, and websites to reduce sign-on friction by leveraging Amazon's own login solution.

In short, the logic goes something like this: First, a user downloads an app, plays a game, or visits a website which requires they sign in. If the app, game, or website is relatively foreign, there's a decent chance that user could simply move on after deciding it's not worth the trouble to create yet another account. After all, it can be hard to know exactly how your information will be used, how secure the account creation forms are, and whether you'll be able to remember your account information should you return.

However, there already exists a certain level of built-in rapport if a site uses a system like "Login with Amazon." Better yet for developers, considering Amazon currently has more than 200 million active accounts, there's a good chance customers won't need to create a new user account at all -- they can instead utilize their existing credentials.

In fact, the folks at Amazon say they've already had success testing the functionality with their Zappos and Woot subsidiaries. More specifically, Zappos saw 40% of its new customers choose to sign-in with an Amazon account, and Woot customers used their Amazon accounts twice as often as any other social login on the site.

Late to the game?
Of course, that brings up a great point: At first glance, Amazon seems to be a bit behind the curve compared to other social sites.

Facebook (NASDAQ: FB  )  for instance, has long provided its own login and registration buttons for developers to use, and the massive social networking site absolutely dwarfs Amazon with more than 1.1 billion monthly active users.

Then there's the search giant Google (NASDAQ: GOOGL  ) , which already allows developers to use its "Federated Login" functionality to take advantage of the more than 359 million monthly active Google Plus accounts.

Advantage: Amazon
That said, despite its lower number of active monthly users, Jeff Bezos' company holds one massive advantage neither Google nor Facebook can match: From its very beginnings, Amazon.com customers have always viewed the site as a core destination for e-commerce.

Think about that for a minute: Google and Facebook aren't exactly websites you visit when you want to buy something. Many of Google's products are free, and Big G's bread and butter is web advertising. And Facebook -- to borrow its own words -- is "free and always will be." Of course, that doesn't mean you can't spend money on either site, but it does mean their users are much less likely to link payment information there as compared with their respective accounts at Amazon.com.

In addition, Amazon claims its login solution is "the most complete end-to-end ecosystem for developers building, monetizing, and marketing their apps and games."

How so? Developers who use "Login with Amazon" can also take advantage of features, like: Amazon's Web Services for infrastructure needs, GameCircle for tracking achievements and leaderboards, a proven In-App purchasing framework, testing functionality to compare the effectiveness of two different apps, Game Connect features to put list virtual goods for sale on Amazon, and Amazon AppStore integration.

Foolish final thoughts
Amazon may have been late to the game offering its own login framework to developers, but now that it's here, investors can rest assured it will help Amazon continue to grow into a significantly more pervasive part of our everyday lives.

However, while everyone knows Amazon is the king of the retail world right now, its sky-high valuation has most investors worried it's the company's share price that will get knocked down instead of competitors'. The Motley Fool's premium report will tell you what's driving the company's growth, and fill you in on reasons to buy and reasons to sell Amazon. The report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.


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