Amazon Expanding In-App Purchases to Include the Sale and Delivery of Physical Goods

In what is one of the best demonstrations of Amazon’s tablet and commerce businesses coming together, the company is letting developers sell physical goods inside of their games with one click.

While most of the attention last week was focused on Amazon’s new lineup of Kindle devices, this new feature will be critically important as the retailer lures developers to its platform.

By enabling developers to sell physical goods inside of games, it will not only open up a new way for them to monetize their applications, but it will also be a key point of differentiation for Amazon in going up against Apple and Google, which don’t have physical distribution capabilities.

Amazon said its first partner is Activision, which will be selling toys inside of Skylanders, its very popular children’s game.

Skylanders is a perfect game to test out this program, because it connects toys to the game through a “portal,” which is plugged into a videogame console. Once a Skylanders toy is placed on the portal, the character transports into the game and comes to life on the screen. A player’s characters and progression are also accessible in the mobile game.

Skylanders Cloud Patrol, which will cost 99 cents, will sell the 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. The physical toy will show up in the mail a couple of days later.

Activision is not the only game maker that has toys. Other examples include Rovio’s Angry Birds, and Zynga’s upcoming deal with Hasbro to bring some of its games to life.

Amazon CEO Jeff Bezos said onstage last Thursday that he’s been amazed at how many games they’ve sold, which is clearly something they are trying to take advantage of. In addition to the physical goods offering, the new Kindle Fire will have a separate tab at the top of its homescreen that will take users directly to the games category in the Appstore. It also is rolling out Whispersync for Games, which will save your game accomplishments in the cloud. That way, even if a user changes devices or deletes the game, their progress will remain intact.

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