Amazon Checkout: Do You Really Wanna Get In Bed With Amazon?

Big news in alternative payments this week: your friendly neighbourhood Amazon has just launched it’s challenger to PayPal and Google Checkout – cleverly dubbed Amazon Checkout. For 2.9% + $0.30 for all transactions over $10, 5.0% + $0.05 for transactions under $10, and tiered volume discounts above $3,000 per month, you too can offer patented 1-click ordering.

There are a few reasons you might consider adding Amazon Checkout to your roster of payment options, including:

  • Access to 81 million (no, I didn’t forget a decimal) people already hold Amazon accounts. This is roughly 30% more than PayPal. Customers would not have to create a new account to checkout with you, nor share any additional personal information. If a customer has multiple billing and shipping addresses on file with Amazon, that can be very convenient for the customer.

  • Through IP-targeting, Amazon can recognize Amazon.com customers and display the 1-Click checkout for them.

  • Show cross-sells and upsells in your cart. And if you show Amazon products in your upsells (eww), you can earn Amazon Associate commissions.
  • Call it a halo effect, but having the option to checkout through Amazon Checkout may carry some brand equity – provided experience with the Big A was positive. Plus, Amazon customers are likely aware of the A-to-Z Guarantee, which you now offer by virtue of the Amazon Checkout option.

Amazon promises increased conversion: “Amazon’s familiar checkout experience, 1-Click ordering, A-to-Z Guarantee, and tens of millions of customers who can checkout without re-entering information helps you optimize conversion on your website.”

But Scot Wingo was apt to point out that Amazon Payments comes with a price:

Amazon’s biggest weakness in general in the world of ecommerce technology like this is that they are trying to be both a technology provider to retailers and a competitor. Large retailers (TRU, Borders, etc.) have left Amazon’s third party business en masse because of this and I don’t imagine they will be jumping for joy to add Amazon’s checkout to their sites. For example, you won’t be seeing Wal-mart.com add this any day soon.

This actually plays to PayPal and Google’s advantage and I’m sure as a first response we’ll see them play up these fears: “Do you REALLY want Amazon seeing all of your transactions, learning about your top sellers and then using that data to compete with you?” The fact that Amazon has a well documented history of using partner data to their advantage in the third-party selling world will make this argument very believable.

What do you think? Would you test out Amazon Checkout or do you think the risks outweigh the benefits?

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14 Responses to “Amazon Checkout: Do You Really Wanna Get In Bed With Amazon?”

  1. I agree with Scot, the last thing I’d recommend to an online retailer is to provide any kind of data to Amazon because of their history in using that information.

    I’d say on one hand, if you already have a site and sell on Amazon, this would make sense. If not, I wouldn’t particularly recommend it.

    But there always seem to be a huge downside with these alternative payment options, with Paypal, their terrible customer service (from a merchant perspective) and outrageous policies cause a lot of headaches and time wasted by online retailers in dealing with these issues. Sometimes the cost of these do outweigh the benefit in additional sales.

  2. Amazon also has made a hefty investment in Bill Me Later, so I’m confused a bit as to their strategy here. We have seen a major uptick in adoption of Google Checkout, Paypal and Bill Me Later in the last year, and it’s clear that consumers like having many alternate payment options. I agree with Scot Wingo’s assessment that it seems to be a conflict of interest. Even the ability to allow Amazon cross sells/upsells makes me think any large retailer would avoid this like the plague – the associate commissions for this may not be worth the trade-off.

    Perhaps smaller market retailers who are debating between having a store on Amazon and keeping their existing site would like this option.

  3. Not only do I not want Amazon to have access to my customer and sales data, I don’t want to have to deal with their customer support any more than I have to. And my recommendation to customers would be the same. The A-to-Z guarantee is heavily weighted toward the end customer, and Amazon provides no support to either party (the merchant or the final customer). Their business model is a pure numbers game, and that low-touch approach isn’t fun to deal with as a merchant.

  4. I am concerned about how many buttons there will be on the shopping cart page…

    ‘Proceeded to Checkout’ then a button for ‘PayPal’ then a ‘Google checkout button’ and now an ‘Amazon’ button too?

    How is average ‘Joe Customer’ going to navigate through the maze?

    From my point of view, having so many options on the shopping cart page, I am sure some customers would get frustrated and just bail out for a site with a clean and easy checkout process.

    What is the title of that book? Don’t make me think?

  5. Floogy says:

    Those of us who work online seem especially slow to realize our biggest competitors. Amazon, eBay and Google have lined up on the other side of the battlefield to web developers and online retailers, but we’re generally too naive to notice or care.

    Google, for example, moves swiftly into competition with social networks, payment gateways, webmail apps, office suites, news aggregators, feed readers, personal photo gallery services, image manipulation tools, instant messengers, role-playing games, web page creation software, blogging and now micro-blogging platforms… Will we see an article about how they use the data collected by your own Analytics and AdSense units in order to compete with you more effectively?

    This bait-and-switch routine is getting old. http://www.google.com/intl/en/options/

    Amazon and these other iconic examples must decide, as a matter of policy and principle, whether to behave as enablers or competitors to private business.

    Or, must they? No need for consistency if we keep using (and thus feeding) their wonderful services for the sheer convenience, regardless.

  6. The risks are significant and important, but they aren’t as tangible and immediate as the benefits; e.g., to add additional payment option gives more choice (disagree with audio bible: users don’t care if there are several payment options – if an heavy Amazon buyers sees this option, probably you’ve enhanced his/her experience).

    Ergo, most smaller sellers will at least want to give this a try.

    But Miva has a great point. It’s not exactly the same business as their own (Amazon’s own cart). Service to the merchants/seller does matter. (Google Checkout is absolutely dreadful, they cannot be reached – Google checkout makes paypal look like the Ritz for service). They seem to have a great track record for their customers but a lame track record in regard to their partners.

  7. Marketing Intern says:

    There are two sides to the Amazon coin. As many of you have pointed out, the customer experience with AMZ is difficult. So why do they have 81MM customers accounts again? Think of it this way, every marketer builds a brand and differentiates that brand on any of a number of dimensions including services, rewards, selection, downstream support, etc. In the catalog world, catalogers have long used cooperative marketing databases where they share their customers and transactions in exchange for modeled customer prospects. These files perform VERY well. So, as much as Amazon can have access to your customers, YOU can have access to theirs. The companies most at risk are those who carry products/services that are not core and are poorly supported and easily knocked off by competitors or those companies with lousy services and poor customer experiences.

    The real issue here is how many NEW customers of sustainable brand quality can you get from Amazon?

    By the way, with 81MM accounts, do you really think your customers are not already shopping with Amazon? And if they do shop Amazon and still shop with you, why do you think that is? Because you do some things better than Amazon does – be brave, be bold, be cautious!

  8. Great points in this discussion thread! For those interested in another POV, check out eBay expert blogger Randy Smythe’s post here:
    http://rksmythe.blogspot.com/2008/07/competitive-iconcerns-with-amazon.html

    “…from what I have observed, and heard directly from Amazon employees, they have systems in place to keep the retail side of the business separate from the marketplace business. I’m not saying that it doesn’t happen, but they’ve assured me that they have systems in place to limit the problems.”

    “If the biggest downside to accepting Amazon Payments is the fear they will take your transaction data and use it against you, that is not a problem without a solution — Read the contract before you sign it.”

  9. [...] Checkout hat amazon sicherlich den Startvorteil, dass sich schon 81 Millionen Kunden bei amazon registriert und Ihre Daten hinterlassen haben. Das könnte positiv für die Akzeptanz sprechen, und den [...]

  10. Keith W says:

    Great points! Another thing to consider is you are not really giving AMZ your products that sell the best, just your internal SKU numbers and product names. So they would have to do a little digging to find out what was your best seller, however I’m sure that would be quite easy for them to do…

  11. Mat Smith says:

    Imagine for one minute that your business sells products that are not available, useful, or relevant to any competitor. Eg. you are an artist.

    Or imagine that you are a small business who offers an innovative service which you have trademarked. Or perhaps you are selling your time.

    There are many reasons you might want to lend a bit of A-Class brand to your checkout process, especially if you are a small business.

    And it’s not like Amazon are redirecting customers to their own products when they try to check out on your website.

    I hear the points being made here, but it would be better to provide a balanced view that assesses both sides of the argument.

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