On the 26% of purchases using Amazon, the e-retailer is guaranteed payment.
Don Davis , Editor in Chief
When Sean McWherter and his partner launched Autoplicity.com two years ago they worried about converting traffic they were paying to attract via online ads, winning customers’ trust and blocking fraud. McWherter says offering consumers the option to pay with Amazon Payments has helped the online auto parts retailer address all three of those concerns.
Autoplicity.com implemented Amazon Payments in March 2012. It allows the 209 million consumers who have created accounts with Amazon and stored payment and shipping information to pay by entering their Amazon user names and passwords.
McWherter hoped adding Amazon as a payments option, and displaying the Pay With Amazon logo on his site, would make customers more comfortable buying from Autoplicity.com. “The customer may not know Autoplicity, but he sees the logo and says, ‘I know Amazon,’” McWherter explained in a session yesterday at the annual Catalyst conference for clients of ChannelAdvisor, which helps retailers sell through online marketplaces, comparison shopping sites and search engines.
“The power of that logo is just overwhelming, and people love it,” McWherter said. While he can’t say for sure it’s helped conversion, he believes it has contributed to his roughly 10% increase in sales since introducing the new payment method.
Another big selling point, McWherter said, is that Amazon guarantees payments so long as a participating retailer ships the item ordered, provides a tracking number and gets a payment authorization from Amazon. That gives McWherter confidence to ship more orders without manual reviews, including to the 30 or so countries covered by Amazon Payments’ guarantee of payment to the seller. A shopper with an Amazon account from any country, except China and Japan, can pay on web sites accepting Amazon Payments, noted Will Daugherty, vice president of external payment services at Amazon.
Amazon previously called its payment service Checkout by Amazon, but is rebranding it Amazon Payments. He said Amazon planned to launch the new service this month.
Daugherty noted that, in response to retailer feedback, Amazon is making another change: Retailers will no longer need to tell Amazon what the customer ordered. He said that requirement stemmed from the payments service being built on top of Amazon’s own order management system, and not any business reason. Some retailers have expressed suspicions that Amazon uses information it gleans from the services it offers other merchants—such as its marketplace on Amazon.com, its payment services and Fulfillment by Amazon—to determine what products to sell and at what price.
That suspicion surfaced in yesterday’s session when a retailer in the audience asked if Amazon might still use information gleaned from the payments service to its advantage—for example, promoting auto parts to someone who uses Amazon Payments on Autoplicity.com. Daugherty told the audience, mostly made up of online retailers, that it would not.
“That’s not what this business is all about,” he said. “It’s about helping Amazon buyers being able to use their Amazon accounts in many places. That makes them feel good about Amazon and helps you.”
McWherter says consumers have responded to the new payment option. While he expected about 5% of payments to be through Amazon Payments in the past 60 days 26% of purchases have been made through the Amazon program. Before he added the Amazon payment option, he says, 60% of customers paid with credit cards, nearly 40% with PayPal and perhaps 1% with Google Checkout; the typical breakdown now is about half credit cards and 25% each Amazon Payments and PayPal, a payment service owned by eBay Inc.
Amazon charges 1.9% of the transaction amount plus 30 cents to process a purchase, whereas Autoplicity’s average credit card processing fee is about 2.2%. With an average order value of nearly $300, Amazon Payments saves the e-retailer money, as a typical credit card fee on a $300 order would be $6.60 compared to a $6.00 fee for Amazon Payments. The base PayPal rate is 2.9% plus 30 cents, or $9 on a $300 order.
McWherter says it took one developer less than two weeks to integrate Amazon Payments into Autoplicity.com, even though the e-retailer decided on a custom implementation to give consumers two ways to pay with their Amazon credentials. The first way is by clicking Pay With Amazon on a product page, which takes the consumer to a single-page checkout that shows the items ordered, provides shipping options and shows the total price. Alternatively, the consumer can continue to the checkout page and then select the Amazon option.
Amazon’s Daugherty said there are ready-made plug-ins for Amazon Payments to a number of e-commerce platforms, including Magento, 3dcart, Miva and PlentyMarkets in Germany. He said Amazon is seeking to integrate Amazon Payments with more providers’ e-commerce software.