When PYMNTS released our first “Buy Button” report last year, it came as big news to many that a Pay with Amazon button was present on roughly 10 percent of the top eCommerce sites in the U.S., second only to PayPal (at 70 percent). The surprise was as much about the number of sites that accepted Amazon as it was that getting to that threshold all happened rather quietly and without a lot of public fanfare. The concentration of merchants with Pay with Amazon was one of the best-kept secrets in payments — well, until that report.
Today, we also know one of the other best-kept secrets in payments: how many consumers actually use Pay with Amazon when visiting those merchant sites.
That number, in 2016, Patrick Gauthier, Amazon’s VP of External Payments, told Karen Webster, is 33 million consumers from 170 countries. Roughly half of those customers are members of Amazon’s coveted customer base – Amazon Prime. Nearly a third of the transactions made by those customers were done via a mobile device, with an average transaction size of $80.
Gauthier says the consumer and merchant acceptance of Pay with Amazon shouldn’t come as a surprise to anyone, since Amazon is offering their customers the same experience off Amazon as it does on the etail giant’s own site — certainty that the checkout experience will be easy and fast.
“This is really not surprising because we are giving [the consumer] something they are already familiar with — and familiarity is something that builds behavior because it takes the risk out of the consumer’s decision-making,” Gauthier explained.
Merchants who have implemented Amazon’s payment solution have also seen sales lift, according to Gauthier, with basket sizes of Pay with Amazon customers 10 to as much as 33 percent higher than non-Pay with Amazon customers.
Gauthier also suggested that there’s something else that shouldn’t come as a big surprise: these numbers point to the beginning of a trend line that he says will grow “exponentially” as Amazon expands its payments reach across many of the touchpoints that consumers use today to buy — and will use moving forward.
Gaining Ground (Under The Radar)
Gauthier told Webster that the Pay with Amazon solution has been rolled out the “old-fashioned way” — by winning merchants and consumers on the strength of its ability to convert browsers to buyers. That “ground game,” with merchants at the middle and longer tail of the retail market, hasn’t been quite as “attention grabbing” as knocking down some of the storied names in retail — but Gauthier says it has allowed Amazon’s yellow pay button to appear on “more and more” sites over a relatively short period of time.
Gauthier said that Pay with Amazon saw its active merchant base grow more than 120 percent and include a host of new verticals including government payments and insurance payments and growing merchant share. In addition to its expanding presence in the U.S., Gauthier shared that Pay with Amazon is now present on 21 percent of Germany’s top 1000 merchants.
Insurance, Gauthier told Webster, is an interesting use case because it demonstrates the ability for Amazon to leverage another of its core competencies – the ability to authenticate the digital identity of a consumer – particularly for industries with big frictions to solve on that score.
The biggest challenge when selling insurance — or even subscriptions, Gauthier notes — actually comes right at the outset, in account creation. Consumers, particularly those on mobile-sized screens, don’t like filling out a lot of windows – Amazon offers an easy way for consumers to “skip” that step.
“The same reason we are good at creating an experience for consumers at checkout makes us able to use the same tools, and as such, we can make create the same seamless experience at check-in,” Gauthier noted.
Equally important, he said, is that once that account is created, Amazon has the ability to keep recurring payments actually recurring without interruptions, even in cases where a consumer has a card lost or stolen or gets a new card — and perhaps forgot to update their account information.
“People who buy online have an Amazon account – and those Amazon accounts are current, because if they aren’t, people can’t buy what they want,’ Gautier said, noting that the etailer’s clean customer files are current even well beyond payment to include home address and phone number.
And consumers whose payment data and shipping address are always current, are, broadly speaking, valuable to merchants, since that eliminates one source of friction.
“People who buy online have an account on Amazon,” Gautier noted.
Forgetting The Zero Sum Game In Favor Of The Big Win
All good, Webster notes, but what about the “Amazon effect” that has become the “Amazon threat” to most merchants who increasingly find themselves competing with a retail giant who’s more or less eating retail’s lunch these days? With data that shows that 85 percent of the time an online buying experience involves a swing by Amazon, isn’t a merchant contemplating Pay with Amazon a bit like Little Red Riding Hood inviting the Big Bad Wolf to lunch?
Gauthier brushes that off to more urban legend than reality. Pay with Amazon, he says, is a rising tide that can lift all boats – with evidence that it has.
“Sometimes customers want something different. Maybe it’s the Amazon experience on Amazon, or it might be physical store experience, or it might be someone else’s branded experience. The reality is, consumers have different wants at different times. We don’t have the misplaced idea they will always come to [Amazon].”
And when they don’t, Gauthier said, Amazon offers a buying experience that helps a merchant close the deal with that consumer. With a Net Promoter score of 90 percent, Pay with Amazon, Gauthier said, can help merchants do that.
It’s also not entirely magnanimous. Gauthier noted that Pay with Amazon “is not a zero-sum game, for either us or merchants using Pay with Amazon.” He cited data that shows that Prime users who use Pay with Amazon off Amazon become more engaged with Amazon itself — which contributes to a virtuous commerce circle — with Amazon squarely in the middle.
“[With Pay with Amazon], merchants are accessing consumers who are more frequent and higher volume users – we’re adding value to all parties involved.”
Helping Merchants And Consumers Way Off Amazon
Pay with Amazon, Gauthier said, isn’t only about meeting consumers where they happen to be shopping on the web today, but anywhere that their connected devices and commerce curiosities may take them. Contextual and conversational commerce is the consumer’s next commerce frontier, one where Gauthier says that a single, familiar payments solution can help consumers and merchants comfortably cross.
“We’re at the beginning of change where commerce will be driven by connected devices that are not always using a browser – or a screen. And, while those commerce contexts may be different, those consumers won’t want to learn a different way to transact in their car, and on their TV, on their mobile phone, with Alexa, or their PC.”
So, when Gauthier and Amazon think of Pay with Amazon, they’re thinking well beyond a wallet and a button, he says, to solving for that issue — and then exporting that solution across their ever-growing customer and merchant ecosystem.
As fast as possible.
Gauthier remarked that consumers today want to focus their mental energies on buying, which is to their benefit and the benefit of the merchant — not on the act of buying. Removing that friction point, he said, is “part of Amazon’s DNA.”
“Pay with Amazon is a problem solver. There’s a lot of friction out there today and will be as we move into a connected commerce world. Our attitude is ‘let’s just fix it,’” Gauthier said in parting to Webster.