Amazon Uses Buyer Convenience to Entice New Sellers, Drive Payments

G00258594

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Summary

Amazon redefines the customer e-commerce experience by converging purchase, ship and pay processes in new buyer and seller functions. Login and Pay will appeal to sellers without well-recognized brands and services sellers.

News Analysis

Event

On 8 October 2013, Amazon announced Log and Pay with Amazon, a new service for online sellers enabling buyers to use existing Amazon credentials to register on a seller’s storefront in the United States. The service identifies the buyer to the seller to enable personalization and is coupled with Amazon Payments (i.e., buyers' use of shipping and payment information in their Amazon profile). Sellers may also incorporate only Login or only Amazon Payments.

Analysis

Gartner believes Amazon’s new Login and Pay will appeal to small and midsize businesses (SMBs) in particular, sellers of physical goods who require buyer registration prior to purchase and sellers of services. Gartner expects Login and Pay to expand Amazon’s presence in the selling of services. These sellers are likely to embrace Login and Pay to gain credibility by using Amazon’s known brand to make customers feel comfortable or to make the purchase and payment process easier for the customer.

Login and Pay aims to eliminate what is often duplicate data entry for buyers. Amazon will authenticate the buyer on behalf of the seller. Buyers then have access to and use of their data stored in their Amazon profile. Login and Pay should increase Amazon's revenue through gains in payment processing with the three types of sellers noted above.

Gartner expects that buyers will like the ease of Login and Pay, and may demand similar experiences from other sellers. Larger, branded sellers of goods may remain wary of the service due to their sometimes competitive relationship with Amazon. Customer demand could drive Amazon to become a larger player in online shopping authentication — reducing Facebook’s e-commerce encroachment.

Because Amazon shoppers typically store multiple payment methods, Login and Pay could become positioned as a digital wallet. If demand soars, eBay’s PayPal could lose overall share of online transactions as buyers adopt Login and Pay and use Amazon stored payment options, which exclude PayPal today.

Amazon Payments falls short, however, when it comes to multichannel capabilities, where PayPal is better suited. PayPal’s parent, eBay, does not compete with sellers in its marketplace. PayPal has recently improved its mobile offerings with the acquisition of Braintree and simultaneously upgraded its in-store capabilities. Braintree’s portfolio has a large portion of businesses that sell services online. PayPal also offers loyalty and rewards programs in its payment mix.

Recommendations

  • New or smaller online sellers: Evaluate Login and Pay. Sellers experiencing a high percentage of anonymous buyers may find value in Login and Pay to increase buyer registrations. Sellers with a high percentage of abandoned shopping carts may find that Login and Pay leads to a greater number of completed sales.

  • Sellers of services: Assess the customer convenience of Login and Pay and calculate the opportunity to gain new revenue via access to 215 million active Amazon buyer accounts.

  • Mature online sellers: Look for evidence of adoption by customers and your competitors over the next six months before using the service. The benefits of using the service must be balanced with the extent of risks posed by allowing Amazon to be part of your customer experience.

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© 2013 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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