With a Name Customers Trust, Amazon Payments Reduces Checkout Friction and Increases Conversions By As Much As 35%
Posted: 9.29.16 Ecommerce

With a Name Customers Trust, Amazon Payments Reduces Checkout Friction and Increases Conversions By As Much As 35%

By: Adam West

The Crunch: Shopping has evolved since consumers have embraced e-commerce. Online powerhouse Amazon is moving toward a future that blurs the line between online and in-store shopping. Already, Amazon Payments is having a significant impact on the digital merchants who’ve incorporated the power of the Amazon name. Conversion rates are soaring and third-party merchants are seeing new business from Amazon users, who are known for spending more per order than the average online shopper. Plus, companies that integrate with Amazon Login and Pay provide consumers with the type of easy experience that inspires repeat business.

Let’s say the average shopping experience takes 30 minutes. In a retail store, a shopper spends most of their time browsing — checking prices and reviews online from their phone while navigating the store — and only about a minute actually paying (not including waiting in line). It’s a simple process to get consumers out the door quickly with their goods.

However, when a consumer is shopping online, a larger part of the 30-minute experience is spent on checking out because most sites push users to sign up for an account with the merchant, requiring them to supply all their personal details and create yet another login to remember. While most payment processing companies focus on that final minute when customers are paying for their goods and services, Amazon Payments takes a different approach. The transaction-processing subsidiary of Seattle-based Amazon.com wants to hone in on the preceding 29 minutes as well as make the payment itself as hassle-free as possible. And it all starts with smartphones, which nearly every shopper uses during their shopping experience.

Portrait of Patrick Gauthier

Patrick Gauthier, Amazon’s Vice President of External Payments, talked to us about his company’s vision for the future of shopping.

“More than half of all consumers will have their smartphone in their hand while they’re shopping in a store,” said Patrick Gauthier, Amazon’s Vice President of External Payments. “So we’re latching onto that and saying, ‘Let’s see what we can do to enhance the consumer experience when their phone is out,’ which tends to be long before checkout.”

Currently, Amazon Payments is focused on partnering with thousands of businesses to ensure that those consumers have a friction-free experience when it’s time to make a purchase online. But, at Amazon, employees tend to dream big.

Amazon’s grand vision is to turn its app into a shopping companion that takes customers from the online research stage and guides them to the aisle where the product is located in a store, and all the way through an efficient payment process.

The company is already taking steps to make this vision of shopping a reality. Patrick recently sat down with us and outlined Amazon’s innovations for what could be the not-so-distant future of shopping.

A 304 Million-Member Reach Helps Shape the Future of Shopping

Amazon is working toward a new way of shopping that creates a seamless transition from browsing for products on websites to browsing store shelves. An example of this is already underway with luxury fashion merchant Moda Operandi, which integrated with Amazon Payments on a deeper level earlier this year.

Before arriving at one of Moda Operandi’s boutiques in New York or London, consumers browse and select which items they’d like to try on in person from the fashion retailer’s online store. Shoppers log in to the site with their Amazon account information, so when they step foot in the store, beacon devices detect the Amazon app on their phones and alert Moda stylists of their presence and wish lists. 

The shopping experience is seamless and streamlined since the stylist is automatically aware of the clothing someone is interested in, and because the customer’s credit card information is on file with Amazon, the payment process is expedited.

Amazon also has a chain of brick-and-mortar bookstores called Amazon Books, where this system is in place, serving as a physical extension of Amazon’s vast online presence. The aim of Amazon Payments is to spread this business model to more merchants so they can benefit from the technical capabilities and trust that come with the Amazon name. The next step, though, is continuing to recruit companies to partner with on an advanced integration level using the system already in place at Moda Operandi and Amazon Books.

Image of shoppers at Amazon Books

Amazon Books, a chain of physical bookstores, blurs the line between in-store and online shopping.

“This is where we think the future of commerce is going,” Patrick said. “It’s cloud-powered, it’s data rich, it’s connected for both the merchant and the consumer, and it no longer makes this artificial distinction between online and offline. So we at Amazon, to a great extent, are reinventing digital commerce and we’re taking other retailers along with us.”

This vision of the future is not just a pipe dream. With 304 million people using its services, Amazon just might have the clout to alter the course of retail history. The company has already partnered with hundreds of businesses now using Amazon Payments and reaping the benefits, including substantial leaps in conversion rates.

“On a very basic level, if you’re a retailer today, at some point you’re going to ask yourself, ‘How do I feel about Amazon?’ ” Patrick said. “We hope that merchants will start not from, ‘Who’s my competitor?’ but ‘Who’s my customer?’ ”

If you’re a merchant, tapping into Amazon’s 304 million loyal customers could be very profitable.

Amazon Payments for Retailers — Higher Conversions, More Customers, and Bigger Tickets

Amazon Payments is well on its way to changing the game when it comes to shopping. For the time being, merchants who have integrated with Amazon are seeing benefits in added revenue, and Patrick explained to us the three reasons why they are profiting.

Conversion Rates Increase Between 10% and 35%

The first thing merchants using Amazon Payments notice is drastically higher conversion rates, and Patrick points to Amazon’s name and commitment to reducing checkout friction as the main reason for this uptick.

Patrick told us that Prime customers convert on Amazon’s site more than 70% of the time, and non-Prime customers convert about 13% of the time. These are huge numbers, especially since Patrick explained that most e-commerce sites get an average conversion rate of between 3% and 5%. That translates to conversion rates of between 5% and 20% more than the e-commerce norm.

Graphic for Amazon Payments' Increased Conversion

Thousands of companies are seeing higher conversion rates when they integrate with Amazon Payments.

Amazon Prime customers are obsessively loyal to ordering products on the Amazon site, and with free two-day shipping, who can blame them? When these Prime customers are shopping on a third-party site, they convert less than 1% of the time, but that number can be much higher when the Amazon button is on the site.

Merchants Can Expand Their Client Base

Amazon customers, particularly Prime customers, represent a large and lucrative audience that many merchants are currently missing out on.

“If you are an online merchant, why would you not want to be able to connect with the most active population online?” Patrick said.

Graphic of Amazon Payments adding new customers

Companies that use Amazon Payments bring in new customers, especially among Prime subscribers.

Unless you’ve been living in a cave for the past 20 years, you’ve almost certainly heard of Amazon. That type of brand awareness doesn’t happen overnight. Merchants, especially those who operate small- or medium-sized businesses, work for years and dump buckets of money into marketing to get their company name out there, bring in new customers, and develop trust capital with those consumers.

Using Amazon Payments in your sales process will boost the level of trust in your transactions, which helps with recruiting and retaining new customers.

For instance, within the first three months of integrating with Amazon Payments’ Login and Pay feature, online furniture retailer Cymax saw its new account registrations triple. In light of how simple it is for Amazon customers to use third-party sites integrated with an Amazon button, this jump is hardly surprising.

Amazon Members Tend to Have Higher Average Tickets

Another factor for merchants to consider when choosing a payment solution is that Amazon customers spend an average of $115 per order, which is higher than the average spending on other e-commerce sites.

Graphic of higher average order values with Amazon Payments

Customers tend to spend more on each order when on sites that use Amazon Login and Pay.

Several of the companies that are already integrated with Amazon Payments have seen this trend rub off on their own sales. For instance, wireless service provider Ting, British fashion retailer AllSaints, and online retailer Woot saw higher average order increases of 30%, 15%, and 5%, respectively.

Amazon Payments for Consumers — Fast Checkout, Data Security, and a Great Experience

Consumers using third-party sites with Amazon Payments see many benefits, with the most important being ease of use. Payments become a breeze with the Amazon button, which is something Amazon customers already know well.

Confidence in a speedy and secure transaction breeds repeat business and helps bolster a company’s bottom line with more sales.

Consumers Love the Simple Payment and Shipment Process

Something customers using Amazon Payments will notice immediately is that, when compared with shopping on other sites, the checkout is extremely quick and painless.

According to an e-commerce study by Statista, 21% of cart abandonment results from customers who thought the checkout process was taking too long.

Chart of how Pay with Amazon works

Checkout is quick and easy when customers use Pay with Amazon.

When AllSaints added an Amazon button to their site, their average checkout time went down by 70 seconds. That means far fewer clicks, fewer headaches, and a group of happy customers who are going to want to continue doing business with you.

Think about how difficult it can be to enter a credit card or shipping address while using a mobile device. Amazon has that data on file, which really speeds up the transaction.

Users Believe in Amazon’s Commitment to Confidentiality

“Amazon is a brand that puts customers first,” Patrick said. “If we can extend that trust capital to other places where they shop, we solve a problem for the consumer.”

Amazon users do a lot of online shopping, and after they’ve placed hundreds of orders on Amazon.com without any problems, they become supremely confident in making purchases.

An Active Online Audience Means Up-To-Date Personal Details

Since Amazon customers are so active, login information tends to stay current. Plus, their credit card information is very likely up-to-date, which is especially important for businesses that use subscription models. After all, an out-of-date or expired credit card could mean missed payments.

Most consumers don’t get all of their purchases delivered to one address. So anywhere they’ve had Amazon ship something — whether it’s their home, workplace, parents’ house, etc. — that shipping information will be at the ready, giving consumers a friction-free way of getting an order where it needs to be.

The credit card data on file is just as important in reducing friction for consumers. Maybe a customer has a credit card that’s giving 5% cash back on Amazon purchases. This person will have the choice of using any card they have on file, reducing the amount of time spent inputting information.

Integrate a “Pay With Amazon” Button in as Little as a Day

Amazon Payments is already integrated with a number of popular e-commerce platforms such as Shopify, OpenCart, and Magento. So anybody with stores on these platforms will have a simpler time getting a Pay With Amazon button on their online stores. It really amounts to a configuration choice.

Image of Pay with Amazon button

Amazon Payments provides merchants with the tools they need to easily integrate with their services.

Patrick said the time it takes to integrate with Amazon Payments depends on the degree of complexity of the merchant’s platform. The simplest form can take as little as one day, while Amazon has plug-ins for more technical stores that operate off in-house coding that could take up to 10 weeks.

“For advanced merchants, it’s about deeper and more personal experiences because they can connect the Amazon account with their CRM system,” Patrick said. “We can now create continuity throughout the different touchpoints and checkout.”

Amazon Payments: Ushering in the Future of Shopping

It’s refreshing to see a payments company that’s willing to put its focus on the entire shopping experience. Amazon’s innovative plan to turn smartphones into complementary shopping partners could mean creating a full-service experience for customers.

One thing we already know is that merchants using Amazon Payments to reduce friction for customers are bringing in a lot of extra revenue in sales, and the power is in the Amazon name. They’ve been around for more than 20 years and 304 million loyal customers use their website, many of them almost daily. Thanks to Amazon Payments, there is a way to piggyback on Amazon’s success within the retail space and make more money for your site.

Smaller retailers are quickly earning the trust of new clients with Amazon Payments, but even bigger companies can benefit from a name everyone knows.

“We see a number of larger merchants who come to the conclusion that, ‘Yes, I do want to connect with this audience, and, for this audience, the Amazon brand means a more efficient and customer-friendly experience. Why would I not want to do this?”