Thursday, April 5, 2012

Amazon Competes in Payments and Advertising


Amazon is a giant in its retail and marketplace businesses, and it's easy to forget other areas in which it competes, including online payments and advertising. While Amazon is not currently thought of in the same way as PayPal or Google AdWords, it's best not to underestimate the retail giant.

While many people think of Amazon Payments as a service that allows shoppers to pay by credit card on the Amazon website, it offers a variety of funding sources, including the ability to pay directly from your checking account, and it allows retailers to accept Amazon Payments on their own ecommerce websites.

"If you have an ACH-enabled U.S. checking account, you can pay online for goods and services purchased on Amazon.com without having to mail in a physical check. You'll see a "Checking Account" option on the payment page when ordering through the Shopping Cart."

In addition, Amazon WebPay allows users to send, receive, and request money from other users from the Amazon Payments website using all available funding options, including verified credit cards and verified bank accounts. You can send money to any recipient with an email address, mobile phone number, or alias, and there is no charge to send money using Amazon WebPay. 

You can also send payment requests from the Amazon Payments website to anyone using their mobile phone, email address, or alias.

Billion Dollar Advertising Opportunity
As for advertising, Amazon has a number of programs including Product Ads, which it launched in 2008. This week, Amazon made it clear this week it was going after the advertising business in a big way.

Amazon's VP of Global Advertising Sales spoke at the ad:tech conference on Tuesday, and according to Reuters, is going after the consumer packaged goods (CPG) ad market, calling it a "huge opportunity." Only about 4 percent of customers purchase a CPG product from Amazon, and clearly the company means to change that. Amazon launched ad businesses in France and Canada this week, adding to teams the company already has in the U.S., United Kingdom, Germany and Japan.

If you're not familiar with Amazon's Subscribe and Save program, it provides automatic delivery and extra savings for shoppers' most frequent purchases. "Save 5-15% and get free shipping on select groceries, beauty products, household supplies, and more." As Amazon ramps up adoption of the program, it will become an ideal platform for consumer packaged goods advertising.

Reuters quoted Wall Street analyst Ben Schachter (Macquarie Securities) - "Given Amazon's knowledge of users' buying habits, they are very well positioned to deliver on the potential of better targeted, and therefore more valuable, advertising experiences."

With its marketplace business, Amazon became a successful contender to eBay. Can it do the same with PayPal and Google?


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