- PROJECT HELP
One of the most discussed topics at last week's retailer-focused Shoptalk conference in Las Vegas was how merchants can increase both online and mobile sales conversion rates and lessen the impact of the dreaded cart abandonment problem when the checkout experience proves too cumbersome.
Cart abandonment is collectively costing retailers billions every year in potential sales, according to some industry estimates. As retailers suffer with this problem, consumers are left with poor checkout experiences and move from retailer to retailer seeking the easiest methods.
The combination of the two issues prompted Amazon to expand its Pay with Amazon function outside its gate to other retailers. It was a curious move considering the company is essentially helping competitors, though Amazon doesn't see it that way. It believes it's doing customers a service while giving retailers new buyers who might not have otherwise shopped at a particular website.
Mobile Payments Today caught up with Patrick Gauthier, VP of Pay with Amazon, at Shoptalk to discuss the company's new direction with this service. This is part one of a two-part Q&A with Gauthier. Stay tuned to part two on Tuesday.
MPT: When Amazon announced the expansion of Pay with Amazon, the move was met with raised eyebrows around the industry. Why did it make sense for Amazon to go this route?
PG: With the experience of an Amazon Prime member, you have OneClick and it's familiar. It’s simple. We're taking that experience and bringing it to third-party merchants. And the reason for that is, if we start from the customers' perspective, when they go to other merchants, most of the time they don't want to create another account, another password, etc. The alternative is to fill out a bunch of information. So, we're focusing on the Amazon customer and making it easier for them to buy elsewhere. It appears counterintuitive as most retailers will not send their customers elsewhere. We're not a retailer. We're a technology company that happens to be in retail.
Everything Amazon does starts not from what we envision to be, it starts with a customer pain point we've identified and we're working backwards from it. And that leads to counterintuitive conclusions. How many retailers do you know, big or small, that share their fulfillment and logistics chain with others? There's one and it's Amazon. How many retailers in any form of a digital delivery company that you see share their IT infrastructure with competitors? There's only one and that Amazon Web Services. And that's because it didn't start with someone saying, oh, we have this product and let's go find a customer for it. It starts with, people we talk to have this problem, would we be able to solve it. Well, the answer is yes. By starting from the customer [pain point] and going backwards, it can lead us to counterintuitive answers, but the truth is, it's actually answers that generally have a much higher probability of growth and success. If you do something that's right for your customers, it's usually a good thing.
So, if I apply that to what we do, you can take your [Amazon] account that you're familiar with and take it shopping with you. Usually people [tell me], you must be doing this for the data. And the answer is, absolutely not. First, it would not be particularly appropriate of us to conduct ourselves in that way and that would really put the Marketplace business at risk if we did anything like that.
If it's not about the data, then what it is about? It's about customer trust. Our customers trust us, but the truth is, trust is something you need to nurture. It's not something you have forever. It's something that every time you have a touch point with your customer, you start with a capital of trust. Depending on what you do, you decrease it or increase it. For us, this is a way to increase engagement with our customer, and therefore increase the trust they have with us. And we do have data that show that is the case. The really interesting dynamic of this is, we solved the customer problem, we in the process further earn their trust but we don't do that at the expense of another retailer. In fact, the retailers who deploy Pay with Amazon see net new customers. They're customers who have never shopped there before and are often Prime members. With those new customers, conversion goes way up because the information is already stored. So for all these reasons, this is also beneficial for the merchant and that's why we're in this business.
MPT: How does the retailer go about replicating the experience you have with Amazon.com or the Amazon mobile app?
PG: We create a set of APIs that enable the merchant to do a "check-in" and a "checkout." If you do a checkout, you'll put in your credentials and your password to pay, and you're done. If you do a checkin, you might do that earlier in the transaction, such that you don't have to do it again later. The benefit of the check-in is that it's helpful for the merchant because they can connect it to their CRM. Now they know it's me, and know about whatever I did with them before. As Amazon, we don't see an interaction. We basically provide the merchant proof positive that this is the person they say they are. Now, do whatever you think is appropriate for your business and the customer. This combination of check-in and checkout enables not just faster payment, but it also enables personalization. That's the name of the game. Everything we're seeing [at Shoptalk] is about connected experiences, personalization, more one-to-one [marketing]. To do one-to-one, it starts off with knowing that person.
MPT: How will Amazon Payments on merchants' sites compare with PayPay, Visa Checkout, MasterPass, Apple Pay and others?
PG:First, Amazon doesn't spend a lot of time talking about its competitors. This is one area, of all the companies that I've worked for, that is a market difference. We're competitor aware, but we're definitely not competitor focused. It's not something that we talk a lot about, but what we do talk about is what do we want to do for our customer, what's the value proposition, how do we execute. When I look at the companies you talk about, they fall into roughly three categories. You have some like PayPal who has been at this for a while. You have some like Visa and MasterCard who are just starting. Then you have the likes of Apple Pay that are more of the mobile in-store use case. There are a few things that they all have in common.
First, they focus on payment and the checkout and don't focus on the end-to-end experience. And payment processing is a commodity. Trusted identity is not. To get a sale, you need the payment processing. But the value is not created because you took payment. The value was created because you enable better conversion. So, a lot of these companies are in the commodities space.
Second, with the exception of Apple who has a strong connection with its customers, none of the others do. Even PayPal, while it's a very good brand, it's not a great brand in that it's one that consumers very strongly relate to. And Visa and MasterCard are good brands, but what they signify for the consumer is a way to pay. Those companies do not have the relationship like we do with consumers.
Third, with all these companies focusing on checkout, it leaves the market relatively wide open to focus [on checkin]. There are few companies that do check-in and checkout. With check-in, it's usually a social media login. But they don't have a particularly strong checkout solution. From a consumer standpoint, it means I login first with Facebook, and then login again to pay. That's not exactly frictionless.
I'm not so much in the business of payments, but more in the business of brokering trust between my customer and the merchant. It's fine. It's totally appropriate. Nobody owns the customer. The customer owns us. We're not here to say you can't transact with these other companies. We're here to solve the customer's problem, and when we do that, we have a deeper relationship with them. And that's a different perspective from us because a lot of others in this space are thinking technology and what they want to protect while we're thinking about what problems do we want to solve for the customer.