As of March, Amazon is limiting related ad placements on product detail pages for Product Ads advertisers in the Apparel category. According to the announcement, any advertisers not participating in Amazon Payments will no longer be eligible for the related ads placement.
However, any ads that are currently search eligible will continue to serve as usual. With these types of restrictions in place, retailers could experience a reduction in traffic, unless they decide to adopt Amazon Payments into their checkout process.
Amazon Payments is a way for customers to purchase goods and services from US based websites using the payment methods in their Amazon.com accounts, such as their Visa or MasterCard. Currently, Amazon.com and Amazon Payments will not accept payment methods from their competitors such as PayPal or Google Wallet.
Retailers like Dazzling Rock and All Saints (video below), have already implemented Amazon Payments, allowing their customers to make fast payments without having to re-enter all their information during the check out process. Users can also check out using Amazon’s 1 Click.
Should retailers sign on with Amazon Payments?
Unfortunately, there is no clear cut answer when it comes the question of whether or not retailers should implement the service. While Amazon is definitely sending a nudge to its retailers to get on board with the feature – it may not be the best decision for every retailer due to a variety of factors that could make the integration process difficult and potentially expensive.
According to Pat Petriello Sr. Marketplace Strategist at CPC Strategy, Amazon has a large scale vision to be part of every ecommerce transaction. By creating Amazon Payments, formally known as “Checkout by Amazon”, the marketplace giant now has the potential to a have a hand in the pot of almost every ecommerce shopping transaction.
Product ads drive traffic to retailers, but if they are not using Amazon Payments, they could be potentially cut off.
Potential challenges to consider with Amazon Payments:
Integration – According to Petriello, the level of integration is closely tied to how customized the merchant’s shopping cart is.
If a company has custom integration, it could be difficult for them to implement a new payment instrument into their site. Retailers must be able to track and pull reports and without that ability – it could really deter them from wanting to adopt. Even if you increase customer loyalty, from the back end you may not be able to track data and could potentially end up creating analytic difficulties.
“It can be a heavy integration (but not necessarily) and that is something if I was a decision-maker or an ecommerce retailer I would want to evaluate pretty thoroughly before pressing play,” Petriello said.
Cost vs. Conversion- It’s plausible Amazon Payments could lead to an increase in conversion rates, especially with the security and easy usability of the Amazon checkout process.
“But, that to me is all relative to the cost of actually using it. How effective it is – is closely related to how much real estate its given,” Petriello said.
For example if the feature is only visible at the bottom of a detail page or in an ad-on in the checkout option – chances are you are going to have a poor experience with Amazon Payments. If your not gaining exposure, then you may go through all the trouble of adopting it but nobody is going to see it.
“Amazon wants retailers to highlight this feature on their home page. If you want to get a true test to it, you’re going to have to commit. If you hide it, it’s not going to perform. But that should be a a plan that’s thought about on the forefront.”
According to Petriello, it’s like buying a car…you don’t want to get to end of the process and find out it costs too much to ensure the vehicle.
Companies like Dazzling Rock has been using Amazon Payments for several months.
“We have seen a boost in orders from adding the Amazon Payments to our site. We do not have the conversion rates at the moment, but we did see an increase in orders,” Kamlesh Italia, CEO of Dazzling Rock said.
While it may be too early to compile data, Dazzling Rock strongly recommends Amazon payments to other retailers.
Advantages of Amazon Payments:
Mobile Capabilities – More than 60 percent of customers spend their online shopping time on a mobile device. Amazon Payment’s 100 percent responsive design allows registered customers to check out in only a few clicks rather than waste time re-entering their credit card information or shipping address.
That is a big hook for retailers interested in Amazon Payments and could lead to an increase in conversions because of mobile accessibility. There’s no set up fee to Amazon but you still have to invest the time (and potential cost) for developers to deploy it.
Brand Control – Inline checkout is also an option provided by Amazon Payments. This features means customers do not have to leave the brand’s website to complete their checkout. It preserves the integrity of the brand by maintaining the color scheme and logo. According to Petriello, if there’s one thing a retailer does not like to do is drive any traffic away from their website.
True Customer Info – Retailers who decide to integrate, will also be provided access to their consumer’s email information.
“I don’t think anyone would be willing to adopt Amazon Payments if it restricted them from their user base,” Petriello said.
If retailers decide to integrate Amazon Payments, the best time to test out the feature and work through any difficulties would be during months of March and April rather than September or October, where you could experience boosts in back to school or upcoming holiday sales.