Selected Amazon customers in the US are now able to use a “buy now, pay later” checkout option.
Amazon has partnered with a company called Affirm to provide the new option for purchases of $50 or more, allowing customers to pay with monthly installments.
Buy now, pay later (BNPL) is a booming industry, particularly among younger shoppers who prefer it over using a credit card.
Will the addition of BNPL to Amazon change the dynamics of the marketplace? Will it make younger shoppers more open to splashing out on big-ticket products?
Amazon launches a brand new way to pay
Paying by installments is not new in itself, having been offered in stores for large items like appliances and furniture for years, but it is new on Amazon.
Paying by credit card is another way to get a similar facility, but young “Generation Z” adults have shown a preference for the new BNPL services.
One reason is that some companies charge zero interest on the installments. Affirm has said that some of the Amazon customer loans it provides will bear interest, while others will be interest-free. Those who have grown up with the instant gratification of on-demand entertainment and one-day shipping are the perfect audience for loans which seem to have no downside.
A new payment option like this might seem like a small development that won’t change anything for marketplace sellers. Amazon handles payment processing and the seller doesn’t need to know how the customer decided to pay. But then again, anything which changes the dynamics of the marketplace has the potential to affect third-party sellers.
Will buyers be more open to upgrading to a premium version of a product, or a larger bulk pack, with BNPL options available? Will expensive items like home fitness equipment become more accessible to young adults, opening up the product category to an audience who formed only a small fraction of buyers in the past?
Sellers who adapt their product range and marketing now could be big winners when BNPL rolls out to all Amazon customers.
Affirm’s stock jumped by almost 50% on the news of the partnership with Amazon. Other companies providing these services include PayPal, Klarna and Afterpay. Klarna is a private company valued at $46 billion, while Afterpay has just been acquired by payment processor Square for $29 billion.
Clearly investors see BNPL as a huge trend that they want to get in on. What it means for Amazon marketplace sellers remains to be seen..
Read more at CNBC.
Other news this week
Amazon gets into the customer service outsourcing business
Amazon has launched a new service called Customer Service by Amazon (CSBA).
CSBA is a paid, optional service where Amazon provides customer service for orders that you fulfill yourself (customer service is already included in the fee for FBA orders).
CSBA provides 24-hour customer support by phone, instant messaging and email, in the language of the marketplace the customer is using. Local-language customer support is one of the requirements for sellers on international Amazon marketplaces, and this can be hard for sellers to provide, so it is likely to be the main attraction of the service for many sellers.
Some sellers have reacted negatively to the new service. Their concerns include:
- Amazon customer reps not being “on the seller’s side” when it comes to refunds and returns
- The service becoming mandatory in the future
- Support reps not being able to answer product questions
- Excessive fees
While the quality and operation of the service isn’t yet known, the fees are clear. While some international ecommerce agencies charge a per-ticket fee for customer support, usually with a monthly minimum, Amazon is charging a fee per order for customer support.
The fee per order is based on Contacts per Unit (CPU). This is the number of customer support requests received over the last three months, divided by the number of units sold. So if you shipped 1,000 orders and had 40 customer inquiries, your CPU would be 4%. Here’s how that translates into the per-order fee:
So a seller with a CPU of 4% would pay $0.10 per order while a seller with a CPU of 31% would pay seven times as much! For 1,000 orders per month, this works out as a fee between $100 and $700 – an incredibly wide range, especially considering that it is not based on the actual number of support requests handled, but more of a prediction based on the last three months.
It is reasonable to pay more money for more service, but CSBA doesn’t do that. What if you have a period with a lot of shipping issues in the last three months due to, just for example, a global pandemic or extreme weather? If those issues go away, will you be stuck with a sky-high fee rate for the next three months?
It seems much more reasonable to base the fee on the actual amount of service provided in the same period. Why can’t Amazon do that?
Read more at Amazon Seller Forums.
Sellers affected by Hurricane Ida: eBay vs Amazon
eBay and Amazon have made announcements this week on relaxing performance requirements for sellers affected by Hurricane Ida, and the extreme weather it has brought to the Southern and Eastern US. It provides a stark comparison of these two marketplaces’ attitudes towards sellers.
As a seller, you do not need to worry about your seller performance. If your business is impacted, eBay will automatically protect your seller performance, including:
- Your late shipment rate
- Your valid tracking upload rate
- “Item not received” cases due to late delivery as long as you uploaded tracking and have a physical scan from the carrier before a case was opened
We will also remove any associated negative and neutral feedback and these cases will not impact your service metrics rating. You do not need to contact Customer Service at this time.
So automatic protection, that’s great. Maybe it won’t always be implemented perfectly, but the policy is clear.
If Hurricane Ida or any resulting seller-fulfilled order issues affect your performance metrics, you may be receiving automated warning emails regarding your order performance metrics. When you are able to return to business operations, if you are prompted to appeal, please include a brief description of how your business was impacted. We will mitigate any impact to your account health as a result of this event and its effects on your operations.
A very different policy, and a very different tone as well.
Amazon will penalize your account upfront but allow you to explain how Ida affected you when you beg for mercy in your appeal.
But performance metrics matter for much more than just generating warnings. Will the effect on Late Shipment Rate and other metrics be irreversible? What about negative customer feedback? Will you lose search ranking and Buy Box placement? Amazon’s statement says nothing about any of that.
Also in the news
- eBay increases luxury handbag fees. Read more at eBay Community.
- Etsy fixes issues with the new Star Seller program. Read more at Etsy Community.
- Amazon closes the last Souq website. Read more at Egypt Today.
- Amazon introduces a “price per unit” requirement. Read more at Amazon Seller Forums.
- Amazon launches a Global Store on Korea’s 11st shopping site. Read more at About Amazon.
- China’s draft ecommerce law will crack down on marketplace IP violations. Read more at BNN Bloomberg.
- Shopify adds integration with TikTok. Read more at Shopify.
Webinars in the week ahead
Various dates: Amazon advertising’s global webinar program rolls on with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization and tips (Amazon).
For US sellers
September 9: Get the Most Bang for Your Media Buck (Tinuiti).
Various dates: Amazon Small Business Academy Pathways series (Amazon).
For UK sellers
September 7: Omnichannel strategy (Tamebay).
September 8: Avoid account disruption due to Invoice Defect Rate (Amazon).
September 9: Maximizing Retail Partnerships: the Four Pillars of E-Commerce Performance (ChannelAdvisor).
September 9: How Amazon can help Selling Partners become more sustainable (Amazon).
Amazon wants YOU!
Amazon is running a virtual recruitment event on September 15. It’s best described with lots of big numbers:
- Amazon is looking to hire more than 40,000 salaried employees and tens of thousands of hourly workers across 220 locations in the US.
- A team of 1,200 recruiters will run 20,000 personalized sessions and there will be thousands of one-on-one career-coaching sessions for existing employees.
- Amazon hired more than 450,000 people in the US during the pandemic, and is the largest “job creator” in the country.
Full-time Amazon employees get “paid time off, 401(k) matching, up to 20 weeks of parental leave, and company-funded career-advancement opportunities, among other benefits”.
Selling on Amazon seems to get harder every day, so maybe it’s time to go and work for them instead?
Read more at About Amazon.