Online purchases at Amazon using points from other retailers
Amazon is planning to expand its loyalty offering to enable customers to use reward points to make online purchases. A job advertisement from the online retailer says that it is planning to create a new rewards redemption platform business as part of its global payments system. The system could be used by its own credit card users and also by members of other loyalty schemes, according to a report in The Financial Times.
There is increasing competition among the reward schemes operated by airlines, credit card companies and retailers in the US. LoyaltyOne Consulting, which has worked with a number of major US companies’ loyalty schemes, estimates that an average family is enrolled in 12 programmes, and actively participates in four to five.Amazon, like other US retailers such as Gap, rewards users of its branded credit cards with gift cards linked to purchases. Some US supermarkets have also started enabling loyalty card points to be used for cheaper petrol at their filling stations.
Credit card issuers, hotel chains and airlines have increasingly begun using their online presence to give loyalty programme members more choice where they spend their accumulated points, including the opportunity to exchange points for merchandise from major retailers.
One example is American Express’s Shop¬Amex site, which offers an online comparison site that allows points accumulated under its Membership Rewards programme to be redeemed on a vast range of products at participating retailers, including Amazon. Amazon’s wide product range – which includes books, CDs, DVDs, toys electronics and video games – would be very attractive to a lot of potential partners.
Amazon recently announced it is giving other US online merchants the ability to use its Checkout online payment system. The service aims to take on online payments provider PayPal and will include ‘1 Click’ and the ‘Express Lane Checkout’ and will also process VAT and shipping costs. “Customers will be coming through an experience that is really similar to Amazon’s,” Mark Stabingas, VP of Amazon Payments told the New York Times. “People will like the familiarity and the comfort associated with that.”
Online merchants will be charged fees calculated on a per-transaction basis. After choosing their purchases on the e-merchant site customers will see the option to ‘Checkout with Amazon’. By clicking on this they can securely pay through Amazon Payments.
Using Amazon’s Simple Pay payment option, someone’s Amazon.com account can effectively be used as a payment method on a third-party website so customers can bypass the merchant’s payment system.
This will have the advantage of giving e-merchants the option of selling of Amazon’s own products to customers at the checkout stage and in return give them loyalty points.