Amazon.com has a lot of things going for it as the company transforms from online retailer into consumer shopping portal: a well-known brand name, a proven reputation for customer service and 12 million credit-card-carrying customers unafraid to click the buy button within its doors.
But it's also counting on yet another of its assets - the 1-Click payment technology it pioneered - to help it popularize the new zShops electronic commerce hosting service it unveiled within the past month. It's that technology - which allows repeat buyers to make new purchases with a single-click - that potentially puts online merchants that set up under the zShops umbrella one-click away from Amazon.com's customers.
And it's that technology that Amazon.com hopes will set it apart from other shopping portals - such as America Online, the Microsoft Network (MSN) and Yahoo! - while giving the company a head start in building usage for electronic wallet services that could play a key role in transforming the online retailer into a full-fledged gateway for Web shopping.
"With 1-Click, you've been able to get your books, CDs, toys," says Jaleh Bisharet, vice president of marketing at Amazon.com, after announcing the Amazon.com Payments service. "Now you can one-click to buy anything. It's the hassle eliminator."
In its emerging role as a shopping portal, though, Amazon.com aims to eliminate hassles for merchants as well as consumers. Amazon.com Payments, for instance, is intended to help ease the online way for small or new merchants that may not have the capability to accept online credit-card orders. It's part of a package of low-cost store hosting services that has Amazon.com following in the footsteps of other portals, such as Yahoo!.
The overarching goal for Amazon.com is to create an easy selling environment that can be combined with its consumer-oriented 1-Click purchase system to create a setting that fosters online retailing.
"Our strategy is to be the best place to find, discover and buy anything online. We're all about shopping, everything we can do to make the selection and shopping experience better," Bisharet says.
With the zShops service, for instance, would-be online merchants can set up shop under Amazon.com's shopping umbrella for as little as 10 cents per item for a two-week listing. For merchants that want to sell more than 100 products, Amazon.com recommends its $9.95 per month subscription plan that lets them sell up to 3,000 unique items. Yahoo!'s hosting service starts at $100 per month for stores with up to 50 items.
For 60 cents per transaction, plus 4.75 percent of the total transaction amount, Amazon.com says it will charge the buyer's credit card, make sure the card is accepted and authorized, and then make a deposit directly into the seller's checking account. An e-mail notifies sellers so they can immediately ship the order, Bisharet says.
Adding to its suite of merchant services, Amazon.com last week enlisted the aid of CyberSource, a payment processing and fraud detection provider that aims to make sure merchants that sign on as a zShop won't have to worry - too much, at least - that they will be the victim of credit-card fraud.
Amazon.com also recognizes it won't be able to guarantee that all its zShops merchants will stand up to its customer service standards. To protect consumers, the company says it will guarantee refunds of up to $250 for any item that is broken or not as the buyer expected. Goods purchased using 1-Click accounts are also guaranteed up to $1,000.
Consumers and analysts agree that easing online consumers' worries is very important. Consumers cite concerns over privacy and credit-card fraud as the top two reasons why they don't shop online more often, according to Forrester Research.
Even those who do shop don't always buy. Jupiter Communications found that 27 percent of online buyers abandon their shopping carts before checkout due to the hassle of filling out order forms.
That's why wallets and other payment schemes, designed to store consumers' financial information as well as information about their personal preferences in a secure and private manner, are looked at as the mechanism that will help ease some of those worries. Novell this month introduced Digitalme, software that stores personal and credit information and which has been licensed by two high-profile financial institutions: Citigroup and First USA. In September, IBM introduced a standards-based version of its Consumer Wallet that it is distributing to the market with partner MasterCard International.
The problem, though, is that no single vendor has yet been able to get widespread consumer - or merchant - adoption for their technology.
Enter the portals. Hoping to capitalize on the fact that they already hold the attention of millions of users, AOL, MSN and Yahoo! have embraced payment technologies they hope will bring the ease of one-click shopping to users.
AOL says it was one of the first companies to recognize the need for an express payment system for online purchases, prompting it in the fall of 1998 to introduce its "Quick Checkout" wallet technology. A new version of the wallet, which can be used to store up to 10 credit cards and up to 50 shipping addresses, debuted this summer. It allows consumers to use the wallet to shop at merchant stores within the Shop@AOL marketplace, which links together AOL's brands: AOL.com, CompuServe, DigitalCity.com and Netcenter.com.
AOL says it hopes the fact that Quick Checkout can be marketed to the almost 50 million consumers who use AOL's brands every month - representing 70 percent of all those who use online services or the Web - will help boost its adoption.
MSN has similar aspirations for Passport, the wallet technology it plans to release this quarter that lets consumers shop with one click at any Passport-enabled site. So far, MSN has announced that just eight third-party sites, including Food.com, iGo.com and SkyMall.com, will accept its Passport. MSN is banking on its name and help from Microsoft's other online properties to get the word out on its wallet, says Margie Miller, a product manager for Microsoft's Consumer and Commerce Group.
As part of its Yahoo! Shopping service, the portal's 65 million users can now sign up for a new Yahoo! Wallet - introduced last week - that automatically fills out the purchase order each time they check out from one of the more than 6,000 merchants it hosts on its site. Yahoo! says consumers can use the Wallet, and its Express Checkout feature, to purchase from among the 3.75 million products, categorized in 17 categories, at its site.
Amazon.com, meanwhile, is banking on its image as an e-etailer dedicated solely to shopping to push it ahead of its competitors. And retailers don't discount the power of its brand. "Anyone who's ever shopped online has shopped at Amazon.com," says Tom Graham, founder of online office supplies provider AtYourOffice.com. The year-old start-up was one of the first to sign up as an Amazon.com zShop.
"Customers are asking for convenience in terms of checkout. To some people, it's a universal wallet. To others, it's speeding up the checkout or providing one-click ordering," Graham says. "From a retailer's perspective, Amazon.com's 1-Click is pretty compelling. It doesn't let the consumer get away, and they've got 12 million consumers already."