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Amazon UK Lets Customers Pay in Installments

By Richard Adhikari
Jan 5, 2016 10:18 AM PT

Amazon UK recently introduced a monthly payment plan -- Pay Monthly -- for customers who purchase products it directly sells and ships.

The offer doesn't extend to third-party retailers' products on its site.

Customers whose order, including shipping and taxes, totals Pounds 400 -- about US$586 -- are eligible for the program.

Hitachi Personal Finance will provide and administer the credit and payments, and customers have to apply to that company for credit.

"The new Amazon Pay Monthly program provides our customers with further payment options to suit their needs when shopping on our website and it is easy, convenient and offers competitive rates and flexible terms," Amazon UK spokesperson Tom Parker told CRM Buyer.

How Pay Monthly Works

Customers can select "Pay Monthly" from among the payment options presented to them online.

They have to fill in Hitachi Personal Finance's credit application form and will get a response within one minute. If they're approved, they accept the credit agreement and place their order.

Purchases will carry interest of 16.9 percent APR. Customers will have, under European law, a two-week cooling-off period during which they can change their minds.

The first payment will be due 30 days after the dispatch date of the final product in the order, and payment will be made in fixed installments.

Credit card payments will carry a further interest charge of 2.5 percent of the amount of the payment, but there will be no additional charges for paying by debit card.

"Amazon has been uber-successful [because] it wraps a whole lot of convenience around the purchasing process," remarked Andreas Scherer, managing partner at Salto Partners.

Pay Monthly "is a logical extension of this value proposition," he told CRM Buyer. "This service will make it easier for certain consumers, such as impulse buyers, to agree to a purchase."

Other Benefits for Amazon

"This is another experiment by Amazon to increase sales and loyalty," said Matt Chosid, CEO at PriceLocal. "On the margins, Amazon will increase sales by extending credit."

Further, Pay Monthly "would be another benefit Amazon gives itself so that consumers prefer its own products to Amazon Marketplace products, while it collects advertising fees and gets access to sales data by hosting Marketplace sellers," he told CRM Buyer.

Restricting Pay Monthly to products sold and shipped directly by Amazon will not hurt the retailer because it sells and fulfills "millions of items," Chosid contended.

Killing Off the Competition

Amazon dominates the online retail market in both the United States and the UK.

Sixty percent of the 200 online retailers polled in the two countries said Amazon generates the greatest sales volume of all the online marketplaces they sell on, according to ChannelAdvisor's 2015 Online Retail Survey.

In the U.S., 70 percent of retailers said Amazon drives the most sales; in the UK, the figure is 50 percent.

That dominance is a cause of concern for 48 percent of the respondents.

Pay Monthly will make things worse for smaller retailers, who will not be able to offer credit in response, Chosid said. The larger retailers already do so.

Coming to America?

Amazon UK's Parker declined comment on whether the company plans to roll out Pay Monthly in the United States or other countries.

It already has a co-branded credit card program in the U.S., Chosid pointed out. Further, access to unsecured credit for purchasing consumer goods "is widely available in the U.S."

However, he said, "depending on the underwriting standards, this could be brought to the U.S. and would likely further extend Amazon's sales."

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

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