Once upon a time it seemed that Amazon could have been destined to be that rare company that could do no wrong.
With a singular focus on providing the best value for consumers the company conquered the book selling market, forcing one major retailer, Borders, out of business and putting the other big national chain, Barnes & Noble, on the ropes.
The past few years have seen Amazon spreading its wings into making a wide variety of hardware: e-readers, tablets, and recently phones and set-top boxes. All of this to create a seamless distribution chain for digital content. Yet with every foray into new territory Amazon has come up against established competitors who have been able to deliver more polished user experiences. The ability to deliver content on the cheap hasn’t turned into big buzz.
This week Amazon entered another messy market: the contentious mobile payment space. They’ve brought their usual tactic–undercutting the competitors on price–but they’re entering the game at a turbulent time, one that may prove to be too late to make the impact the increasingly under pressure to be profitable company needs.
The new mobile payment solution is called Amazon Local Register, and the intended customer is small business people. Early adopters will get a cut-throat 1.75% per transaction rate which will be locked in until Jan 1, 2016. After that the price will rise towards something closer, but still under that of competing services like the first-to-market Square.
The rates are great, but the service is being met with skepticism because of the source. Amazon is known for playing hardball with suppliers: they’ve been engaged in very public battles with the publisher Hachette and the Walt Disney Company this summer. While small businesses use Amazon as a supplier themselves, there is fear that the retailer will use data collected from customers, or gleaned from patterns of transactions, to target consumers directly.
Given that Amazon continues to develop same-day delivery and their Amazon Fresh food delivery service these fears are far from irrational. This is a company that has never shied away from taking on roles—publisher, television producer—that its partners have traditionally played.
However the fear of being muscled out is not the only thing that may keep Amazon from breaking through in the mobile payments business. The field is exploding with activity right now, in part because first-to-market leader Square has not done a great job of sewing up the space.
The current battlefield is in food delivery and restaurant transactions. Square just acquired high-end restaurant delivery service Caviar, while go-to reservation service OpenTable has expanded an experiment in mobile transactions to New York City.
The later is interesting in light of Square’s development of an appointment system which is apparently aimed at hair dressers and the like, but it takes little imagination to see how this could be expanded to directly compete with OpenTable.
Here we’re seeing a pitched battle for creating not just a payment solution, but an end to end user experience from booking to payment to inventory control which benefits both consumers and business owners. One that is simple and secure, a major issue in light of all the credit card security breaches in the past year.
In all of its attempts to make an impact in the digital device space Amazon has been slammed hard by critics for not getting the user experience right. That’s the kiss of death in this battlefield, where stability and ease of use are the determining factors for success.
Amazon, of course, brings its legendary patience and deep pockets to the table. Unfortunately for Bezos and company both the patience and the pockets are tied to the whims of Wall Street, which might not have much more of a stomach for the online retailer’s habit of tilting at windmills, even when the markets are giant-sized.