One of Amazon’s core leadership principles is “customer obsession”. Determined to create the best possible outcomes for their customers, the company’s products and services have evolved and diversified drastically throughout its twenty-eight-year history. Arguably, one of its most notable and profitable product innovations is the launch of its financial service offerings.
A non-financial organisation, like Amazon, integrating a financial product or service into its customer experience, journey or platform is known as “embedded finance”.
Although you may be unfamiliar with the term, you’re likely using embedded finance in your day-to-day life already. If you’ve ever used Uber’s in-app payments, or used a buy now pay later service at checkout with a retailer like ASOS, you have accessed financial services through a non-financial institution.
Embedding finance is highly lucrative and the embedded finance market is expected to surpass $183 billion within the next four years.
The opportunity to make the most of embedded finance is rapidly growing, and major brands like Amazon have been doing so for years. Their introductory payment product, Amazon Pay, launched to the public in 2007. Amazon Pay allowed external merchants to partner with the tech giant, such that Amazon account holders could purchase the products and services of these merchants using the payment details already saved on their Amazon account.
Whilst this appears to be a relatively simple product diversification strategy, Amazon capitalized on the burgeoning consumer appetite for a frictionless payment experience by offering their customers the opportunity to avoid re-entering their card details and answering arduous security questions across multiple sites.
The impact of Amazon Pay, the beginning of Amazon’s embedded finance strategy, is multi-layered. The incorporation of this payment service into Amazon’s existing product portfolio widened the spectrum of their revenue potential whilst simultaneously fortifying their relationship with their existing customer base.
By offering a convenient, trusted method of payment for their customers across multiple different sites, Amazon solidified its position as an easy-to-use, trustworthy payment platform thus supercharging consumer brand loyalty with phenomenal vigour.
Fast forward sixteen years and Amazon’s trajectory of creating better outcomes for its customers through the expansion of its product portfolio is showing no signs of slowing down. Amazon now offer embedded finance solutions including one click payment methods, buy now pay later, lending services and much more to better serve their customers – all whilst maximizing their opportunity to earn high profits whilst doing so.
The conglomerate’s latest financial service venture is that of its cash advance program. Through their recent partnership with fintech company Parafin, Amazon are offering select sellers the chance to access capital to accelerate the growth of their businesses on the eCommerce platform.
The service gives businesses quick access to cash with “no interest, no late fees and no personal collateral required,” according to Tai Koottatep, Director and General Manager of Amazon’s Worldwide B2B Payments and Lending arm, on LinkedIn.
But embedded finance is not wholly reserved for tech giants with seemingly boundless reserves of cash and resources. If you, like Amazon, are gunning to optimize your customer experience, bolster your consumer relationships and maximize your revenue potential, you too can take advantage of the embedded finance.
Want to learn more about how Etsy, eBay, Vodafone, Marks & Spencer, TikTok, WeWork, Expedia and more are doing so? Make sure you don’t miss our Embedded Finance & Super-Apps event series [16th May, London and June 20, New York] where leading experts will be exploring the opportunity of embedded finance and revealing just what steps you must take to grab it whilst it’s hot.
