Amazon makes a bold move on the UK appliances and furniture market, as its customers can now access loans in order to buy more expensive products straight from the website.
The installment scheme from the world's biggest online retailer applies to orders over £400 ($587), and customers may combine a number of products to reach that limit.
The financial flexibility that comes with Amazon Pay Monthly is a red alert to retailers such as John Lewis, which could see a consistent number of customers migrating toward Amazon. The company offers the loan at an advertised rate of 16.9 percent, and clients are able to return it over two, three or four years. The refund time depends directly on how big the purchase is.
It is worth noting that clients who opt for this payment method do not have to pay a deposit, as Amazon UK considers the first payment as the opening monthly installment. However, not all products found on the e-retailer's site fit the grade for the loan. More specifically, items that are sold by third parties do not benefit from the offer.
Voices familiar with the matter said that Amazon's new strategy has the potential of being a "gamechanger."
Hitachi Capital Consumer Finance will be in charge of the retailer's loan services. In an ironic twist, Hitachi Capital also offers financial services to John Lewis. In comparison with Amazon, clients of John Lewis may take furniture credits with zero interest.
Clients receive the pay monthly option at the checkout page on Amazon's website under a comprehensive list of payment methods. Buyers may apply for a credit, which determines if they are eligible or not for the loan.
"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 told The Guardian.
A leader from Hitachi Capital underlined the importance of the cooperation between his company and Amazon.
"Our new trial with Amazon is all about giving people the fastest and most seamless experience when it comes to point-of-sale credit," Hitachi Capital managing director, Gerald Grimes, also noted for The Guardian.
Grimes explained that the advantageous payment method allows users to shortcut through the purchasing process, saving time and effort. The fact that customers remain on Amazon's site means less hassle for the client and more money for the two companies.
"Amazon is famous for its '1-Click' service, allowing you to place an order literally at the click of a button with pre-stored payment details and delivery addresses," Grimes pointed out.
This upgrade to customer experience heralds the changes that the online retailer is going through.
Amazon Pay Monthly is only one in a series of customer-care initiatives that the company implemented during the last year. One-hour delivery for thousands of products in major cities is another example.
Furniture and home appliances are not the only markets that Amazon has its eyes on. Supermarkets should be on alert, as Amazon aims to increase its number of grocery items in 2016.
Amazon Pantry started in November 2015 and lets clients take their pick from 4,000 grocery and household products. Using the service, household items can be sent to your address in no time, and the delivery fee is only £2.99 ($4.40) for a large box.
Christopher North, managing director of Amazon UK, confirmed that a lot more products will make it into Amazon Pantry this year.
Due to its increasing popularity and services, Amazon reached a new record in orders on Black Friday 2015, amassing 7.4 million orders. In 2014, the global retailer scored 5.5 million orders on Black Friday. At this rate, 2016 should yield even more impressive results.
