The 800lb supply chain gorilla continues to disrupt with payment services

Amazon announced today it was going to jump right into the deep end when it comes to physical, in-store payment systems. They have unveiled a mobile payment service for brick and mortar stores. Taking direct aim at other mobile POS systems – Square, Paypal as well as Google and Apple. From the reports, Amazon will look to undercut other mobile payment systems – taking 2.5% of transactions versus 2.7% for the likes of Square – to grow their market presence. They are giving merchants an introductory rate under 2% to build that beachhead (feels like a credit card invitation – 0% APR and then only a slight bump to 33%).

In the online world, Amazon already knows how to handle and secure credit cards. They are also well versed when it comes to mobile payments as their iOS and

Coming to a brick and mortar store near you...

Coming to a brick and mortar store near you…

Android apps’ success has demonstrated. The natural progression was to push into the brick and mortar space – where 90% of retail transactions live. In the near term I am not sure that Amazon will do more than offer a secondary maybe even tertiary option. Brick and mortar retailers could view the Amazon system as letting the fox into the hen house. It would be understandable if these brick and mortar players do not flock to embracing Amazon and their payment systems. But I am sure that the favorable financial set up will force a large number of players to give it some serious consideration. Whether or not Amazon is widely successful with this venture is secondary to what the eCommerce 800lb gorilla is doing with regards to their overall supply chain disruption.

A quick look at what Amazon has been doing to become the 800 lb gorilla in supply chain:

  • Acquired Kiva Systems to add sophisticated robotics and automation to their massive distribution centers.
  • Gobbled up the likes of fabric.com, CDNow, Zappos, Pets.com to constantly expand their ability to offer a wide array of inventory.
  • Pushed out a tablet and now a mobile phone under the Fire umbrella. Both of which are really hand held sales terminals for Amazon to leverage.
  • Started pushing last mile grocery delivery in certain markets with their AmazonFresh offering.
  • Even leaking that they are thinking of delivering via drones.

This is in addition to their deep experience in the online retail world. Taken together and you have the 800 lb gorilla that is disrupting the supply chain jungle. Add to this the news of them pushing into the payment space and you see Amazon gaining access to POS data from brick and mortar, coupled with all the data they have on consumer online buying. Amazon is quickly aggregating vital data sources on how consumers buy, where demand is being generated and how it impacts the retail supply chain.

So now Amazon is dabbling in last mile logistics, continually working on more efficient warehouse management, putting portable POS systems in consumers’ hands and now putting POS systems in the retailers’ hands.

That 800lb gorilla might have added another 50lbs of lean muscle.

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Filed under Current Events, Mobile payment, Retail, Supply Chain

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