Amazon Payphrase

Online payment system
Amazon Cemetery
GENERAL INFORMATION
Category:
e-Commerce
Started:
2009
BUSINESS FAILURE
Cause:
No Market Need
Closed:
2012

Description

Introduced in 2009, Amazon PayPhrase was a system that simplified payments and speeded up the checkout experience on Amazon and other major retailers by enabling users to make payments using a chosen phrase. Amazon PayPhrase kept a record of users’ credit card information and shipping details which could be utilized upon entering the chosen phrase. The idea was to reduce cart abandonment by removing friction in the web store checkout experience. Because of this, apart from Amazon, Phrase was adopted by clothing brands like DKNY, Jockey, and  Patagonia along with the electronics website Buy.com.

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Cause of Failure

After almost two and a half years since its inception, Amazon decided to shut down the PayPhrase service. When asked for a reason, an Amazon spokesperson vaguely explained that the company had learned a lot from PayPhrase about their customers’ checkout preferences and these lessons were going to be applied to other features on Amazon.

While Amazon had never revealed how many customers actually used the service, many people surmised that the adoption rate might have been low. Clearly, customers didn’t find the phrase approach to be more convenient than simply entering their usernames and passwords.

Another functionality of PayPhrase, which gave users the ability to delegate buying authority to others, was also not a revolutionary idea. Many other platforms had already been implementing it so there was no real need for the service.

Despite PayPhrase being a flop among consumers, businesses found it to be a useful tool as its multi-user feature allowed different users to register over 20 different phrases in the same account (useful for different people making purchases from the same business account). However, Amazon later on created its own Purchase Delegation service which was better suited for this purpose. On their purchase delegation homepage, Amazon explained that PayPhrase was not created for work-related purchases made by multiple people from the same account, and recommended businesses to use their Purchase Delegation service instead.

Due to the dissatisfaction of consumers with PayPhrase and a better solution already available to meet businesses’ needs, Amazon must not have seen any market need for PayPhrase to continue.

References

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