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How To Take Advantage Of The 1-Click Payment Patent Expiry

By: Duncan Licence

The patent for Amazon’s 1-click payments has expired. This article examines how online retailers can take advantage of this golden opportunity.

  • Optimise for mobile
  • Bear security in mind
  • Ensure you store enough delivery and pamyment preferences

The background

Many of us have enjoyed the benefits of Amazon’s 1-click feature - the ultra-simple part of Amazon’s checkout process that allows customers to make a purchase with a single click by using payment credentials and delivery information already stored with the online giant.

Customers don’t have to repeatedly enter their details, or make different delivery choices every time they make a purchase, and if they are using Amazon Echo, they can buy what they want with a single voice command.

Amazon was granted a US patent on 1-click twenty years ago and, although estimates vary, over the ensuing period, it is assumed that it has made the company many billions of dollars in revenue. The patent, however, has run out.

There have been many challenges to the patent over the years, and much controversy. It was granted when ecommerce was in its infancy, and many commentators have since expressed incredulity that its application was successful, particularly given that it focused on a business concept, rather than a new technology. It is clear, however, that this patent has given Amazon an advantage over other online retailers.

In a recent radio interview, Robert Stoll, a former commissioner for patents who was at the U.S. Patent and Trademark Office at the time, said: “A lot of improvidently granted patents were issued in the financial services business method area, which caused a lot of concern and, in fact, a lot of problems.”

Challenging Amazon

Perhaps one of the most well-known challenges came from US bookseller Barnes & Noble in 1999. It employed a feature that allowed customers to make repeat purchases by clicking on a product. Amazon sued, and won, and the court order requiring Barnes & Noble to change its processes hit in the middle of the busiest shopping period of the year, Christmas.

Since then other retailers, including Apple, have been able to take out licences on the patent from Amazon. The sums they have paid are high, which tells us everything we need to know about the massive advantages of a 1-click checkout option.

Amazon has undoubtedly prepared for the end of its patent. It is busy expanding its ecommerce interests into logistics and fulfilment where it can streamline its valuable delivery services, but for all other online retailers, the ability to add 1-click to their checkout processes is a golden opportunity.

This goes for European retailers and brands too. Whilst the patent was only granted in the US, and Amazon’s many European applications were never approved, ecommerce has since evolved into a global sector where borderlines are blurred. As such, Amazon’s influence on all territories has been hefty enough to deter merchants from other countries from using 1-click processes. That US patent has, by default, been applicable across the world.

Shopper habits

Consumers like their purchase process to be easy. If they are stalled at the checkout by having to input payment details or make delivery choices when they have already gone through the process repeatedly, they are likely to abandon checkout entirely.

Amazon has maximised on this, but Apple also knew that the success of iTunes would depend on easy buying. More recently services such as Uber have taken this a step further and removed any physical payment method, relying instead on a back-end POS service.

The best retailers are constantly perfecting processes in order to enhance the customer journey. They know that simplicity doesn’t lessen the need for security, but if a customer is confident that their payment details are secure, they will reward a retailer’s straightforward buying procedure with their loyalty. Easy checkout also encourages a higher level of impulse spending and removes basket abandonment entirely.

When it comes to mobile, the 1-click process has particular resonance, being easier to activate when a customer is on the move, waiting or in a hurry. According to the PwC Total Retail survey for 2017, while shopping via PC has become less popular over the last five years and shopping by tablet has been relatively flat, shopping via mobile has been climbing steadily.

Tellingly, when asked, 37% of the global survey respondents said that they had paid for purchases using their mobile or smartphone, just behind the 44% who researched products, or the 38% who compared prices with competitors. The likelihood is that mobile use will also encourage a higher level of impulse purchasing, which will be further enabled through a 1-click feature.

Getting prepared

For retailers to take advantage of 1-click and introduce the virtually frictionless checkout process does mean some technology changes for their ecommerce sites. One of the most important aspects to this is ensuring they understand the right delivery option for each customer who signs up.

Currently, the majority of retailers and brands choose to offer a range of options that meet their customers’ needs at that time. This is an essential part of the eCommerce offer, enabling customers to select next-day delivery to their home for one order and delivery in-store for another, decisions they make based on cost and convenience.

By adding a 1-click option, merchants will be default the delivery options and standardising price, but this doesn’t mean that the customer will have no choice, it simply means that they will have certainty.

To get this right, retailers need to have a handle on the preferred delivery option for each customer who signs-up, which is where data comes in. Solutions are available that can help merchants to analyse the choices that their customers make, whether they relate to the price they are prepared to pay or the range of delivery options that they use.

Conclusion

Implementing 1-click without identifying customer habits in advance is like putting the cart before the horse. Today’s retailers have had years to collate data on their customers and are already using it to create highly personalised shopping experiences.

The same approach now needs to be taken with their purchasing and delivery preferences, so they can provide an accurate delivery choice from the point of order to the moment they click to buy.

The likelihood is that most retailers and brands will introduce a 1-click option. Why would they not when the benefits are so clear? So, the real issue now is who can do it most efficiently, and who can get it right and meet the discerning demands of their customers? As usual, Amazon set the bar, everyone else now has to match up. 

 

By: Duncan Licence - VP for Global Solutions at MetaPack

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