Amazon Gets Into Subscriptions: What Does This Mean For Zuora?

By Aarthi Rayapura June 11, 2014

 

Gabe Weisert

Content Marketing Manager

 

 

Amazon recently announced that it hopes to manage third party subscription payments for a variety of services, including music streams, grocery deliveries, car services, even phone bills. Clients will take advantage of the company’s 240 million credit cards on file, and Amazon will charge a small transaction fee.

 

Expect to hear more mobile payment details on June 18th, when the company roles out its new sci-fi smartphone.

 

Most of the press coverage of the announcement has focused on Amazon’s threat to PayPal, but we also think Amazon is cannily responding to vendor dissatisfaction with iTunes. Because while revenue management is a sensitive issue, customer data is downright fraught.

 

No one is happy with Apple’s thirty percent iTunes cut, particularly larger brands with mature distribution channels. For weekend app hobbyists the value proposition makes a little more sense: Apple provides access to a thriving online marketplace, and handles a variety of tax and compliance issues. But it’s the complete and total lack of customer visibility that drives everyone nuts.

 

As the media industry has known for decades, customer data is the golden egg of the Subscription Economy. Consumer preferences are crucial in establishing long-term recurring relationships that save both vendors and clients an inordinate amount of time and money. This is the targeted information that helps avoid brain-dead promotional offers and stupid up-sell pitches.

 

Amazon gets it. Their vice-president of seller services Tom Taylor makes pains to point out that the only details collected by Amazon as part of the new service is the dollar amount of each transaction, and not any “item-level information.”

 

Both Apple and Amazon enjoy sterling reputations in terms of platform and revenue security, but only one of them is giving their third party clients the golden egg they need to grow and sustain their subscription businesses.  Of course e-commerce startup have all all sorts of reasons to be wary of Amazon, but at least they’re not offering the Cupertino deal: access for information.

 

What does this mean for Zuora, as the market leader in the subscription billing space? We’ve been talking about subscriptions for seven years. It’s always validating to see yet another major corporate vote in favor of subscription business models (we’re looking at you, Microsoft Windows).

 

And while we always sleep with one eye open, most of the competitive thrust seems squarely aimed at PayPal, iTunes and relatively straightforward subscription vendors, not comprehensive enterprise solutions with sophisticated installation processes. Our Z-Business Enterprise 9 solution currently supports 34 different global payment gateways from around the world – we look forward to working with the new one from Seattle!

 

Free Download: The Nine Keys to Building a Successful Subscription Business