Amazon.com Inc. has been able to seal support of the millennial shoppers, their parents and most of their grandparents. However, the largest e-commerce firm in the world has not been able to tap one group of potential customers.
A big challenge to Amazon is posed by teenagers who are also known as Generation Z. This is because they overwhelmingly tend to like to go to a physical store to purchase things compared to purchasing online, as well as they do not have bank accounts and do no town plastic cards.
However, Amazon apparently has an answer. Sources said that the e-retailer wants to introduce a system of payments similar to checking accounts and it is in talks with banks including JPMorgan Chase & Co. and Capital One Financial Corp. for development of the product. The aim of the move is to be able to allow those people who do not own a card – the teenagers, and make the accounts customized to suit their needs, said media reports citing sources with knowledge of the matter.
“The sooner you can start collecting information on them, the better prepared you are,” said Tim Barefield, a managing director at the consulting firm Kotter International. “For Amazon, it’s another way to expand their brand. Their brand is reaching out every place that their tentacles can reach out to.”
This measure by Amazon potentially recognizes the assumption that teenagers could be made life long customers even before they venture out of their parent’s home through digital accounts for minors.
And amazon apparently knows all about the life cycles of its users. Discounts on diapers and baby food is given to new parents. Amazon Prime memberships are given to college students at discounted prices, free shipping and access to streaming video is also given so that they are able to become loyal customers and remain so even when they earn enough to spend more.
A pseudo-debit card called Amazon Cash was started by Amazon because many young people don’t qualify for credit cards. That card allows young shoppers to drop off money at drugstores such as 7-Eleven Inc. and CVS Health Corp. and later link it to an Amazon wallet for online usage.
Even though the company noted a 31% increase in revenues in 2017 at $178 billion compared to 2016 and reported an almost 2,500% increase from 2004, when it was a relative newcomer into the industry., the company still wants to stay at the top of its earning capacity.
Typically, parental consent is needed for children under the age of 18 to sign up for a bank account. monthly service charges and overdraft fees are often associated with checking accounts for high school students.
Therefore, according to Stuart Sopp, chief executive officer of Current, a startup that offers debit cards to teens, Amazon has the opportunity of enhancing the banking experience.
“I’m sure Amazon is scaring the hell out of every single regional bank and credit union right now,” Sopp said. “The banks have very clearly not serviced these demographics, so there’s opportunity.”