Amazon has taken a leaf out of Paytm’s playbook and is piloting what it calls Amazon Smile code to extend its mobile payments offering to offline merchants. A quick response, or QR, code, it will allow users to scan and make payments at the store, or even get the products delivered.
“We are introducing Amazon smile code, a new way for our customers to shop and pay at physical stores,” said an Amazon spokesperson. “Customers can use the Amazon app to scan the code and discover the product, read reviews, ratings and buy the product with Amazon Pay.”
The Smile code was quietly displayed at the Amazon Home in Delhi’s Defence Colony area, where the e-commerce giant showcased its home collection — from beds to wardrobes, dining tables to sofas and recliners, clothes to cutlery, and appliances.
Some products in the house had the Smile code, which could be scanned to order the product from Amazon, which would be delivered in a couple of days. The Smile code is in pilot mode, said the Amazon spokesperson.
QR codes were made popular by Paytm as the Noida-headquartered company planted codes in more than five million retail stores, tea-stalls, milk booths, toll stations, and petrol pumps. It became an instant hit among users as code scans crossed 100 million by the beginning of 2018. The transactions were small and large, and Paytm offered cashbacks to keep the users hooked.
Soon, MobiKwik, Paytm’s biggest domestic rival, started putting up QR codes, too, and touched two million merchants. The government unsuccessfully continues to push the use of QR codes through its interoperable BharatQR. Google Pay offers what it calls audio QR, which uses sound waves to pair two devices to transfer money. In 2017, payments provider Visa and BillDesk got on to the QR code bandwagon.
The QR playbook
Paytm* one of the earliest internet companies in India that has successfully used QR codes in India. With the rise of smartphones, using the camera to scan a QR code pasted on a sheet of paper on the wall was the easiest thing to do. If it was a product the QR code had the price, and if it was the QR code assigned to the shop the price had to be keyed in. Nonetheless, the process was nearly as fast as exchanging cash if you had money stored in your wallet.
“Paying using a QR code is much faster,” said Upasana Taku, co-founder of MobiKwik, in an interview earlier. “It just takes five to seven seconds.”
She added that there weren’t enough point-of-sale machines that allow electronic payments. In the beginning of 2018, according to the Reserve Bank of India, there were just over three million PoS devices deployed in India. If it comes to QR code payment any smartphone can become a PoS device.
“Paytm has proven that QR code works,” said Mohammad Imthiaz, co-founder and CEO of Quick Digital Technologies, a supply chain and logistics company. “But, Amazon will have to see how it will deal with the offline merchants if there are three codes by three different companies hanging at the merchant’s shop,” he said. Imthiaz, in a previous avatar, founded Hoppr, a commerce and couponing venture acquired by Hike Messenger.
Amazon wants more and more people to continue shopping inside its network by making payments an integral part of it. “Customers will soon find Amazon Smile codes in retail stores, neighbourhood stores where they can scan and pay for their purchases seamlessly,” the spokesperson said.
The Guide Shop Model
For example, in the US, where Amazon also has a physical presence with its Whole Foods acquisition, it uses the QR code to offer heavy discounts. Prime users in America can connect their membership in the Whole Foods app and can avail deals at checkout, exclusive only to Amazon customers. In India, Amazon has tie-ups with Kishore Biyani’s Big Bazaar and More (earlier owned by the Aditya Birla Group).
With Smile codes, Amazon wants to converge physical retail and e-commerce. Retailers, who wish to sell online, will not have to think about inventory, supply-chain and logistics, and collecting payments. These stores can provide the experience of the product, much like products showcased in the Amazon Home in Delhi. Amazon doesn’t want retailers to worry about stocking — they can turn their shops into areas that would capture the imagination of buyers, who can then scan a product and have it delivered home. Of course, the profits will be split.
The biggest problem with e-commerce has always been that the buyer cannot touch and feel the product before buying. “People like trying the products before buying… Shopping is an experience,” said Imthiaz, adding few enjoy carrying shopping bags home.
Amazon wants to allow both — pay using the code and carry the goods along with yourself, or order it on Amazon and get it delivered home. In both the cases, the buyer will be eligible for a good deal.
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Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures, Vijay Shekhar Sharma, Jay Vijayan and Girish Mathrubootham among its investors. Accel Partners and Blume Ventures are venture capital firms with investments in several companies. Vijay Shekhar Sharma is the founder of Paytm. Jay Vijayan and Girish Mathrubootham are entrepreneurs and angel investors. None of FactorDaily’s investors has any influence on its reporting about India’s technology and startup ecosystem.