This week in payments: Amazon, Peloton, BNPL

With news that Amazon is winding down its Amazon Care healthcare initiative, Peloton’s pivot to a more open ecosystem for its app and content and an optimistic outlook for the beat buy now, pay later sector seeing the light at the end of the tunnel (it’s not a train) is a mixed bag of upside-down activity asking for a shot of clarity in what has been a strange week.

This is in addition to the hunt for deals and other offers as consumers abandon high-end brands and favorite retailers seek to stretch dollars rapidly losing purchasing elasticity.

Subscriptions are a way for brands and merchants to lock in spending and loyalty at times like this, as President and CEO Brian Bogosian said, joining Karen Webster of PYMNTS to discuss this and other news in the latest episode of “This Week in Payments.”

Farewell, Amazon Care

This week saw the surprise announcement that Amazon will close its Amazon Care division, founded in 2019 as an employee telehealth benefit that the e-commerce giant has decided to expand nationwide. But with its acquisition of One Medical for $3.9 billion, it looks like Amazon is buying into a more scalable model. One Medical charges an annual fee of $199.

“As we learn from Amazon Care, we will continue to invent, learn from our customers and industry partners, and hold ourselves to the highest standards while helping reinvent the future of care. health,” Neil, senior vice president of Amazon Health Services. Lindsay said in a note shared with The Wall Street Journal and other media.

On this point, Bogosian sees the massive healthcare industry as (ahem) the top pick for subscriptions. He called Amazon’s One Medical movement “a very smart way to provide coverage for people, and I think that plays into not just the healthcare segment, but all the adjacencies around the products needed to support the people in the health care field who are also available. on the same platform. They will be able to create interesting bundles.

Read more: Amazon is ending Amazon Care as it bolsters healthcare services

Peloton pushes open ecosystem

Embattled Peloton is moving straight to the ship — or stationary bike, if you prefer — with CEO Barry McCarthy telling analysts during the company’s fourth-quarter earnings call on Thursday (Aug. 25) that stratified pricing giving prioritizing subscriber growth over hardware sales is the new focus.

McCarthy acknowledged that about half of Peloton’s customers use its fitness content on non-Peloton hardware. “I would love for you to use our content on someone else’s gear that you have already purchased. That’s the big installed base and I think that’s a big monetization opportunity for us and we’re going to be looking at that segment,” he said.

Bogosian cut to the chase saying, “Hardware is a long-term loser. Moving to a software-agnostic position will likely be the right thing for them. It reminds me a lot of Blackberry. You had these devices and in the end it was the software, and the software on Android and then iOS obviously killed that business.

He said to expand “I think it’s going to be very important that they build other bridges and alliances, and I don’t think Amazon is the answer or even close to being the answer for them. They’re going to have to find other significant distribution channels where their software and content can be meaningfully leveraged” and reposition the business model.

Unsurprisingly, Bogosian said for Peloton, “It’s all about subscriptions. They need to grow that customer base, and a significant portion of those customers – eventually the majority – will be equipment independent.

Read more: Why Peloton’s Biggest Problem Isn’t Gear

food for thought

As food prices rose throughout the first half of the year, consumers got creative to find the best bargains. Surprisingly, some of these deals found restaurants beating the grocery store.

Based on a survey of 2,669 U.S. consumers, PYMNTS’ August report, Digital Economy Payments: Consumers Buy Into Food Bargains, found that consumers were generally dining out less compared to the previous month, dropping from 72% to 70%.

But millennials on the bridge who made restaurant purchases rose from 72% in June to 74% in July, while the percentage of millennials rose from 71% to 72%, “responding to the fact that prices restaurants, especially limited menu or fast food service prices, has increased at a much slower rate than grocery store prices, meaning restaurants can be an affordable and convenient option.

All of this is a reflection of the tough economic road ahead of us, Bogosian said. “Inflation rates are still bad and interest rates continue to rise. I think we’re going to be doing hard luge for the next year or two. Businesses must be prepared to continue to run their business profitably and maintain [against] longer-term headwind. I don’t see anything that can prevent this.

Get the study: Payments in the digital economy: Consumers buy into food bargains

seek to assert oneself

Although it got crowded premarket trading on Friday after reporting its fiscal fourth quarter and full year results on Thursday (August 25), behemoth Affirm, buy now, pay later, still posted an increase of 31% of transactions compared to 8% a year ago. and PYMNTS research finds that more than 46% of baby boomers and seniors and 71% of BNPL users with incomes over $100,000 have increased their use of BNPL in the past year.

“I think we’ll see a bit of a push back in there, but it’s an important tool for traders to use to get people in,” Bogosian said, though he sees big changes down the road.

As for the outlook, he said, “The rapid growth of this sector is also sure to cool. Affirm has released some good numbers, so hopefully they’ll continue to do so here in the coming quarters,” but he sees BNPL becoming “a feature within e-commerce platforms rather than a standalone product. You will see that it is going to be difficult for these independent companies to buy now pay later to capture a significant market share because those who control the checkout with the merchants are going to come up with their own flavor, their own version of the solution.

Get it now: Buy Now, Pay Later® Tracker



About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.

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