In an apparent effort to capture more spending from teenage shoppers, Amazon has unveiled a new service that makes it easier for parents to fund their kids’ online purchases.
Launched quietly in the past month, Amazon Allowance gives parents and guardians the ability to add funds to an Amazon Gift Card that their children can use to purchase products on Amazon.
According to the company “it’s an easy way to fund shopping on Amazon without sharing your account or credit cards.”
Funds can be added on a one-time or recurring basis and there are no additional fees associated with providing or using Amazon Allowance. Funds do not expire.
The future of allowances?
As Bloomberg’s Spencer Soper notes, the gift card market is expected to be worth $14bn in the United States in the next two years, and major retailers are vying to ensure that they’re well-positioned to get a piece of the action.
Amazon, which sells millions of physical products as well as digital content, is obviously one of the retailers with the most to gain or lose.
While Amazon Allowances can be used by anyone aged 13 and up, and looks to be a good solution for parents helping their children with college purchases, the service’s name suggests that the company is targeting teenage shoppers. This makes perfect sense: if Amazon can establish loyalty with this segment, it could be a huge boon for Amazon’s business going forward.
But can Amazon Allowances really change the traditions around allowances?
Instead of giving kids cash for chores completed, will large numbers of parents really choose to deposit funds into an Amazon account instead?
Perhaps not, but Amazon’s capacity to change the way consumers shop and think about shopping shouldn’t be underestimated.
Case in point: Amazon is now allowing independent merchants to participate in its Prime two-day shipping program, potentially increasing by millions the number of products Amazon customers can have delivered to their doorsteps in just a couple of days.
If this initiative works out and is expanded more broadly, it could be a game-changer for Amazon.
So even if Amazon Allowance doesn’t immediately become a mainstay of American teenage tradition, as Amazon innovates in other areas, it’s not hard to imagine a day in which Amazon becomes the virtual mall for young digital natives, making Amazon Allowance a more appealing option for parents.