Online retailing giant Amazon.com launched what it calls the online equivalent of a department store credit card, without the actual card – a private label virtual card product called the Amazon Credit Account.
Interest rates at launch are an APR on purchases of 22.90% percent, with a rate for those who default on payments escalating to 26.90 percent.
The Seattle-based company, which has been struggling to get its stock price out of the cellar despite its predictions of pro forma profits in the fourth quarter, launched the new credit product with a “no payments for 90 days” promotion.
Making an effort to reach recession-weary shoppers, Amazon touted the credit offering as “the solution for holiday shoppers” and also said it “may make it possible for people without a bank card or credit card to shop online at Amazon.com.”
Amazon stock closed Thursday at $6.95; its 52-week high is $40.87 and the low is $5.51. The company recently posted a pro forma loss of 25 cents per share for the third quarter. It also said sales are expected to be between $950 million and $1.05 billion, but pro forma operating losses are expected to be between 5 percent and 8 percent of sales.
The “no payments” promotion is good on orders over $200 placed through Jan. 31.
The private label Amazon Credit Account product is made possible by Citi Commerce Solutions, a division of Citibank Cards. Financial arrangements were not disclosed.
Meanwhile, Amazon executed on its retailing agreement with Target stores and began selling merchandise from the discount store chain this week. The new offerings, showcased on Amazon’s Web site by a photo of Target’s dog mascot sporting the company’s trademark red bull’s-eye, expands Amazon’s selection to include furniture, clothes and jewelry.
