Amazon eyes a new audience: teenagers with spending money

Last Updated Oct 11, 2017 3:18 PM EDT

Amazon (AMZN) is targeting a demographic that doesn't have to struggle with a mortgage or household bills, and are among the most digitally savvy consumers: America's teenagers. 

The online retail giant is rolling out a new service for teenagers that allows them to shop on Amazon with their own login. Teens can stream or shop independently, although parents can approve the orders after teens hit the "place order" button. After a teen places their order, Amazon sends an email or text to the parents, who then make the final decision. Parents can also set pre-approved spending limits, Amazon said. 

The service is targeted to 13- to 17-year-olds, who are part of Generation Z, the demographic group that's on track to surpass the millennials in size and, someday, spending power. Already, Generation Z is the largest media audience, comprising 26 percent of all viewers, or four percentage points more than millennials, according to Nielsen. Introducing teens to Amazon by providing them with their own logins may capture a generation that's notoriously connected to their phones and devices. 

Teens represent "the sweet spot of becoming independent. They need back-to-school clothes, snacks for sports," and other items they might want to shop for with their own login, said Michael Carr, vice president of Amazon Households. "They are kids who are beginning to have the maturity to do shopping on their own."

Carr joked, "Because I happen to be a parent of a teen, I have a personal stake in it." He added that customers also said they were interested in a service for their teenagers. "They want their teens to be independent, but aren't ready to hand them off completely."

Teens of parents with Prime memberships can also access their family's included services, such as Prime Video and Twitch Prime, the online gaming platform. The Prime membership service costs $99 a year and includes free two-day shipping, online video streaming and other services. 

After teens graduate high school and attend college, they can migrate to their own Prime Student accounts. Their shopping history will stay with them, Carr said. 

Generation Z is considered by demographers to be the first truly digital generation, having grown up with online games, smartphones and computers. Four out of 5 teens said they'd give up TV to remain connected to their smartphones for the day, while almost 30 percent said they'd give up friends or money to keep their mobile device, according to an August survey from Bank of America. 

Not surprisingly, Amazon is targeting teens through their mobile devices. The service is geared for the Amazon App, and works by sending parents texts or emails when their teen wants to order an item. The teen can add a note explaining why they want the item, and then the parent can visit the order page to review it. 

Parents can skip the approval step and set pre-approved spending limits, although parents still receive itemized notifications for each order, Amazon said.