Amazon Seizes Opportunity to Fill Shipping Void Left by Shopify
Amazon is capitalizing on Shopify’s withdrawal from shipping services earlier this year, creating a lucrative opportunity for the online retail giant to deliver products ordered from sites other than Amazon. The company is promoting Buy With Prime, a service introduced last year that offers fast delivery of customer orders placed on external websites.
At the recent Accelerate sellers conference, Amazon revealed metrics showcasing the sales boost experienced by merchants when shoppers utilize their Amazon Prime membership for fast shipping and other benefits. According to Peter Larsen, an Amazon vice president, three out of four Buy With Prime purchases come from new customers to the respective online brands. Larsen explained that the service attracts these shoppers because they are already familiar with the Amazon experience and trust the prompt delivery of their orders. In fact, Amazon disclosed earlier this year that merchants using Buy With Prime witnessed a 25% increase in sales conversions.
With its dominant position in US e-commerce, capturing nearly 38% of all online spending this year, Amazon is increasingly focusing on providing services to online merchants rather than selling products directly. The company expects more shoppers to buy directly from brand websites instead of online marketplaces like Amazon and Walmart. Insider Intelligence predicts a 17% increase in direct-to-consumer sales this year, reaching $182.6 billion, almost double the growth rate of overall online spending.
Although Amazon did not disclose the number of merchants currently using Buy With Prime, Larsen stated that the company is fully committed to this initiative. However, he acknowledged that there is still work to be done. The retreat of Shopify from logistics seems to have brought about a truce between the two companies. Last year, tensions escalated when Shopify acquired logistics startup Deliverr, signaling its intention to directly compete with Amazon. However, Shopify abandoned those plans in May when it sold its logistics unit to San Francisco startup Flexport. In August, Shopify and Amazon reached an agreement allowing merchants to use Amazon’s logistics network alongside Shopify’s e-commerce tool.
Merchants have expressed satisfaction with Buy With Prime. Aaron Cordovez, co-founder of Zulay Kitchen, which sells approximately 1,000 products on Amazon, stated that the service is helping increase sales on his website because customers trust the Amazon process. Recognizing the need to sell through multiple channels, including marketplaces, their own websites, and physical stores, online merchants are showing interest in diversifying. Ben Rey, chief revenue officer at Teikametrics, a Boston-based software firm, believes that Amazon’s timing is opportune as fulfillment has always been a challenge for merchants looking to expand to other channels.
Amazon’s Buy With Prime push may prove more successful than its previous attempts to expand beyond its online store. The company relaunched Amazon Pay in 2013 and closed its Amazon Web Store business in 2015. With merchants increasingly recognizing the importance of diversification, Amazon is seizing the opportunity to fill the delivery void left by Shopify’s retreat.
This story was originally published on Bloomberg.com. [Read it here.](https://www.bloomberg.com/news/articles/2023-09-14/amazon-going-big-to-fill-delivery-void-left-by-shopify-retreat)