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 websites 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 Accelerate sellers conference on Thursday, 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 of their familiarity with the Amazon experience and their trust in prompt delivery. In fact, Amazon disclosed earlier this year that merchants using Buy With Prime witnessed a 25% increase in sales conversions.
With nearly 38% of all online spending in the US captured by Amazon this year, the company is increasingly generating revenue by providing services to online merchants rather than selling products directly. As Amazon’s own online sales growth slows, it anticipates more shoppers will purchase directly from brand websites rather than relying on online marketplaces like Amazon and Walmart.
Insider Intelligence reports that direct-to-consumer sales, where shoppers buy items directly from a brand’s website, are projected to increase by 17% this year, reaching $182.6 billion. This growth rate is nearly double the overall online spending growth rate of 9.3%.
Although Amazon did not disclose the number of merchants currently using Buy With Prime, Larsen emphasized that the company is fully committed to its success. He acknowledged that there is still work to be done, but expressed confidence in the service’s potential.
The tension between Amazon and Shopify seems to have subsided following Shopify’s retreat from logistics. Last year, tensions escalated when Shopify acquired logistics startup Deliverr, signaling its intentions to compete directly with Amazon. However, in May, Shopify abandoned these plans and sold its logistics unit to San Francisco startup Flexport. In August, Shopify and Amazon reached a deal allowing merchants to use Amazon’s logistics network through Shopify’s e-commerce tool. Larsen stated that the integration went smoothly, as both companies prioritize the best interests of merchants and shoppers.
Merchants have expressed satisfaction with Buy With Prime. Aaron Cordovez, co-founder of Zulay Kitchen, which sells approximately 1,000 products on Amazon, noted that the service is helping him boost sales on his website due to customers’ trust in the Amazon process. He believes that more people will be inclined to try it.
Amazon has faced challenges in expanding its e-commerce success beyond its online store in the past. However, the Buy With Prime initiative may prove more successful as online merchants recognize the need to sell through multiple channels, including marketplaces, their own websites, and brick-and-mortar stores. Ben Rey, chief revenue officer at Teikametrics, a Boston-based software firm managing nearly $1 billion in annual advertising spending on platforms like Amazon and Walmart, highlighted the growing interest among merchants to diversify to other channels. He stated that fulfillment has always been a challenge, and Amazon is seizing the opportunity at the right time.
This story was originally published at bloomberg.com. Read it here.