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.
At its Accelerate sellers conference on Thursday, Amazon unveiled its Buy With Prime service, which was introduced last year. This service offers online merchants fast delivery of customer orders placed on external websites. The company shared metrics that demonstrate the sales boost experienced by merchants when shoppers utilize their Amazon Prime membership to receive expedited shipping and other benefits.
According to Peter Larsen, an Amazon vice president, three out of four Buy With Prime purchases are made by customers who are new to the specific online brand. Larsen explained that this service attracts these shoppers because they are already familiar with the Amazon experience and trust that their orders will be delivered promptly. In fact, Amazon previously disclosed that merchants using Buy With Prime saw a 25% increase in sales conversions.
Amazon currently dominates e-commerce in the U.S., capturing nearly 38% of all online spending this year, as reported by Insider Intelligence. The company is increasingly generating revenue by providing services, such as product packing and delivery, to online merchants rather than solely selling its own products. As Amazon’s own online sales growth slows down, it anticipates more customers will purchase directly from brand websites instead of relying on online marketplaces like Amazon and Walmart.
Insider Intelligence predicts that direct-to-consumer sales, where shoppers buy items directly from a brand’s website, will rise by 17% this year to reach $182.6 billion. This growth rate is nearly double the 9.3% increase in 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 service. However, he acknowledged that there is still work to be done.
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 for $2.1 billion, signaling its intentions to directly compete with Amazon. However, in May, Shopify abandoned these plans and sold its logistics unit to San Francisco startup Flexport, which is currently undergoing its own strategy shift after replacing its CEO. The truce between Amazon and Shopify was solidified in August when they struck a deal allowing merchants using Shopify’s e-commerce tool to utilize Amazon’s logistics network. Larsen emphasized 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, stated that the service is helping increase sales on his website because customers trust the Amazon process. He believes that more people will try it due to the limited downsides.
Amazon has faced challenges in expanding its e-commerce success beyond its own online store in the past. It relaunched Amazon Pay in 2013 to enable customers to shop on other sites using their stored payment information. Additionally, in 2015, Amazon discontinued its Amazon Web Store business, an earlier attempt to offer services that allow online merchants to create their own stores similar to Shopify.
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, believes that the Buy With Prime initiative could be more successful as online merchants recognize the importance of selling through multiple channels, including marketplaces, their own websites, and brick-and-mortar stores. Rey stated, “There’s a lot of interest in diversifying to other channels, and the challenge has always been fulfillment. Amazon is striking when the iron is hot.”
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)