Amazon Targets Logistics Void Left by Shopify’s Retreat, Promotes Buy With Prime
Amazon is capitalizing on the logistics gap created by Shopify’s sudden withdrawal from shipping services earlier this year. This move has provided an opportunity for the online retail giant to generate revenue by delivering products ordered from websites other than Amazon.
At its Accelerate sellers conference on Thursday, Amazon unveiled Buy With Prime, a service introduced last year that offers fast delivery of customer orders placed on external websites. The company showcased metrics that highlight the sales boost experienced by merchants when shoppers take advantage of their Amazon Prime membership to receive fast shipping and other benefits.
According to Peter Larsen, an Amazon vice president, three out of four Buy With Prime purchases are made by new customers to the respective online brands. Larsen explained that the service attracts these shoppers because they are familiar with the Amazon experience and trust that their orders will be delivered promptly. In fact, Amazon previously revealed that merchants using Buy With Prime witnessed a 25% increase in sales conversions.
As the dominant force 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. This shift comes as the company expects more consumers to purchase products 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 grow by 17% this year, reaching $182.6 billion. This growth rate is nearly double the overall online spending growth rate of 9.3%.
While Amazon did not disclose the number of merchants using Buy With Prime, Larsen emphasized that the company is fully committed to this initiative. 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. The companies recently struck a deal allowing merchants using Shopify’s e-commerce tool to utilize Amazon’s logistics network. Larsen stated that the integration went smoothly, as both companies have the best interests of merchants and shoppers in mind.
Aaron Cordovez, co-founder of Zulay Kitchen, a seller of approximately 1,000 products on Amazon, expressed his satisfaction with Buy With Prime. He believes the service is helping him increase sales on his website because customers trust the Amazon process. Cordovez sees few downsides and expects more people to give it a try.
Amazon has faced challenges in expanding its e-commerce success beyond its own online store. Previous attempts, such as the relaunch of Amazon Pay in 2013 and the closure of its Amazon Web Store business in 2015, did not yield significant results. However, industry experts believe that the Buy With Prime push could be more successful as online merchants recognize the importance of selling through multiple channels.
Ben Rey, chief revenue officer at Teikametrics, a Boston-based software firm that manages nearly $1 billion in annual advertising spending on platforms like Amazon and Walmart, stated that there is growing interest among merchants to diversify their sales channels. He believes 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.](https://www.bloomberg.com/news/articles/2023-09-14/amazon-going-big-to-fill-delivery-void-left-by-shopify-retreat)