Amazon and Shopify Strike Surprising Deal to Benefit Merchants and Prime Members
In an unexpected move, Amazon and Shopify have announced a partnership that will allow Shopify merchants to offer the “Buy with Prime” feature on their stores. This means that Shopify users will have access to Amazon’s fast and free delivery service, as well as the option for returns through Amazon’s fulfillment network. Additionally, Amazon Prime members will be able to check out using their Amazon accounts. The service is currently being tested and is expected to roll out across the US by the end of September.
This decision comes as a surprise considering that just a year ago, Shopify advised its merchants against using Amazon’s “Buy with Prime” service due to a violation of Shopify’s terms of service. At that time, Shopify encouraged its merchants to use its own payment and checkout solution, Shop Pay. As a result, merchants had to use “Buy with Prime” separately from their Shopify administrative tools.
According to Amazon, the “Buy with Prime” feature drives a 25% increase in shopper conversion on average. Analyst Barton Crockett from Rosenblatt believes that this feature will help boost sales for merchants who sign up. He also points out that Amazon stands to benefit from the deal in various ways, including promoting Prime subscriptions, leveraging economies of scale, and strengthening its third-party momentum. By expanding access to Prime, Amazon is able to tap into economic benefits from non-Amazon shopping arenas.
Crockett emphasizes the massive scale of Amazon’s reach and sees this initiative as a sign of Amazon’s confidence in its retail capabilities and potential for increased margins. He maintains a Buy rating on Amazon shares with a price target of $184, which allows for 33% growth from current levels.
Out of the 41 reviews on Amazon over the past three months, all but one are positive, resulting in a Strong Buy consensus rating for the stock. Analysts forecast one-year returns of 27%, with an average target price of $175.63.
Please note that the opinions expressed in this article are solely those of the featured analysts and should not be taken as investment advice. It is important to conduct your own analysis before making any investment decisions.