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Don’t waste another dime on bloated channel reporting and vanity metrics.
Don’t waste another dime on bloated channel reporting and vanity metrics.
Buy With Prime is opening up Prime delivery and checkout capabilities beyond Amazon.com.
Items on any website will be able to have a Buy With Prime badge. (Image courtesy of Amazon)
Amazon is rolling out a new service that will allow merchants to offer the company’s Prime benefits through their own websites.
Buy With Prime opens up the checkout, fulfillment, delivery and returns that are hallmarks of the company’s subscription service for use at online stores beyond Amazon’s website.
The service will initially be available on an invitation-only basis for merchants using Fulfillment by Amazon (FBA). As it rolls out in 2022, Amazon indicated it will invite merchants that are not currently selling on Amazon or using FBA.
Supported by Amazon’s vast logistics network, Prime provides its 200+ million members with free delivery, shipping that comes as soon as the next day and free returns. Merchants who participate in Buy with Prime will be able to offer these services directly in their online stores, with a Prime badge displayed next to the products to which it applies. Prime members, in turn, will be able to use payment and shipping info from their Amazon account when they check out at the outside stores.
"For over 20 years, we’ve been empowering small and medium-sized businesses with opportunities to grow," said Peter Larsen, Amazon’s VP of Buy with Prime, in a statement. "Allowing merchants to offer Prime shopping benefits on their own direct-to-consumer online stores is an exciting next step in our mission to help merchants of all sizes grow their business—whether on Amazon or beyond. With shoppers purchasing directly from merchants’ online stores, Buy with Prime will allow merchants to build customer relationships and brand loyalty while offering conversion-driving benefits like fast, free shipping."
For merchants, there won’t be a subscription fee to the service. Rather, pricing will be based on a service fee, a payment processing fee and fulfillment and storage fees that are calculated per unit.
For sellers, here’s how it will work to get started, according to Amazon’s press release:
For merchants already using FBA, Buy with Prime can be added to their online store within minutes because their inventory is already stored in Amazon fulfillment centers. To get started, merchants sign up for Buy with Prime, link an Amazon Seller Central account, use Multi-Channel Fulfillment to offer one pool of inventory for multiple channels, and link an Amazon Pay account to offer a seamless checkout experience for Prime members. Then, by installing a JavaScript widget in their online store, merchants can easily add Buy with Prime to one or more products. With Buy with Prime, merchants will receive shopper order information, including email addresses for customer orders, which they can use to provide customer service and build direct relationships with shoppers.
The company said Buy With Prime will work with “most online stores,” and its press release pointed to BigCommerce, whose SVP of Product Troy Cox was quoted as saying that extending Prime benefits to merchants will “help elevate their online shopper experiences, build brand loyalty, and power them to grow and scale."
“Buy with Prime will be a game changer for our brand. Prime members will enjoy the trust and familiarity they have with shopping on Amazon while connecting with our business directly on our own site,” said David Ghiyam, president of vitamins brand MaryRuth Organics, in a statement included with Amazon's news release. “When we began using Fulfillment by Amazon, our business quadrupled in growth thanks to Amazon’s logistics network and our Prime-eligible listings. Using Buy with Prime, we will be able to drive the conversion we’ve experienced with Fulfillment by Amazon while running our business on our own site.”
By offering tools that appear on direct-to-consumer websites, Amazon is moving into territory that is often considered the province of Shopify. The ecommerce companies long took distinct approaches. Amazon created a central marketplace on its website, providing access to its massive audience while setting terms for how items could be displayed and priced. Shopify’s platform offered the infrastructure for independent online stores that attracted shoppers from other channels, while enabling entrepreneurs to maintain their own look and terms.
The Buy With Prime announcement comes at a time when Shopify is making moves to offer more shipping and logistics services to its merchants. Last month, it invested in Shippo and launched a native integration for its platform that allowed merchants to tap the service’s network of carriers and infrastructure. This week, Bloomberg reported that Shopify is in talks to acquire Deliverr, a fulfillment company that integrates with ecommerce marketplaces and allows merchants to offer two-day shipping.
Through Buy with Prime, Amazon is offering its own integration, backed by its massive logistics network. At the same time, sellers can present their products within their own stores and keep running their sites on platforms like BigCommerce, while still tapping into what Amazon offers. For shoppers, it means a Prime membership is beneficial beyond Amazon, or a property the company owns like Whole Foods. It remains to be seen whether the Buy With Prime strategy is successful, but the move appears to be one that could further embed Amazon within the ecommerce landscape.
The company is pulling back after breakneck pandemic expansion. Will it sacrifice the shopping experience along the way?
Amazon is in a period of rebalancing.
The company has long scaled at a relentless pace as it sought to not only provide a marketplace for commerce, but the infrastructure that enabled it, as well. Amazon found another level of overdrive over the last two years, as demand spiked to unseen heights during the pandemic and the company tried to build to keep up.
This wasn’t necessarily a period that saw the kind of invention that Jeff Bezos made an existential tenet of the company, but it nonetheless seems to be shaking out as a cycle that included risk and fallout.
In this case, the risk was not a new device like a smartphone or a move to bend the future to Amazon's will like drone delivery. Rather, it was an expansion that took its already-vast operations to new heights.
Nowhere was this more evident than the company’s logistics network. As CEO Andy Jassy described it to analysts Thursday on an earnings call, the company doubled the size of a fulfillment network it took a quarter-century to build in two years. It also built out a last-mile delivery network that was the size of UPS, which is one of the top two carriers in the U.S.
In 2022, all of that expansion ran into 40-year-high inflation, war in Ukraine and a pullback in demand for goods amid reopening. The company first admitted the problem: It had overbuilt.
But the solution is not to tear down. It had to keep expanding as only Amazon does, while still cutting back in a period of “belt-tightening,” as executives have put it.
That’s evident in watching developments out of the logistics network alone. Amazon pulled out of some areas, and canceled plans to expand into some new warehouses. Yet, as Business Insider reported, it still added 79 million square feet – a footprint that is equal to half of next-closest competitor Walmart’s entire distribution network. It is also expanding Buy with Prime, a new program that will allow direct-to-consumer brands to offer Prime benefits, and, by extension, access to Amazon’s logistics network. Another service, called Amazon Warehousing and Delivery, is designed for upstream storage, necessitating more space to be made available in the network.
At the same time, it will seek to keep doing more for consumers.
Jassy indicated as much when he was prompted to outline his priority areas. Beyond cost-cutting, he said speed is the second highest priority for Amazon. As if to conform this, he said later in the call that one-day shipping is getting off the ground in North America.
Selection is another priority area. At Amazon, that phrase translates to a few things, but top of mind is “expanding the third-party seller marketplace.” Third-party sellers accounted for 59% of sales in Q4. Beyond sales, Amazon’s work with the sellers who post their products on the marketplace is also lucrative for the company. Amazon allows these sellers to tap its logistics network to offer Prime through the Fulfillment by Amazon program. Its business segment called third-party seller services grew 20% year-over-year in the fourth quarter, right in line with the massively profitable cloud computing division Amazon Web Services.
Price, Jassy said, is another area of importance, especially with the consumer pullback on discretionary purchases being observed amid inflation.
“I think pricing being sharp is always important,” Jassy said. “But particularly in this type of uncertain economy, where customers are very conscious about how much they're spending, having the millions of deals that we put together with our selling partners in the fourth quarter was an important part of the demand that you saw.”
Finally, Jassy cited a priority of improving the customer experience. He said Buy with Prime would give subscribers the ability to use their benefits across the web, and noted that virtual try-on for shoes brings change to the shopping experience.
But it’s in this area that the tradeoffs that may be happening under the surface may rear their head again. GlobalData Managing Director Neil Saunders noted that online shopping generally is becoming “more difficult" on Amazon.
“While the Amazon marketplace is far from a terrible place to shop, it has become more complex and cluttered with a multitude of products, delivery options, and prices levels for shoppers to sift through,” Saunders wrote in note released at the time of the earnings call. “The result is that impulse buying has dropped and that more people are migrating away to other retailers. This is not yet a serious problem as erosion has only happened at the margins, but it is something Amazon will need to address and arrest to prevent further decline.”
Taking a rhetorical step further, the journalist John Hermann wrote this week that a “junkification” of Amazon is taking place, while arguing that “everything is going according to plan" for the company.
He placed the growth of the third-party seller marketplace at the center of this trend. But it also comes as Amazon grows its advertising business, with many taking note of a growing number of ads on the platform. The company also wants to keep growing Prime, and is now using content such as Lord of the Rings and NFL’s Thursday Night Football as key acquisition channels. Both had “record” signups of new Prime members, CFO Brian Olsavsky said.
“We see a direct link between that type of engagement and higher purchases of everyday products on our Amazon website,” he said.
It will have to do each of these things at once, while entering a period that will require it to be “more targeted with its growth ambitions,” as Saunders put it.
"Since its inception, Amazon has had a culture of throwing dollars at many different things to see where they led and what they could learn," Saunders said. "That approach worked well for a younger, fast-growth business. It works far less successfully for a more mature entity. In our view, management deserves credit for recognizing this and quickly responding. However, the shift requires a lot of care because Amazon needs to find a new balance between being ambitious and innovative and being more frugal with its spending – which will be very challenging."
Jassy said the changes of the pandemic made its logistics a "different network." That may be true of the whole company. Rather than an isolated cycle of overbuilding and pulling back, this may prove to be a period that changes Amazon altogether. The bets will still be there, but the risk will be magnified with fewer dollars that don't pay off to go around. As hinted by the logistics buildout of the pandemic and even Buy with Prime, they also may look more operational.
Less delivery robot, more delivery optimization.
As Jassy put it: “We're going to be very thoughtful about how we streamline our costs, and I think you see a lot of that, but we're also going to continue to invest for the long term.”
The recipients of those investments will say a lot about where it wants to head in this next year.