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 no-fee subscription program is adding customers, and they are spending more over time.
When it comes to pets, loyalty is a valued trait. Chewy is showing how the same is true for online sales of pet products.
At a time when recurring revenue is more important than ever for brands and retailers, the pet ecommerce marketplace is growing uptake of its program that automatically replenishes goods.
Chewy said sales from Autoship customers totaled roughly 75% of net sales in the first quarter of 2023, ticking up from 73% in Q4. That’s a new record for the program’s penetration. Autoship sales, which reached $2.08 billion, grew 18% over the first quarter of 2022.
Crucially, the program is also driving loyalty, as Chewy eyes bigger baskets and long-term relationships. With consumers pulling back on discretionary purchases, many retailers are eying ways to ramp up engagement with their best customers. Autoship is a long-running example that is seeing gains now.
The Autoship service allows customers to subscribe to regular orders of pet products, with no membership fee attached. It’s a particularly strong fit for pet food and other consumables, which tend to be bought and used in regular intervals.
“Our Autoship subscription service is a powerful tool for us, driving recurring and predictable revenue and long-term customer loyalty,” Chewy CEO Sumit Singh told analysts.
Responding to a question from analysts, Singh recalled a period soon after its 2019 IPO where 60% penetration for Autoship was seen as a positive. Singh said the growth since was a result of improvements to reduce friction in the customer experience, as well as the business model behind it.
The fact that it’s a free subscription is particularly attractive to consumers.
“In fact, it leads to a discount for the customers who sign up for that program, and that discount is funded by our vendors, so we don't have to fund it ourselves,” Chewy CFO Mario Marte said.
A “symbiotic relationship” between the marketplace and brands is at the heart of the program, Singh said.
“It's one of the more effective mechanisms to fuel brand loyalty for our supplier brands,” Singh said. "Their participation greatly showcases the value that both of us find in it.”
Overall consumer trends are also benefiting the program. In recent months, sales have shifted more toward consumables and healthcare as discretionary spending on hard goods softened. The essentials tend to be the products that are sent in the Autoship program, since they are in need of refilling.
At the same time, Chewy has expanded selection within the program. The number of SKUs available for Autoship has increased significantly in recent years. Chewy has also grown the categories of products available through the program. Healthcare was a newer addition to Autoship since its debut at Chewy four years ago.
“When you think about the proposition of a health customer, humans are bad at feeding humans medication. We forget to feed our pets,” Singh said. "So if you have the option of putting that on recurring delivery, combined with an ongoing engaged program and the notification engine put behind it, etc., etc., it fuels even stronger compliance rates.”
The shopper experience through Chewy’s site has also encouraged customers to build bigger baskets.
It all results in a reliable customer pool that is made up on not only repeat visitors to the marketplace, but signed up to a program that keeps them locked in with Chewy.
Ultimately, this is a base from which Chewy can continue to build.
When it comes to defining success of Autoship, Chewy doesn’t only measure the active customers it has in the program, though those are growing. The marketplace is also keying in on net sales per active customer, which grew 15% to more than $512 in the first quarter. Like Autoship penetration, this was a record high for the company. Both the number of subscribers and the amount that they spend are driving growth in the program.
Autoship also helps to drive increased customer lifetime value (LTV), which serves as a measure of loyalty. These customers tend to spend more with Chewy over time, so they are a crucial driver of long-term sustainability.
In the end, Autoship sales are good for the top line, as well as the bottom line. Repeat orders allow the company to better plan for shipping, so it can optimize its fulfillment network accordingly. This is especially important as Chewy expands automated fulfillment capacity through four new centers.
“Seventy-five percent of our sales going through the Autoship program allows a predictable, repeatable base of volume that allows us to fulfill that demand in a manner that optimizes asset utilization across the company and allows us to kind of flow that revenue, you know, into the bottom line,” Singh said.
A reliable revenue stream that drives growth over time is good for a business during any economic period, but it’s especially important at a time when many retailers have shifted from a mentality of growth to meet surging demand to profitability when consumers pull back. It’s also a bulwark against potential competitors who may try to replicate Chewy’s service. They may open a pet marketplace, but they won’t have all of Chewy’s Autoship customers.
