In a surprise move, Shopify will now offer its merchants the opportunity to activate and integrate Amazon’s ‘Buy with Prime.’ For those unfamiliar, this is Amazon’s program that lets eCommerce merchants outside of Amazon.com tap into its payment processing, shipping, and returns functions.
Generally, the thought is that this lets merchants who aren’t on Amazon benefit from the eCommerce giant’s best-of-breed logistics. They can offload shipping and logistical headaches and simply let Amazon’s established systems handle the load – a sort of “eCommerce-as-a-service.”
Of course, that value comes at a cost. Amazon charges a fulfillment fee based on transaction volume on a given site. This covers things like shipping and payment processing. Still, this could be a worthwhile and risk-averse method for merchants to pay for shipping & logistics through a revenue share.
To put some numbers behind that, Amazon says that Buy with Prime has increased shopper conversions by 25 percent on average. There’s also an implicit level of trust that customers have in dealing with a known quantity for shipping, which may result in greater conversions and fewer abandoned carts.
Surface Area
Back to the Shopify integration, how will that work exactly? Amazon will release an app that Shopify merchants can integrate with their stores. This app will operate on Shopify’s platform, available in its app store – sort of like the way that WordPress plugins or Chrome browser extensions work.
From there, Shopify merchants will be able to select items from their Amazon inventory to be able to sell in their Shopify stores, including Buy with Prime functionality. Therein lies one of the requirements of this crossover integration: participating Shopify merchants need to have an existing Amazon store.
For those who do, this could be a worthwhile integration that lets them federate disparate eCommerce efforts and offer their shoppers more choice. Beyond shopper-facing benefits like a wider range of checkout options, Shopify also claims that merchants will retain all of the customer data that results.
But one question that looms from all of the above is why? And that question applies to both Shopify and Amazon. Starting with Amazon, it’s simply part of its continued revenue diversification: an imperative for mature businesses. Here, it’s expanding the surface area for its eCommerce-as-a-service play.
Ep. 11 Examines BigTech’s Old Shiny New Thing — Subscriptions
Sleeping with the Enemy
Moving on to Shopify’s motivations, why is it offering Buy with Prime to its merchants – the “surprising” part noted above? Indeed, Shopify’s entire ethos is to empower merchants with everything they need to operate eCommerce stores independently – a sort of Amazon killer. Is it now sleeping with the enemy?
Adding to the level of surprise, Shopify previously warned its merchants not to use Amazon’s Buy with Prime, as it violated its terms of service. Instead, it channeled its merchants towards its own checkout system, Shop Pay. Now it’s not only allowing Buy with Prime but integrating the option natively.
So again, the question is why? The answer may be buried in the statement above. Offering its merchants ‘everything they need’ can arguably include the products of its competitors. By making all the best tools available, Shopify’s retention and merchant satisfaction – its top KPIs – could ultimately improve.
Put another way, Shopify realizes that attracting and retaining merchants is the endgame. If that means offering the widest range of tools – even those of competitors – the end justifies the means. It doesn’t have to own and fulfill every aspect of the eCommerce stack… sometimes it’s better to buy than build.
