Amazon is working on another flywheel strategy to get more direct-to-consumer brands into its platform, leveraging its existing storage and delivery capabilities. What is Buy with Amazon? This new service, Buy with Prime, will allow sellers to sell their products on various e-commerce platforms other than Amazon.com, with Amazon FBA infrastructure.
What is “Buy with Prime”?
On April 21, Amazon introduced “Buy with Prime”, which allows Prime members to shop on other websites and check out their purchases using their Amazon account. Amazon will also handle the fulfillment.
Over the years, Amazon has had various services that allow its customers to easily shop on other retailers’ websites. One of these is Amazon Pay, which is a credit card-based payment solution that allows users to pay with their Amazon account. Similar to Buy with Prime, the new service also lets users log in with their Amazon username and use their shipping address.
Unlike other payment methods, such as Apple Pay, Buy with Prime will not only allow users to pay with their Amazon account, but it also guarantees free shipping and 2 day delivery time. This new service is aimed at convincing more people to sign up for Prime.
Here is what’s in Amazon’s announcement.
“Today, Amazon announced “Buy with Prime” — a new benefit for Prime members that will extend the convenience of Prime shopping to online stores beyond Amazon.com. Buy with Prime will initially be available by invitation only for merchants using Fulfillment by Amazon (FBA) and will roll out through 2022 as merchants are invited to participate, including those not selling on Amazon or using FBA.
Buy with Prime will allow millions of U.S.-based Prime members to shop directly from merchants’ online stores with the trusted experience they expect from Amazon—including fast, free delivery, a seamless checkout experience, and free returns on eligible orders. Prime members will see the Prime logo and delivery promise on eligible products in merchants’ online stores, which signals the item is available for free delivery, as fast as next day, with free returns. When shopping with Buy with Prime, checkout is simple and convenient. Prime members will use the payment and shipping information stored in their Amazon account and receive timely shipping and delivery notifications after an order is placed.”
What are the limitations of “Buy with Prime”?
There is a catch for “Buy with Prime”. The service will initially only allow merchants who are using FBA to sell on other website with that service. It will not allow merchants to use the company’s 3PL warehouse and Amazon delivery service in combination. They will have to send their inventory to Amazon warehouses first.
Non-Prime members will also not be able to use Buy with Prime as a payment gateway. This means that merchants will stil have to separate their operations and handle fulfillment separately for non prime members. They will also not be able to rely on this new service as a complete replacement for their payments gateway.
Amazon did not provide the fee structure for the service, nor did it reveal how it will perform against the various payment methods available on e-commerce websites. Some of these include Apple Pay, PayPal, and Shop Pay.
The first and most important customer for Amazon’s new service is existing sellers. They already have a lot of inventory in their FBA warehouse, and they are eager to grow their sales outside of Amazon. Getting DTC brands that is not currently on Amazon to send products to Amazon for orders placed by Prime members will be a challenge.
Future of “Buy with Prime”
“Buy with Prime” might be just the first step of its master plan:
1. Launch “buy with prime”
2. Launch an e-commerce website builder that compete with Shopify. Nudge every Amazon seller to have a DTC website
3. Attract all DTC brands to offload their payments, fulfillment, part of their ads to Amazon
4. Become the infrastructure of e-commerce;
For over two years, Amazon has been working on a competing e-commerce website builder that would compete with Shopify. With the launch of “Buy with Prime,” this new service would allow e-commerce website builders to offer a payment and fulfillment solution. Fulfillment is Amazon’s biggest differentiator and would prove very valuable to any competitor.
Most e-commerce website builders who are all-in with Amazon will eventually adopt “Buy with Prime.” Once enough sellers start using it, it will prove the company’s concept of selling outside of Amazon. It could also expand its offerings beyond third-party sellers by allowing merchants to sell on other websites. One of the main factors that will determine if Amazon will continue to expand its offerings beyond sellers is by separating the services from its FBA.
The next step is to become a retail infrastructure provider, which will allow brands to use various parts of Amazon’s platform to manage their operations. These include its Fulfillment Services, 3PL warehouse, and payments.
It’s too early to tell if “Buy with Prime” will have a significant impact on e-commerce outside of Amazon. There are still many factors that need to be considered before it can be considered a flywheel. One of these is converting more merchants, who are currently opt-in on Shopify.