Amazon.com Inc. (No. 1 in the 2022 Digital Commerce 360 Top 1000) said it would let merchants sell products they list with the ecommerce giant directly from their own websites as part of a move to blunt the momentum of fast-growing competitor Shopify Inc.
The new “Buy with Prime” feature combines Amazon’s payments and fulfillment services. The service makes them available at checkout on other websites, letting shoppers use their Amazon Prime membership to receive fast-shipping and other benefits. It’ll be invite-only, and merchants will pay Amazon fees for the service, which Amazon did not disclose.
In a statement announcing the new service, Amazon said merchants already using the Fulfillment by Amazon (FBA) services can add Buy with Prime online stores “within minutes because their inventory is already stored in Amazon fulfillment centers.” Retailers that use FBA send products to Amazon fulfillment centers and pay Amazon to handle receiving, packing, shipping, customer service and returns for those orders.
In the Amazon announcement Peter Larsen, Amazon’s vice president of Buy with Prime, said the new service will allow merchants to offer “conversion-driving benefits like fast, free shipping” to shoppers purchasing directly from merchants’ online stores.
Amazon did not immediately respond to a request from Digital Commerce 360 for more details.
Retailers using Buy with Prime will receive shopper order information, including email addresses for customer orders. Merchants can then use the data to provide customer service and build direct relationships with shoppers, Amazon says.
Amazon’s strained relationships with marketplace sellers
The online retailer has a strained relationship with millions of merchants who sell goods on its platform. Merchants enjoy having access to Amazon’s U.S. shoppers. But many merchants regret letting Amazon control the relationship with customers and dictate terms in take-it-or-leave-it selling agreements.
Walter Hanson, owner and CEO of The Nordic Shops Inc., a Rochester, Minnesota-based retailer of Norwegian goods, says he had bad experiences selling on Amazon. And the Buy with Prime program isn’t enough to lure the merchant back into a relationship with the ecommerce giant.
“We used to be on Amazon and got off of it several years ago,” Hanson says.
One reason for leaving the Amazon platform was that Amazon kept asking The Nordic Shop to lower its prices below minimum advertised pricing (MAP) levels, which specify the lowest price a retailer can advertise a product for sale, Hanson says. He added that Amazon then used “threatening language” to pressure The Nordic Shop into offering lower prices for Amazon Prime members.
“We are a small family-owned specialty store and if we give away our profit margin, we don’t make it up in volume,” Hanson says.
He added that it was already more expensive to sell on Amazon than on The Nordic Shop’s website — and it did not make sense to also lower prices for goods it sold on the platform.
“The final straw was that we had a free gift wrap policy, but every time someone specified gift wrap, we were charged $8 for gift wrap services by Amazon,” Hanson says. “We were the ones doing the wrapping and Amazon was not involved at all. After fighting that for over a year, we finally said we were finished and never looked back.”
Shopify as an alternative
Shopify has emerged as an alternative for merchants who prefer selling direct to consumers via their own websites. Amazon aims to distinguish its new service from Shopify with its fast-shipping pledge, an area where its rival has struggled.
According to people familiar with the matter, Ottawa-based Shopify is in talks to buy delivery startup Deliverr to expand its own fulfillment services.
Amazon has struggled to expand its ecommerce success beyond its own website. It relaunched its payments service Amazon Pay in 2013 to let customers shop on other sites using payment information stored with Amazon after killing earlier iterations. In 2015 it began closing its Amazon Web Store business, an earlier attempt to sell services that let online merchants create their own stores like Shopify.
Among retailers ranked in the Top 1000, 17.9% offer Amazon Pay versus 36.5% for Apple Pay and 19.0% for Google Pay.Favorite