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Shopify Looking to Integrate with Amazon Buy With Prime

UPDATED: Shopify Looking to Integrate with Amazon Buy With Prime

UPDATE 08/30/2023: 📣 It’s official! Shopify announced on Wednesday that Amazon will release Buy with Prime in the platform’s app ecosystem, marking a ceasefire between the two eCommerce giants.

For Prime customers, this collaboration holds the potential for a more dependable checkout and delivery experience across a wider array of retail brands outside of Amazon.

For some sellers, this announcement may come as a surprise after Shopify cautioned its merchants against attempting integration of Buy with Prime on their respective online stores, citing breaches of its terms of service and the emergence of security vulnerabilities.

The subtleties surrounding this app integration provide insights into concessions orchestrated by both companies.

Customers who log into their Amazon Prime accounts on a Shopify store equipped with the “Buy with Prime” feature can choose to utilize a payment mechanism linked to their Amazon wallets. Yes, Amazon Pay will be added as another payment option within Shopify.

However, instead of Amazon Pay, the payment processing will be handled by Shopify’s checkout system, allowing the company to:

  • Keep the entire or a portion of the revenue generated by processing Prime orders within Shopify Checkout. It’s unclear whether both parties entered into a revenue sharing contract, where the income made from Buy with Prime transaction fees on Shopify is split between the two companies.
  • Help Shopify sellers “maintain 100% control of their brand and their customer data in Shopify’s admin,” the company said in a statement. đź‘Ź 

The program rolled out on August 30, initially catering to selected sellers on Shopify’s platform. By the end of September, it will become accessible to all Shopify sellers interested in leveraging Amazon’s extensive fulfillment network, Amazon said.
With Shopify out of the way, Amazon now stands to capture more non-Amazon merchants via wider Buy with Prime adoption, while existing sellers face increasing competition and fulfillment fees.

On Shopify’s Q4 2022 earnings call, President Harley Finkelstein revealed the company is currently in talks with Amazon about adding Buy With Prime (BWP) in Shopify-powered stores. 🫣

“We think any company that’s going to make their infrastructure available to merchants to sell more a great thing,” Finkelstein said during the earnings call.

“We’re going to talk to the Amazon now to make that work, but it has to be done in a way that we think is important for merchants to have a relationship with their end consumer,” Finkelstein added.

That’s great news for merchants and aggregators interested in using both Shopify and BWP, but not for those who don’t want to give up their customer data to Amazon. 🤔

BWP is a Fulfillment-as-a-Service (FaaS) program that allows merchants to offer 1 to 2-day shipping, free delivery, and free returns on their own websites outside of Amazon.com.

However, checkout is done via Amazon Pay, which requires a customer to create or log in to their Prime account to be able to complete a transaction. This process could allow Amazon to take a peek into the customer’s name, address, and possibly even contact details (for shipping purposes) that they could then use to launch remarketing and retargeting campaigns to that customer.

In September 2022, Shopify itself issued a warning to merchants about the potential security issues they could face when installing BWP. Moreover, taking the checkout process outside of Shopify is currently a violation of the platform’s Terms of Service.

But given Shopify’s recent complete turnaround on the issue, the warning may primarily have beenn due to its plans to launch its own FaaS program, Shopify Fulfillment Network (SFN). The service was first introduced in 2019, but has reportedly made little progress since.

Turning to Amazon to Overcome Challenges Ahead

The broader rollout of SFN unfortunately happened at a time when the company’s Q4 2022 shares fell nearly 7% and revenue growth slowed amid escalating Amazon rivalry, indicating a rough time ahead.

That might explain why Shopify is looking for a partnership with Amazon instead of competition, a business strategy called “Co-Opetition.” 🤔

Welcoming its rival into the fold might help the company reduce competitive intensity levels while expanding its customer reach with Prime, which currently has over 200 million members worldwide.

Same goes for Amazon, a collaboration presents an opportunity to tap into the rival’s customer base while keeping them at an arm’s length, as well as maintain its lead over Walmart.

The risk, however, is potentially greater for Shopify as it stands to loosen their grip on their merchants’ customer data. Additionally, BWP could eat into its profits. The Canadian eComm giant mostly generates revenue from transaction fees. 

For that reason, analysts recommend not allowing Amazon to take over checkout. But it seems unlikely to happen given that Amazon Pay has always been conditional to BWP, unless both parties come up with a fair revenue sharing arrangement.

If no deal is taken, Shopify might have to find other companies that can take Amazon’s place in solving this challenge for them.

Shopify Tries to Stay in the Fight 

Recent moves suggest that Shopify is not backing down in its fight for market share. It has teamed up with Flexport to expand its fulfillment capabilities globally and compete with Amazon Global Logistics.

The company also released new tools and features that will help merchants sell across channels, boost conversion, and run their stores more efficiently.

Meanwhile, Amazon continues to beef up Buy with Prime by making it available to US merchants that use BigCommerce. The Texas-based shopping site builder launched an app that allows sellers to easily enable BWP features on their stores with no coding required.

In sum, while integrating with BWP could temporarily hurt Shopify, the company also stands to gain some wins, such as the ability to offer faster delivery without doubling its fulfillment network, i.e., cut costs.

It all probably just comes down to how the two eComm giants will split the revenue from BWP transactions on Shopify stores. It will be interesting to see how it all shakes out. 

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