In an unusual move, Amazon and Shopify have formed a partnership that lets Shopify merchants integrate Buy With Prime at checkout through an Amazon app in Shopify’s store, with the latter quick to note that merchants still control their brand and customer data within its administrative dashboard.
The app will be available to all U.S. merchants in September, the companies said.
The move comes a year after Shopify warned merchants they were in danger of violating their terms of service by using Buy With Prime, an integration that required more work without a native app. Merchants can now manage Buy with Prime product listings and view orders and returns in their Shopify dashboard.
It also comes after Shopify offloaded its fulfillment assets Deliverr and 6 River Systems, respectively, to Flexport and Ocado earlier this year. That’s a service gap that Fulfillment By Amazon (FBA) can fill nicely for Shopify merchants.
For the first time, Prime members visiting a Shopify seller’s site can select Buy With Prime on a product detail page, then check out using Shopify Payments. Previously, merchants had to use Amazon Pay at checkout under the Buy With Prime. Launched last year and expanded nationally in 2023, the program lets merchants outside of Amazon offer Prime services and add the valuable badge to their product pages. Amazon claims it provides a 25% conversion lift.
Both companies will benefit. Shopify gets incremental revenue from transactions using its checkout system, plus merchants gain access to 200 million-plus Prime members and use of FBA. Amazon gets revenue for FBA and a piece of Shopify’s estimated $230 billion in GMV in 2023, per Wedbush.
“For Amazon, the company now has an easier path to capture share of fulfillment services offplatform and monetize a portion of Shopify’s GMV, in addition to increasing the value of its Prime membership by extending its benefits to more sites,” said Wedbush analyst Scott Devitt in a research note.
“This new app will make it easier for our merchants who also partner with Amazon to offer Buy with Prime to their customers on their Shopify-powered site,” said Shopify president Harley Finkelstein in a video announcing the deal. “More choice, means more opportunities to succeed as an entrepreneur; and that’s what we are powering here at Shopify.”
“The build of this app was a collaboration with Shopify,” said Peter Larsen, Amazon’s vice president of Buy with Prime in a release. “We’re excited to help merchants not only grow their businesses, but also save time and resources, all while giving Prime members even more places to enjoy their shopping benefits.”
For the second quarter ended June 30, Shopify’s revenue increased 30.8% to $1.7 billion on strong growth in merchant revenue, but its operating loss ballooned from $190 million to $1.6 billion. Its stock did get a boost from the unexpected Amazon news.
Colin Sebastian, a senior research analyst with Baird, said in a research note the deal suggests Amazon isn’t that interested in competing directly with Shopify in ecommerce software, but “time will tell.”
“While (Amazon) seemed reticent to enter into revenue-sharing agreements and cede payment processing to Shopify in the past, the compromise recognizes Shopify’s strong competition position among SMBs,” Sebastian wrote. “That native integration with Shopify’s platform could make Buy with Prime a more compelling option for merchants. It also helps Amazon gain further penetration with the Amazon Payments digital wallet, one of the goals of the Buy with Prime program.”
PayPal, now one of the more popular payment options within Shopify Pay, may take a hit as a result of this deal, Sebastian added.
James Thomson, a managing partner with Equity Value Advisors, said the partnership should attract Shopify merchants already doing business with FBA, because combined inventory means avoiding split shipments.
“They don’t have any highly scalable fulfillment options, so it’s likely to be embraced by at least those Shopify sellers who already have Amazon accounts,” Thomson said.