Buy With Prime is coming. Here’s what it means for D2C retailers

Ever wish you could ship your orders as fast as Amazon? Well, that’s what Buy With Prime is promising. 

Every eCommerce founder knows Shopify’s winning formula plugs a gap Amazon can’t. The platform offers small and medium-sized businesses a better way to create and run their own online shops. All without having to write a line of code.

Shopify brought payments and shipping to its loyal and growing customer base with Shop Pay and Shopify Shipping in recent years. And this strategy has worked wonders for the company, generating about $153 billion in sales for the company in 2020. To top it off, Shopify just acquired an end-to-end logistics platform to strengthen its shipping network, including inventory management and returns.

End of story? Not quite.

Amazon is now planning to take a bite out of Shopify’s market share by launching a new service called Buy With Prime. Naturally, the first market to get access will be the US, but with Amazon’s growing presence in Australia and the UK, there’s no reason to think these markets wouldn’t soon follow.

Let’s dig into what Buy With Prime actually is, its pros and cons, and how it could impact your business.

What is Buy With Prime?

‘What is Buy With Prime, and why is it breaking news for an eCommerce founder?’ you ask.

The new service means merchants will be able to offer Amazon’s speedy delivery options and payment processing to customers via their own website. You can’t argue with the sales-boosting success of Shop Pay and BNPL checkout experiences (and popularity of subscription models).

The allure will be even stronger for Prime members who will get access to the same free shipping and returns they can get on Amazon. The service will provide conversion-driving benefits for subscribers, without sacrificing the customer relationships and loyalty brands work hard to build with their own web stores.

Initially offered just to Amazon sellers using its fulfilment service, Buy With Prime will eventually be expanded to all merchants.

So, what changed for Amazon?

Historically, Amazon wasn’t offering its payment processing and shipping services to retailers unless they were selling via Amazon. Retailers wanting to advertise directly and build brand loyalty with their customers by offering a native experience had to find alternatives.

But Amazon soon realised it had already invested substantially in payment processing infrastructure, distribution centres and delivery networks for its marketplace sales. It can also offer these services through a native, Buy With Prime experience without increasing its cost base by a mile. The pricing is yet to be confirmed, but incumbent logistics providers should watch out.

What does this mean for eCommerce?

It means Amazon’s ecosystem is getting stronger in 2022. 

As with Amazon, Buy With Prime will come with its own pros and cons that could make it the right — or wrong — choice for your business. 

Even if you’re not immediately eligible, it’s important to take stock of what’s coming. It’s going to raise the bar for customer expectations.

Fulfilment

There’s no denying that Amazon dominates the world in terms of its fulfilment processes and technology. With Buy With Prime, merchants will be able to let Amazon pick, pack and ship their orders via its Fullfilment by Amazon (FBA) program. That includes customer service and returns for these products.

If you’re unsure about whether Amazon’s FBA service could be the right fit for you, ask yourself the following:

• Should Amazon hold your inventory and pack your orders?

• Does it cost you much to do this yourself? 

• Do you have physical stores that already do this for you?

• How important is fast shipping to your customers and what speed do you offer today?

As with their marketplace, there won’t be any minimum requirements for the number of products you have to send. Amazon also handles all the details and logistics, which could potentially free you up for other things.

Delivery

Every eCommerce business owner knows that efficient delivery can lay the foundation for longer-term customer lifetime value. So how will Buy With Prime’s shipping stack up? 

The first thing you need to know is that any customer who’s an existing Prime member will be offered free shipping and returns.

That’s right. Amazon will absorb shipping costs for its Prime members, which means more and more consumers will start to expect free (or free-ish) next-day delivery. If you thought expectations were already through the roof, Buy With Prime just raised the stakes. 

The best way to get an Amazon-like shipping experience? It’s simple, really — ship via Amazon. But that’s not to say it’s the only way to offer free and fast shipping. You could build it into your pricing or shrug it off and keep doing what you’re doing.

But if the service appeals to you, you should first consider the likelihood of your customers being Prime members.

If the answer is yes, the next question to ask yourself is whether your customers even need or expect free returns. For example, it might not make sense for a grocer to offer the service, but it could help customers get the perfect fit when buying garments from online fashion retailers.

Customer experience

Most eCommerce brands wouldn’t have even dreamed of using Amazon’s fulfilment and shipping services if it meant they had to sell via their marketplace. The aggregator has a lot of drawbacks. 

The first and most obvious reason merchants don’t sell on Amazon is that you can’t control the customer experience or offer personalised unboxing. You also can’t remarket to people who’ve made a previous purchase.

But Buy With Prime opens up the option of selling directly to customers, enabling retailers to retain their personalisation, branding and native website experience.

Similar to Shop Pay, Buy With Prime will likely offer a simple, one-click payment solution for online shoppers to save their payment information and breeze through checkouts in the future.

Let’s talk about the risks

You’ve likely made up your mind about Buy With Prime already, but just in case, we thought we’d touch on a couple of potential risks to be aware of.

Risk number one: The most glaring potential risk of using Buy With Prime’s service is that it would give Amazon access to your sales and customer data. Amazon has flat-out denied such activity, but it has been accused in the past of using seller data to develop and launch its own competing products.

Risk number two: Yes, customers will still be making direct purchases from your website and interacting with your brand. But there’s risk in handing over control of every experience beyond Buy With Prime’s payment gateway, including checkout, delivery and unboxing. You should consider the impact on your sales mix and whether it will increase the volume of lower-margin product sales.

Risk number three: Because the service will only be eligible for Amazon FBA sellers initially, there’s a risk you’ll need to allocate some of your inventory into Amazon’s warehouse. The current global supply chain issues we’re seeing make it more important than ever to get your inventory management right. Failing to get the right split may force you to set aside money for orders going through another shipping and inventory solution.

Final thoughts

Shopify’s Shop Pay currently dominates the eCommerce landscape as a website payment option, so it might not see its growth affected by this new service. But it’s clear both companies are working overtime to win over merchants.

Will you be shifting strategy when Buy With Prime lands in your region?

If you’d like to learn more about how technology is changing the eCommerce industry, speak to our expert team today. We don’t just offer great financial products — we’re your end-to-end business growth partner.

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