Online shopping is here to stay and yoday, an average of nearly 28% of the global population buys products through e-commerce stores. That includes 267 million US shoppers.
As brands expand their online presence to capture those sales, they need new ways to offset the most taxing part of selling online: shipping and fulfillment.
Many brands turn to marketplace services like Fulfilled by Amazon (FBA) to make that happen, often at the steep price of customer loyalty. But there might be a way for growing DTC brands to have their cake and eat it too.
Meet Amazon’s New Buy with Prime Feature
Buy with Prime (BwP) offers brand owners a way to get the best of both worlds: to build a loyal customer base through their own DTC website while offloading the logistical nightmare that is shipping and returns.
Sellers can increase conversions and shoppers can connect directly with the brands they’re buying from. A true win-win.
But there are still a number of unknowns to account for. Let’s take a closer look at what we know so far, both for individual brand owners and for the e-commerce landscape as a whole.
The Scoop on Buy with Prime
- What is Buy with Prime? How does it work?
- Why Buy with Prime is a game-changer: The real pros and cons
- Buy with Prime vs. Shopify
- What does this mean for growing brands?
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What is Buy with Prime? How does it work?
On April 21st, 2022, Amazon introduced Buy with Prime, a new fulfillment and checkout service that allows shoppers with a Prime membership to shop on e-commerce websites other than Amazon.
DTC brands can simply add the “Buy with Prime” button to their site and any shopper with an Amazon Prime membership can buy products directly from the brand’s website using their prime accounts — which means they get free and fast shipping, Amazon customer service, as well as streamlined payment solutions.
A 2021 study on the factors limiting online shopping behavior found that customers generally hesitate to buy from e-commerce websites due to the following reasons:
- Fear of insecure bank transaction
- Unsure of brands’ reputation and services provided
- A negative prior experience
- Insufficient product information
- Lack of trust
As an already tried, tested, and somewhat-universally preferred e-commerce marketplace, Amazon has the potential to greatly encourage customers to shop directly from DTC websites.
From that perspective, the Buy with Prime button can be a key asset for converting customers from just browsing to actually hitting Checkout.
What if Amazon swipes my customers?
While the checkout process might happen on the Prime portal, merchants receive all the information they need to be able to connect with the customer later on.
Amazon shares customers’ names, email addresses, shipping addresses, and phone numbers so that merchants can build direct relationships with customers through email and text marketing.
This means sending out notifications about new arrivals related to the customer’s purchase, following up with a customer for reviews after the product has been received, notifying them about new offers and discounts, and many other marketing strategies to establish a connection with your customer.
For more on the information sharing between Amazon and its BwP DTC partners, check out these FAQs.
How exactly does Amazon Buy with Prime work?
Here are the current guidelines regarding enrollment in Buy with Prime:
- At the moment, BwP is invitation-only and limited to sellers who are enrolled in Amazon FBA. However, the plan is to roll out this feature to make it accessible to everyone, even retailers who don’t sell on Amazon.
- Participating businesses will have to pay service fees, processing fees, fulfillment fees, and storage fees, similar to selling on Amazon Prime. There are, however, no fixed or long-term subscription fees.
- To use Buy with Prime, merchants are required to sign up with Amazon Pay so customers can have a seamless checkout experience using their saved payment and shipping information.
Buy with Prime is easy to integrate into your website once you get enrolled. All you need to do is enroll, set up Buy with Prime for your website, pick which products you want to offer this feature for, then create and add the code for the Buy with Prime button to your site.
For detailed steps on integrating BwP into your site, check out this Buy with Prime help page.
Once your Buy with Prime button goes live, shoppers buying products through your DTC website have the option of checking out through their Amazon Prime accounts.
Your customers get a more efficient shopping experience and you can get back to scaling your brand, knowing that the fulfillment for that order will be handled by Amazon.
Why Buy with Prime Is a Game-Changer: The Real Pros and Cons
Now that you know what Buy with Prime is and exactly how it works, you’re probably wondering whether to go ahead and get on that waitlist.
Many signals indicate that could be a good move. In fact, a survey conducted by RetailDive found that:
“If a brand can offer the same seamless browsing experience and flexible payment options as online marketplaces, then 76% of respondents said they would prefer to shop on a branded site and 85% said they’re more likely to shop directly with brands.”
For DTC sellers, adding the Buy with Prime button to their e-commerce sites may seem like a no-brainer. But as with all new e-commerce trends, it’s important to keep the full picture in mind.
Let’s take a closer look at the potential benefits and drawbacks of Buy with Prime.
The Pros of Buy with Prime
Here’s a recap on the potential advantages of adopting BwP:
- Amazon handles all levels of fulfillment — including packing, shipping, returns, and exchanges.
- Amazon is a trusted marketplace. People are more likely to follow through with their purchase if they feel comfortable relying on Amazon as the fulfillment provider.
- 34% of shoppers leave brand sites without buying when they are forced to create an account. With the Buy with Prime option, customers can simply log into their existing Prime accounts and checkout securely, which means no more cart abandonments.
- The Buy with Prime feature could increase the number of customers shopping directly on DTC websites, which can help sellers connect directly with customers and improve their brand presence and trust.
- It’s easy to set up for sellers and convenient to use for customers.
The Cons of BwP
Like everything, Buy with Prime isn’t perfect.
Here are a few potential drawbacks:
- It is invitation-only (although, that might change pretty soon)
- Buy with Prime is offered only in the US, so international shoppers will not be able to take advantage of Prime shipping and checkout.
- Sellers still need to cover storage, fulfillment, and service fees just like they would if they sold directly on the marketplace.
Of course, if you take on your own shipping and fulfillment, you’ll still be paying storage, packing, and shipping costs through different fulfillment and delivery providers. As you can imagine, the answer to ‘Should I sign up for Buy with Prime?’ will look different for every brand.
For DTC brands that already have a healthy online sales presence from their own site and/or channels outside of Amazon, or for those that have an affordable and reliable fulfillment network, the benefits might not outweigh the risks.
While Buy with Prime looks promising at the moment, keeping an eye on how things progress once it’s fully launched and available to all sellers will be key in making an informed decision.
Buy with Prime vs. Shopify (and Other Fulfillment Services)
No other retailer or marketplace matches Amazon’s worldwide connectivity.
The biggest advantage of Amazon, for both shoppers and sellers alike, is its efficient, fast, and cheap (even free) delivery system.
With over 1 million employees in its warehouses and a 50% boost in fulfillment capacity in 2020 alone, Amazon is on the way to building a logistics system to rival UPS and FedEx.
Additionally, Amazon offers lower fulfillment costs and faster shipping compared to UPS, USPS, and FedEx, which makes it a more attractive option for many shoppers and sellers.
With all this in mind, some experts predict that Buy with Prime just might be the pivotal move in Amazon’s plan to take over the shipping industry.
Shopify is trying to keep up
While Amazon is expanding, so is Shopify.
Recently, Shopify bought the logistics company Deliverr to accelerate the development of their end-to-end fulfillment services. This holds great promise for Shopify sellers as they can now offer customers same-day or two-day delivery, just like Amazon.
However, Amazon’s Buy with Prime is available via many e-commerce platforms, including Shopify — which could change the scope of this e-commerce platform, which rose in popularity as a way to support merchants who wanted to sell directly from their own DTC websites.
In an interview with Charged, Consulterce founder and e-commerce strategy consultant Martin Heubel said:
“[Shopify] will have to focus on creating an equally attractive, and presumably more competitive, proposition for merchants than Buy with Prime represents. However, given Amazon’s sheer advantages in terms of existing fulfillment volume, economies of scale are unlikely to work in Shopify’s favor.”
All fingers point toward a tricky situation for Shopify.
On the one hand, Buy with Prime could reduce the number of cart abandonments for sellers and drive more traffic to Shopify, but integrating this checkout option also means inviting their competitors right into their ecosystem, which has its own implications.
For now, Amazon has already developed BwP integration technology with Shopify. But what measures will Shopify end up taking to combat Amazon’s move?
What does this mean for growing brands?
Currently, BwP focuses on offering conversion-boosting possibilities to growing DTC brands. And it may very well work.
Many shoppers browse through retailers’ websites for products they like and immediately switch to Amazon to place an order. The reason: convenience, fast and free shipping, and they want to get their money’s worth out of the Prime membership they’re already paying for.
If instead shoppers are given the option to sign into their Prime accounts right there from your DTC website, it could be safe to bet sales will increase. But the tradeoff for growing brands and the e-commerce landscape as a whole has yet to be seen.
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