In the wake of Shopify's (SHOP) retreat from shipping services, Amazon is seizing the opportunity to capitalize on the delivery void and expand its revenue streams. With an aggressive approach, it is promoting its "Buy with Prime" feature, which facilitates swift delivery of customer orders placed on websites other than Amazon. (AMZN) As disclosed during the recent Accelerate sellers conference, the service is resonating with online merchants, reportedly enhancing sales conversions by 25%. Additionally, it is serving as a magnet for customers who are new to various online brands but familiar with and trust the Amazon delivery process, fostering higher conversion rates.
On the US turf, Amazon commands a significant portion of the e-commerce market, accounting for nearly 38% of all online expenditure this year. Notably, a shift is observed in Amazon's revenue generation strategy; it is gravitating towards offering ancillary services like product packing and delivery to online merchants, instead of primarily focusing on direct product sales. This shift is in tune with the broader market trend, where direct-to-consumer sales are forecasted to burgeon at a rate of 17%, significantly outpacing the overall growth of online spending.
Meanwhile, the dynamics between Amazon and Shopify have transitioned from competition to collaboration. Initially escalating to rivalry with Shopify's acquisition of logistics startup Deliverr, tensions cooled down when Shopify sold its logistics segment to Flexport Inc, which is currently in the midst of a strategic overhaul. A formal agreement between Amazon and Shopify in August further solidified this newfound synergy, enabling merchants using Shopify's tools to leverage Amazon's expansive logistics network. This partnership, emphasizing mutual growth and customer satisfaction, effectively ends the narrative of Amazon vs. Shopify, as stated by Amazon Vice President, Peter Larsen.
Despite previous failed attempts to proliferate its e-commerce footprint beyond its native platform, Amazon seems poised for success with its renewed "Buy with Prime" initiative. Early feedback from merchants like Aaron Cordovez of Zulay Kitchen signifies a positive reception, attributing increased sales to customer trust in the Amazon process. Moreover, industry experts, including Ben Rey from Teikametrics, underline the timeliness of this move, noting a growing interest among online merchants in diversifying sales channels and addressing long-standing fulfillment challenges. As the endeavor is still in its infancy, Amazon acknowledges the necessity for further enhancements to fully realize its potential.
