By now you have probably heard the splashy news that Amazon announced last week. The everything-to-everybody behemoth has unleashed a new service offering for Direct-to-Consumer (DTC) brands that allows merchants to display a ‘Buy with Prime’ button that can be easily integrated into their native checkout flow. The big idea here is to provide your customers with fast and free shipping (via FBA) and the simplified Amazon checkout process that millions have grown to love, but on your own website. This may sound too good to be true; as often the case with Amazon. In this piece we will look at the case for and the case against using ‘Buy with Prime.’

* It should be noted that Buy with Prime is in Beta and is currently an invite only service. This is expected to expand rapidly later this year and into 2023, starting with FBA Sellers that also sell off Amazon’s platform.

The Case For Using Buy With Prime

  • Fast and Free Shipping
    • Since Amazon is emulating their Fulfillment by Amazon (FBA) service here it would look the same to your customer.
    • The process:
      • The merchant would send products ahead of time to Amazon fulfillment centers across the U.S.
      • The merchant would then collect the sales order using Amazon’s Buy with Prime checkout on their own DTC website.
      • Amazon will already have the customer information so from there an order will be created within Amazon’s fulfillment network.
      • Amazon fulfills the order and sends confirmation back to your site automatically. This, then dispatches your customer tracking notification email sequence just like if you had shipped the order on ShipStation or PirateShip.
    • Customers love fast and free shipping. They have become addicted to it and have even come to expect similar commitments off of Amazon’s ecosystem. Amazon is always going to be able to fulfill and ship the orders cheaper than a 3PL or yourself. Amazon doubled their already massive warehouse footprint in the past 18 months. Think about that!
    • Just seeing the ‘Prime badge’ and checkout should lead to a higher conversion rate. Some are projecting 2-3x!
    • Even more parcel shipping volume for Amazon should lead to lower shipping rates (not just on Amazon but with other parcel upstarts).
    • This offering provides your customer’s free returns, as well. Something you may not have thought about until now.
  •  You Still Get Valuable Customer Data
    • So the good news is unlike selling direct on Amazon, by utilizing this program you still have access to the customer data (bad news: Amazon gets the customer data, as well. More to come on this later).
    • Customer data is king so not having to sacrifice important information about your buying base is crucial
    • You will still be able to market and retarget these customers continuously which should lead to a higher lifetime value.
  • Focus on Selling vs. Fulfilling
    • This program is mostly designed for Small and Medium-sized Businesses (SMBs). These brands usually don’t have a lot of resources or extra time. Having Amazon take care of the inventory storage, shipping, and returns is a huge time saver.
    • By utilizing Buy with Prime, a business owner can free up time to focus on brand growth and continuous improvements.
  • Cheaper Selling Costs
    • When you sell on Amazon you typically have two big bucketed fees:
      • Referral fee. Variable by category but usually 15% of MSRP. Essentially, the fee for Amazon to find the customer.
      • FBA fees. Fulfillment, storage, returns. Averages another 15% usually
    • By selling on your website you are eliminating the 15% referral fee. You have still found and own that customer so you don’t have to pay the referral fee. You get the benefits of the fast and free shipping that you would get if the item was sold on Amazon’s own site.

The Case Against Using ‘Buy With Prime’

  • Venturing Deeper Into the Belly of the Beast
    • Amazon already has its claws entrenched in 90%+ U.S. consumer brands. By continuing to partner with Amazon, yes you get the massive benefits of  their scale, but you also continue to be in bed with a company that notoriously has abused sellers with many documented processes over the past 10-15 years (Oh, do I have stories for you if ever interested)
    • It is no secret that Amazon’s onsite traffic is starting to level off and even decline for certain industries and niches. This program is a way for Amazon to capture (share) the offsite traffic. Who is to say what Amazon will be doing with the data they collect off DTC sites. They have been accused in the past of using their treasure trove of data to create private labeled products that emulate other’s best sellers. The FTC always seems to be sniffing around but the anti-competition enforcement always seems to false start.
    • As a seller, you are really trading off for convenience plus the increase in conversions here for the loss of autonomous control over your customers.
    • Amazon has been vigilant on protecting customer data for orders that occur on their platforms. However, to partner here you have to be willing to a) turn over your key customer data continuously and b) have some level of trust that Amazon isn’t going to manipulate the data for their gain in some form or fashion.
    • This program will also only continue to fuel Amazon’s ever growing Logistics sector. More and more volume will lead to Amazon overtaking all the carriers in Average Daily Volume (ADV).
    • Also, who is to say Amazon won’t start pitching more of their services to be on your DTC site? I am sure they will figure out some way for off- and onsite advertising fees at some point. High likelihood that sellers that enroll in this program will be upsold and consistently monetized by Amazon.
    • Good chance this program negatively impacts brand loyalty programs since their is some control loss
  • Hard to Turn Back
    • If you are a DTC brand that does intend to use Buy with Prime, you should know it will be incredibly hard to go backwards.
      • Your customers are now going see Fast & Free shipping options. This is made possible by Amazon’s vast fulfillment network. Say for whatever myriad of reasons, the program is not right for you. Good luck walking back that value prop to your customers. Or even worse, good luck trying to emulate free 2 day nationwide shipping at an affordable rate. SMBs cannot compete here.
  • Less Competition
    • By using Buy with Prime other payment processors will be negatively impacted. Shopify payments, PayPal, Stripe and Square are some players that come to mind. Markets are better with competition. Amazon’s playbook is to try and decimate competitors.
    • Also, other carrier delivery partners (UPS, FedEx, USPS) will be adversely affected by lost volume as they have targeted partnerships with Shopify, BigCommerce, and others. This will directly negatively impact these relationships and the volumes that drive them.

The Wrap

If anything, Buy with Prime is certainly an interesting offering from Amazon. The blue chipper is reading the tea leaves and realizes off platform traffic is picking up while their on platform traffic is plateauing. Their move makes logical sense to continue to keep grabbing market share of customer purchases/fulfillment. This program, however, is not for everyone as it isn’t one-size-fits-all.

It seems more natural for SMBs that are hyper concerned with growth and a stable, impressive service shipping offering. Larger brands will be best suited to continue to 100% own the customer relationship. They have the volume buying power to negotiate good national rates and are probably already shipping out of multiple warehouses. They may not be able to beat Amazon price, but for them control is going to be the determining factor. Regardless, anyone that enrolls in this program has to understand just how hard it will be to unravel once your customer’s have been shown the offering. It will be fascinating to see where Buy with Prime evolves from here. It always is with Amazon.