With a truce with Shopify, can Amazon’s DTC flywheel take off?

It is learned that on August 30, Amazon and Shopify simultaneously announced a new plan, that is, Amazon will provide the "Buy with Prime" application in the Shopify App Store. A year ago, Shopify was still issuing warnings to merchants for using "Buy with Prime". The new plan marks the official cooperation between the two parties.

"Buy with Prime" is one of the first and most important weapons launched by Amazon to enter the DTC field. By providing logistics and other services to brand merchants outside Amazon, Amazon hopes to create a flywheel in the DTC field. However, due to Shopify's warning to merchants using this service, the progress of "Buy with Prime" has not been smooth.

It is reported that "Buy with Prime" is currently only available to invited merchants, but it is expected to be open to all US Shopify merchants who have used FBA logistics by the end of September this year. Merchants can not only have all the data of customers using "Buy with Prime", but also quickly synchronize products after downloading the app, and automatically synchronize information such as orders and promotion discounts.

The partnership with Shopify is an important milestone for Amazon’s entry into the DTC space. However, it remains to be seen whether Amazon’s DTC flywheel can start running.

To promote BuywithPrime, all we need is Shopify’s nod?

Amazon first launched BuywithPrime in April 2022, providing Amazon FBA logistics and payment services to brand merchants with independent websites. Initially, the program was limited to invited merchants. Later, in order to attract more merchants, Amazon made several improvements and announced in January this year that it would be open to all US merchants.

In more than a year since its launch, Amazon has been very active in Buy with Prime.

First, the function of modifying size/color variations was added, and the seller's order and customer data on the website was synchronized to the brand website. Then, BuywithPrime also supported sellers to synchronize customer reviews on Amazon on their website, and introduced conversion tracking with Facebook and Google pixels to track customer behavior using BuywithPrime. Finally, Amazon also opened BuywithPrime to some non-Prime members.

However, the effect of this series of actions is not obvious. The main reason is that independent website building platforms such as Shopify are not welcoming to BuywithPrime. These platforms usually provide their own payment and logistics services to merchants, and Amazon's entry indirectly damages their interests.

Especially Shopify, which is several times larger than other platforms among many website building platforms. Amazon wants to promote Buy with Prime, and Shopify is a platform that cannot afford to lose. However, Shopify's attitude tends to refuse. For merchants using Buy with Prime, the platform will pop up a warning window to remind them of risky behavior.

In fact, Shopify has also tried to negotiate with Amazon. After all, providing merchants with better services is also its goal. However, both parties were unwilling to compromise on some details, so they failed to reach a cooperation. For example, Amazon made its payment method the first choice in Buy with Prime, which would cause Shopify to suffer a great loss in terms of payment.

The cooperation was mainly due to the compromise between Shopify and Amazon on some details. For example, AmazonPay will be provided as one of the payment options of ShopifyPay, so the final payment will be processed through the Shopify payment system. Amazon Prime members can enjoy Amazon's delivery time when shopping outside the site, and the consistency of logistics and payment experience is guaranteed.

However, according to Amazon's second quarter financial report, even before the cooperation was reached, it also saw an increase in the number of orders using Buy with Prime. During Prime Day this year, the number of orders increased 10 times month-on-month. Amazon also denied the claim that Marketplace Pulse "has only been used by a hundred brands in its first year online", saying that the number of brands is growing every day.

Therefore, Shopify's approval may be an important part of whether Buy with Prime can proceed smoothly, but it may not play a fundamental role. What is more important is whether merchants can obtain tangible benefits when using Buy with Prime. According to Andy Jassy at the Amazon earnings conference, the conversion rate of merchants using Buy with Prime increased by an average of 25%.

Amazon has a long way to go to win the trust of DTC brand sellers

Merchants are not only the foundation for promoting Buy with Prime, but also the cornerstone for Amazon to build a DTC e-commerce ecosystem. However, Amazon currently faces many challenges in attracting DTC merchants.

First, many brand sellers already have fixed partners in various links in the process of developing DTC business. To switch to using Amazon services, they need greater value to attract them. Second, for non-Amazon brand sellers, business integration is more inconvenient, and their trust in Amazon is relatively low.

In order to enter the DTC e-commerce field, Amazon has launched other services for merchants on platforms such as Shopify in addition to launching Buy with Prime. In April this year, Amazon launched a fixed invitation program for brand sellers, namely the "Explore Brand Selection" program.

According to Amazon, the program aims to help brand sellers list products on Amazon faster by automatically synchronizing sellers' listings on their brand websites with Amazon and automatically filling in 59% of product attributes, saving sellers time on manual uploading.

However, this plan has not been recognized by sellers. Many people believe that the purpose behind this plan of Amazon is to obtain the product and sales data of brand sellers' independent sites. Although this plan is an optional plan, it will eventually become a forced use of sellers once they use it, just like FBA, for example, requiring access to certain data before using it.

In response, Amazon officials stressed that the program does not require sellers to link with Amazon on the back end of their websites and will not obtain confidential information. Sellers can still control the products to be listed and review, edit and approve the listings before listing. Nevertheless, there are already many third-party tools on the market that provide similar services, and Amazon's verbal promise is not very convincing.

But some sellers are optimistic and willing to try the new plan. For them, the problem is how to ensure that there are no mistakes in the operation. The automatic transmission of product listing data from one platform to another may result in a large amount of information and data errors. Not only is it difficult to delete, it may also cause a series of subsequent troubles.

At the same time, on Amazon, listing quality is an important competitive factor, and sellers need to further optimize. This means that if the seller's brand website has more product information loopholes, there will be more places to modify.

As the e-commerce market becomes saturated, the DTC model of refined operations is becoming increasingly popular. Amazon's dream of building a DTC e-commerce ecosystem needs to start with merchants, but there is still a long way to go to win the trust of merchants.

Editor✎ Ashley/

Disclaimer: This article is copyrighted and may not be reproduced without permission.