FNew companies have been able to disrupt the shopping experience as often as Amazon.co.uk (NASDAQ: AMZN). It’s because of the e-commerce giant that consumers are reluctant to make an online purchase if they can’t have it shipped for free in two days or less.
Amazon is now set to revolutionize the e-commerce experience again after announcing that it is extending the benefits of its Prime loyalty program to third-party websites. Merchants using Fulfillment by Amazon (FBA) will now be able to offer all membership benefits to Prime customers on their own websites.
Initially by invitation only, the program will allow third-party sellers on Amazon to offer their customers the Prime shopping experience without ever having to visit Amazon. All the benefits of Prime — fast, free delivery and returns; payment using Prime payment and shipping options; and updates to orders through Prime – will be available on the participating retailer’s website.
Amazon says it will continue to invite sellers to participate throughout the year and plans to eventually expand the offer to retailers who don’t have an Amazon presence or don’t use fulfillment services. from Amazon.
An end of the race around the competition
The new Buy with Prime program takes advantage of Amazon’s logistical prowess while alleviating concerns about the rising cost of membership. While a Prime membership is a must-have perk for many, with fees now costing $139 per year, there may be a moment of hesitation before renewing the program.
Even though you get movies, music, books and other services as part of Prime, it’s the free two-day shipping that’s the biggest draw. Customers who aren’t heavy users of the site may start to wonder if it’s still worth paying that premium, especially now that walmart (NYSE: WMT) has a viable alternative in its Walmart+ program that costs just $99 per year.
However, expanding Prime beyond the closed world of Amazon’s site could entice customers to stick around as it opens up more choices for shopping.
The real benefit for Amazon, however, is to mitigate the threat posed by Shopify (NYSE: SHOP)which has become more vertically integrated and continues to develop its own fulfillment and logistics platform.
The Shopify Fulfillment Network now gives small and medium businesses a way to effectively compete with Amazon by introducing two-day shipping for a merchant’s customers, simplified returns, and product storage.
The camel’s nose under the tent
Buying with Prime always carries risks for participants. An ongoing fear is that Amazon will use the data it collects on customer shopping habits and turn that information against the retailer by developing competing products. Now, he will not only be able to get information about shoppers visiting storefronts on Amazon.com, but he will also be able to access the third-party retailer’s site for that data.
So the real game-changing development may not be so much about Amazon expanding a new level of convenience and opportunity for customers and merchants, but rather about using its vast resources to infiltrate the competition and capture their business models. off-site traffic and transactions.
Logistics as a service could be the biggest competitive threat facing retailers on and off Amazon.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Rich Duprey has no position in the stocks mentioned. The Motley Fool owns and recommends Amazon and Shopify. The Motley Fool recommends the following options: $1140 January 2023 Long Calls on Shopify and $1160 January 2023 Short Calls on Shopify. The Motley Fool has a disclosure policy.
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