Amazon is extending the benefits of a Prime membership to online stores beyond its own site, a move aimed at increasing merchant fee revenue and expanding its logistics footprint.
The company announced Thursday that the new service it calls “Buy with Prime” will initially be available by invitation to merchants who ship their products using Amazon’s warehouse and delivery services. Then it will be rolled out to merchants who don’t sell on Amazon or use its delivery services.
Amazon.com Inc. said the service will only be available to US customers. Launched in 2005, Prime has more than 200 million members worldwide who pay $139 per year, or $14.99 per month, for faster shipping and other benefits, such as free shipping and returns.
The company said Prime members using “Buy with Prime” could see the Prime logo on eligible products on a merchant’s site and make purchases using payment and shipping information stored in their Amazon account.
Merchants using the service will pay various fees, which the retailer says are calculated based on what sellers use. “With no fixed subscription fees or long-term contracts required, merchants can expand their selection or cancel at any time,” he said.
Bob O’Donnell, chief analyst at TECHnalysis Research, says the expansion will open more doors for businesses to use Amazon’s services without selling to the retailer’s third-party marketplace, which has long faced accusations undercutting merchants by making “counterfeits,” or very similar products, and boosting their presence on the site.
“If I’m a merchant and really don’t want to deal with the hassle of shipping, logistics, returns, and all that kind of stuff, this becomes a really great option without having to sell on Amazon” , O’ said Donnell.
Amazon’s growing logistics arm aims to further compete with major carriers like UPS, FedEx and the US Postal Service, although some speculate Thursday’s announcement could also have been aimed at blunting the Canadian company’s momentum. Shopify e-commerce, which makes software that allows businesses to create their online stores.
But Michael Pachter, a longtime technology analyst at Wedbush Securities, believes the company is extending Prime benefits to satisfy customers.
“They do this to make it easier for the customer to find what they want, wherever they are, complete the transaction, and remain an Amazon customer,” Pachter said.
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