Amazon is Primed for online domination – TechCrunch


We talk about bulls in china shops, but what about bulls running through the streets of entire shopping districts, or other neighborhoods? This morning, Amazon unveiled a new feature that will test just how much of a bull it can be online — beyond its own china shop, so to speak.

Prime — its membership-based scheme that provides free and fast shipping options on a number of products sold on Amazon, alongside a number of other perks like Amazon’s streamed video and music services, used by more than 200 million consumers — is now officially stepping outside of the walls of Amazon itself. Buy with Prime, as the service is officially called, will see Prime members get to extend those Prime benefits — specifically fast and free delivery, free returns, and a seamless checkout experience — to participating third-party merchants on their own sites and apps.

There is no guarantee that this will be a big hit for Amazon. Alexa was huge for the company, and Prime on Amazon itself has been, too. But don’t forget the Fire Phone, or Amazon’s foray into restaurant delivery, or other projects that have been killed over the years.

Be that as it may, there is a giant amount of potential here for the company, so it’s worth spelling out what is going on, some of the context behind this launch (and what that means), and what it’s giving Amazon that it hasn’t had before, and why that matters.

First, the basics

Buy with Prime is starting with merchants that are already using Fulfillment By Amazon (FBA) — which, like Amazon Pay, is an Amazon feature that had already been available outside of and merchants use to outsource shipping and logistics.

Amazon said it will be rolling out to these retailers throughout the rest of this year, and as 2022 progresses it will also be extended to those no already using FBA or selling with Amazon on an invitation basis.

Users look for the Prime logo on these other online stores to find and use the service. Merchants meanwhile integrate by signing up, linking in their Amazon Seller Central accounts, Multi-Channel Fulfillment, and Amazon Pay; and then installing a JavaScript widget. Merchants get access to order data — but Amazon does, too (more on that below).

The whole service is run on a similar idea to AWS, based on SaaS pricing covering a service fee, a payment processing fee, a fulfillment fee and a storage fee — all calculated per unit. “Merchants pay only for what they use,” Amazon writes. “Merchants can expand selection or cancel at any time.”

Amazon is playing this as more convenience and another perquisite for Prime subscribers.

“We always aim to exceed Prime members’ expectations by offering more selection, exclusive deals, quality content, and convenient features,” said Jamil Ghani, VP of Amazon Prime, in a canned statement in Amazon’s official announcement. “With the introduction of Buy with Prime, we’re expanding where members can enjoy trusted and convenient Prime shopping benefits beyond Amazon, adding even more value to their membership. Members will have the flexibility to shop from merchants directly, all while enjoying the fast, free delivery, seamless checkout, and easy returns they’ve come to know and love from Amazon.”

It’s also touting it as part of its strategy to build B2B tools, aimed at merchants selling online.

“For over 20 years, we’ve been empowering small and medium-sized businesses with opportunities to grow,” said Peter Larsen, Amazon’s VP of Buy with Prime, in the same announcement. “Allowing merchants to offer Prime shopping benefits on their own direct-to-consumer online stores is an exciting next step in our mission to help merchants of all sizes grow their business—whether on Amazon or beyond. With shoppers purchasing directly from merchants’ online stores, Buy with Prime will allow merchants to build customer relationships and brand loyalty while offering conversion-driving benefits like fast, free shipping.”

Move slow, break things

As with other very slow rollouts we’ve seen at Amazon, the expansion of Prime beyond Amazon’s walled garden has been in the works for years — more than three, in fact.

Back in March 2019 — when the company unveiled a partnership with WorldPay that enabled merchants outside of Amazon to start to accept Amazon Pay as a payment option alongside others like credit cards, PayPal, Apple Pay and Google Pay — its VP of Amazon Pay at the time, Patrick Gauthier, got very coy when I asked him about its ambitions to extend Prime in a similar way.

Instead, he pointed me to a small trial it was running with fashion retailer All Saints, which was providing Prime shipping benefits to customers if they were already Prime subscribers.

“It has been very successful in terms of customer conversion and lift, and to capture new customers,” he said. He also noted that it ran a different test during Prime Day in 2018, embedding Prime links with third-party merchants (but linking shoppers back to those merchants’ Amazon-based products) to understand the potential opportunity it might have here. “Yes, we have had interest from merchants if and when we decide to go further with Prime,” he added. (Gauthier has since left Amazon to run Convera, Western Union’s Business Solutions spin-out.)

Prime is Amazon’s Prime agent of change

Amazon is famously vague when it comes to user numbers and revenues for specific products. Its last official numbers are from April 2021, when founder (now) executive chairman CEO Jeff Bezos said it had 200 million members. (It now says it has “over 200 million.”)

Amazon Prime arguably has been the primary agent of change in the Amazon universe: first and foremost, it’s been the company’s chief (prime, even) way of building loyalty among customers, who have found the free and quick shipping options to be a huge lever to lowering the barriers to shopping online. The allure of quick and “free” shipping has been strong enough that Prime members turn first to Prime before considering (let along buying) other products when it comes to browsing and purchasing, a route made easier by Amazon’s search feature to search just for Prime-eligible products.

That’s been shown to be powerful enough that people are even willing to opt for a Prime-based product over one that is less expensive, but might take longer to receive, or have the shipping price spelled out more explicitly in the overall price — usually a combination of the two.

Amazon’s also used Prime to introduce completely different product categories, too, from groceries through to streamed media services. Overall Amazon says that Prime covers thousands of films and shows on Prime Video; 2 million songs, thousands of stations and playlists, and thousands of podcasts on Amazon Music; free games with Prime Gaming; over 3,000 books and magazines on Prime Reading; unlimited photo storage with Amazon Photos; grocery delivery and pickup from Amazon Fresh and Whole Foods Market; same-day and other fast deliver options for 15 million items in the U.S. alone; Amazon Pharmacy and prescription access; and more.

Considering how transformative Prime has been to Amazon itself, it’s fair to wonder if Amazon might try to exercise some of that strategy further afield, too. That is to say, if it starts with the bread and butter of its business now — the Marketplace, and the kinds of products third-party sellers already offer on Amazon itself — does it expand next to offering Prime for subscriptions to magazines and newspapers, or to other kinds of media, or to grocery shopping online?

One of the key issues with Amazon for so many has been that third-party brands haven’t been so keen to fit into the Amazon template when it comes to presenting its products. Amazon has tried to make efforts over the years to address this — for example this partnership with Adobe to help D2C brands using Amazon fulfillment to customize their storefronts — but generally even when a merchant has a storefront that looks “different” to the rest of Amazon on Amazon itself, going any deeper than the front page yields the same cookie-cutter river approach that Amazon has standardized across the whole of

That attitude has driven a lot of business to the likes of Shopify, Commercetools and many others offering “headless” commerce solutions to merchants to build and run storefronts with as little or as much input, and integrating as many third-party solutions including those for logistics and fulfillment, as they are willing to make — a large army of third-party e-commerce technology providers amassing in the name of giving retailers a way to bypass Amazon.

Now, Amazon is playing nice with platforms like BigCommerce. Powering sites on their own terms does away with all of that, and could be a powerful option for a wide swathe of businesses beyond e-commerce, which have a very specific focus on content management.

Move slow, break things

There are many examples of how Amazon has not been the fastest draw when it comes to launching new things. It took Amazon years to add more countries to the Kindle beyond its home market of the U.S. (or really to add much of anything: do a search on TC or Google for the words “kindle” and “finally” to see what I mean). It’s worth wondering whether that drawn-out processes has helped or hindered the growth of e-books, or if it was both and they simply cancelled each other out.

The Kindle is worth looking at when considering how Amazon has done in building products that extend it to new frontiers, as Prime would do. The success of the its home-grown e-reader is undisputed: although Amazon is famously vague when it comes to talking about actual sales numbers, others estimate that its share of e-readers is around 68%.

On the other hand, e-books themselves are still a smaller market compared to the reading market overall, with Pew Research (admittedly using 2019 data) noting that only 7% of respondents said they only read e-books, compared to 37% saying they only read print books (28% read a combination). In other words, changing overall habits may or may not happen, and it will be a slow-burn issue one way or the other. But in the meantime, Amazon itself makes a killing in the market that it has created. That could well be a pattern that gets repeated with Buy with Prime.

Data is Amazon’s oil

Last but not least, there is a fascinating data play here for Amazon, which goes to the heart of how the e-commerce giant is fueling its growth.

Amazon is giving merchants control over aspects of the e-commerce process that would have been out of their hands if they sold through Amazon itself. They can control personalization for shoppers, the algorithms behind what different people are offered and how items get priced, and the wider user interface and experience. But if keep get full control of their data, Amazon now will see it, too.

It’s processing information about its Prime subscribers, key details about their shopping habits, behavior and interests across other kinds of sites that are not designed or run by Amazon — all information that it can in turn use to improve and shape what it sells on

It goes beyond that, though. Amazon has become a major player in online advertising, an area that will also potentially benefit from richer datasets on browsing and shopping habits, which because this concerns Prime subscribers and processing Prime orders, will be first-party data for the company.

It’s also giving Amazon an interesting crack at an even bigger role in the online universe, that of identity management.

Companies like Facebook (Meta), Apple and Google have all made interesting plays at controlling the “log in” across apps and sites, creating social graphs and user graphs across different walled gardens (benefitting those controlling the log-in services), while also providing a way to manage users and profiles across specific apps and sites (benefitting those app and site publishers).

This gives that concept a new twist, and points to just how Amazon really could control it all. If Facebook focused on the social graph, and companies like Apple or Google have made a play to build the identity graph, Amazon has the potential to build the consumer graph, a bigger overall picture of how the internet moves based on purchasing activity.



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