- Shopify announced a new shipping product that mirrors Amazon’s new Buy with Prime feature.
- Both products use each company’s fulfillment capabilities as marketing.
- Amazon has long offered the kind of shipping services that Shopify is after.
Shopify and Amazon recently announced features that allow online sellers to highlight shipping expectations. Providing details like when a package might arrive is another way the two e-commerce companies could compete for customers and sellers.
Buy With Prime, announced by Amazon in late April, allows online sellers to offer services associated with Prime, such as fast shipping, free delivery and free returns, to buyers who shop on websites outside of Amazon.com.
Shopify on Thursday announced a related product during the company’s earnings called Shop Promise, a new badge that will give shoppers expected delivery dates across merchant stores and other channels like Google, Facebook and Instagram where merchants sell. their products. Shopify also offers package tracking through its Shop app.
The implementation of Shop Promise is dependent on the Shopify Fulfillment Network catching up, as the new feature will only be available to US merchants using SFN. Shopify confirmed Thursday that it plans to acquire asset-light fulfillment startup Deliverr for $2.1 billion, in a deal the company says will help speed up its plans. Still, SFN won’t hit scale until late 2023 at the earliest, Shopify CFO Amy Shapero confirmed during the earnings call. Amazon has offered the shipping services that Shopify is planning for more than a decade.
The ads are an escalation in a long-standing but little-recognized battle between Shopify and Amazon.
“Amazon is definitely taking notice of Shopify, and this feature is the latest in a series of moves to improve its own competitive position,” Dan Romanoff, senior equity research analyst at Morningstar, told Insider regarding Buy With Prime. .
‘We’re really excited’
During Thursday’s earnings call, William Blair analyst Matthew Pfau asked Shopify CEO Tobi Lütke if Buy With Prime would affect Shopify’s business in general or its fulfillment plans more specifically. Lütke’s response, which lasted three minutes, downplayed the rivalry and the possible ramifications of Buy With Prime for Shopify.
“We’re really thrilled that Amazon has made the decision to take the incredible infrastructure that they’ve built, because, I mean, it’s an infrastructure that’s second to none, and we want to share this broadly with small merchants on the Internet,” Lütke said.
Shopify does not currently allow merchants to install alternative payment options like Buy with Prime in their online stores.
But during the call, Lütke said that Shopify would be “happy” to integrate Buy With Prime into its services, just as it has already done with Meta, Google, and TikTok.
A Shopify spokesperson did not respond to Insider’s request for comment. The company told The Information that Lütke’s statements during the call were his opinion and that the company would still need to gather details.
Shopify’s mission is to make it easy for merchants to sell things online. It does this by allowing third-party software providers to integrate with its platform. Software integrations “make it much more possible for small businesses to engage in very complex retail strategies that previously would have required a lot of staff,” Lütke said during the earnings call.
Still, the CEO’s comments indicate a change in tone. In the past, Lütke has described Shopify’s mission as “arming the rebels” against the e-commerce empire that is Amazon.
“This shows, in a sense, a remarkable maturity on Tobi’s part and certainly an evolution in how Shopify views Amazon,” Rick Watson, CEO of RMW Commerce Consulting, told Insider. “Three years ago Shopify, the rebel alliance, would never transport their troops on Empire ships. That would be unthinkable.”
Regardless of Lütke’s positive response to the new product during the company’s earnings call, Buy With Prime “increases the competitive environment for Shopify,” Angelo Zino, senior investment strategist at CFRA Research, told Insider.
And Buy With Prime likely isn’t the last of Amazon’s products that could pose a threat to Shopify. Amazon has a secret team, known internally as “Project Santos,” that has been tasked with fending off Shopify’s threat to Amazon’s e-commerce dominance, Insider reported in early April.
The Information reported Thursday that the launch of Buy With Prime has sparked a heated debate within Shopify for the past two weeks, with members of the product team discussing whether they should develop tools that allow their merchants to use Buy With Prime.
Shopify reported earnings that were below investor expectations, reflecting a slowdown in e-commerce activity shown in reports from Amazon, Etsy and eBay. Shopify revenue grew 22% year over year to $1.2 billion, compared to analyst expectations of $1.25 billion. And gross merchandise volume, or the total value of goods purchased through the Shopify platform, grew 16% to $43.2 billion, compared with the $46.5 billion analysts expected.
Its shares fell more than 14% after the earnings call. Shopify’s stock is down about 70% from its pandemic highs in the fall of 2021.
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