Amazon’s new service offers partnership opportunities to companies that don’t want to sell on the Amazon site, analyst says

Amazon.com Inc. announced the launch of Buy With Prime on Thursday, a service that will allow Prime customers to take advantage of membership benefits, like speedy delivery, on purchases that happen beyond the Amazon site.

“Prime members will see the Prime logo and delivery promise on eligible products in merchants’ online stores, which signals the item is available for free delivery, as fast as next day, with free returns,” the announcement said.

“Prime members will use the payment and shipping information stored in their Amazon account and receive timely shipping and delivery notifications after an order is placed.” 

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To start, Buy With Prime will only be available by invitation to sellers that use Fulfillment by Amazon, who already have inventory in Amazon
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fulfillment centers. The service will be rolled out through the year. Merchants that use Buy With Prime will only pay for the services they use rather than a fixed subscription fee or signing a contract.

“With growth from its core retail business slowing, Amazon is looking for new ways to bolster revenue,” wrote Neil Saunders, managing director of GlobalData.

Amazon reported fourth quarter results in February that got a boost from its investment in Rivian Automotive Inc.
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AWS and a growing advertising business.

“Foremost among these is the expansion of businesses Amazon can partner with, which will now potentially include those who do not wish to sell directly on Amazon’s marketplace,” Saunders said.

“Over time, this will bring in additional lucrative revenue from services such as payment and fulfillment. The supplemental volumes will also allow Amazon to further invest in, and expand, its logistics infrastructure, which is one of the cornerstones of its success.”

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Amazon has also historically run into challenges enticing some brands, particularly luxury ones, to sell on the e-commerce site.

“The potential downside of Buy With Prime is that it could draw consumers away from Amazon’s own marketplace, which is not ideal at a time when the company is struggling to generate growth as it laps tough comparatives and battles with a more frugal consumer,” Saunders said.

Amazon is also facing more competition across various parts of its business, which Buy With Prime could counter.

“Amazon will also have in mind that it is now competing much more with services like Shopify, Instacart and upstarts like Walmart’s GoLocal,” Saunders said. “It recognizes the need to offer its own world-beating services more widely.”

Saunders noted that this latest service is also one more way to show the value of a Prime subscription membership.

Amazon stock has tumbled 9.1% over the last year. It is scheduled to report first-quarter earnings on April 28, according to a FactSet calendar.