Initially launched as invite-only in April 2022, Amazon is now expanding Buy with Prime, a feature designed to increase shopper conversions for e-commerce merchants and direct-to-consumer (DTC) brands. The idea is simple — brands that add the “Buy with Prime” button to their online storefront offer a stress-free and seamless way for shoppers to buy products outside of Amazon using their Amazon Prime account.
For merchants, Buy with Prime offers a way to get the best of both worlds — a loyal customer base through your DTC website and the ease and convenience of Fulfillment by Amazon (FBA). Initial results have shown that some brands have achieved a 25% increase in conversions after adding the button to their site.
But there’s a catch. Made more widely available to US-based merchants in January 2023, Buy with Prime has seen little adoption so far. While there are benefits to offering Buy with Prime, get a full picture of what the feature offers and how it works.
Understanding Buy with Prime for Merchants
- What Is Buy with Prime?
- How Does Amazon Buy with Prime Work?
- The Pros and Cons of Buy with Prime for Merchants
What Is Buy with Prime? And What Does It Mean for Sellers?
With Amazon Buy with Prime, merchants can include a ‘Buy with Prime’ button and checkout option on their DTC website so that Prime members can enjoy the same seamless checkout experience and fast delivery they’re used to on Amazon.com. There’s no need to enter credit card information or personal data.
The Buy with Prime logo also signals an efficient and trustworthy shopping experience, alleviating many common fears, such as lack of trust and fear of fraud, that often prevent shoppers from purchasing from an unknown website.
Merchants offering Buy with Prime can also take advantage of Amazon’s other services. These include Amazon Pay for payment processing and Fulfillment by Amazon for product storage, packing, delivery, and returns. Buy with Prime comes with 24/7 support and sellers can use existing FBA inventory to fulfill Buy with Prime orders.
Buy with Prime also offers sellers marketing solutions designed to drive website traffic. With these features, you can download a toolkit to create Facebook and Instagram ads that feature the Buy with Prime badge to help attract and convert new shoppers.
Last but not least, Buy with Prime helps build credibility by allowing brands to display ratings and reviews, which according to Amazon will “help merchants increase shopper trust and conversion, and better inform shopper purchase decisions.” This could be a big potential benefit to sellers, with up to 99% of consumers reading online reviews before they buy and 46% reporting that they trust online reviews as much as they would a recommendation from a friend or family.
Why Is Buy with Prime a Promising Option for Merchants?
Buy with Prime could mean higher conversions and lower fulfillment complexity for merchants, and its benefits could be significant. How significant exactly?
Here’s some back-of-the-napkin math from SeekingAlpha:
Imagine 100 customers looking at a product on any given DTC website. 8 of them decide to purchase the product without Buy with Prime. With the Buy with Prime option, 10 of them would’ve bought the product (8*1.25).
Now, 2 additional conversions don’t seem so much, but what if instead of 100 customers, we were talking about 100,000? In this scenario, an improvement in the conversion rate from 8% to 10% would drive 2,000 additional sales.
The main argument for merchants using Buy with Prime is that by attracting more Amazon shoppers, it won’t just help drive increased traffic. It will also help drive conversions, with brands like Wyze and Trophy Skin reporting conversion rate increases of 25% or more.
How Does Amazon Buy with Prime Work?
For existing Amazon customers, the process is easy. All they need to do is click the Buy with Prime button on a website for seamless and easy checkout. But for merchants, the process is slightly more complicated than just one click.
For merchant enrollment, you must have:
- A US-based e-commerce website
- Professional Seller Central Account or Amazon Supply Chain Account
- Amazon Fulfillment Services, including Multi-Channel Fulfillment (MCF)
- Amazon Pay
Once these accounts are set up, you’ll follow a four-step process:
- Sign up to create an account.
- Link Seller Central/Supply Chain and Amazon Pay accounts and import products.
- Choose products to offer via Buy with Prime and confirm SKUs and pricing.
- Create and install the Buy with Prime button on the website. Amazon provides instructions for creating and installing the button.
When these steps are completed, website visitors will see the option to “Buy with Prime” on product detail pages, which offers a level of trust and credibility to your site, as well as a simplified user experience at checkout.
What’s the Difference Between Amazon Pay and Buy with Prime?
Both Amazon Pay and Buy with Prime allow Amazon shoppers to pay for goods on third-party websites using their Amazon account credentials. However, Buy with Prime adds another layer to Amazon Pay and offers Amazon’s checkout, delivery, returns, and marketing services.
The Pros and Cons of Buy with Prime for Merchants
So what are the potential pros and cons of Buy with Prime for sellers? Let’s take a closer look at the possible benefits and drawbacks you can make the right choice for your business.
The Pros
More Sales and Revenue
The numbers don’t lie. Since its invitation-only launch in 2022, several brands have seen an increase in conversions on sites with the Buy with Prime button versus those without. Increases, on average, are 25% and as high as 30%.
Reduced Shopping Cart Abandonment
Currently, the global shopping cart abandonment rate is roughly 71%. A recent study found several reasons shoppers change their minds, and adding the Buy with Prime button to your e-commerce site can help with some of these factors.
Cart/Purchase Abandonment Statistics
- 55% abandon a transaction due to unexpected fees, including shipping costs
- 21% abandon due to lengthy or complex checkout processes
- 17% cite a lack of trust, fearing credit card theft or other security concerns
Amazon is a trusted e-commerce marketplace. Consumers are more likely to follow through with their purchase if they feel comfortable relying on Amazon as the fulfillment provider. In turn, the convenience and speed of the service can lead to more sales and higher average order values, ultimately boosting your sales and revenue.
The prominent Prime logo displayed is a subtle yet powerful visual indicator of quality and credibility, further attracting potential customers and alleviating first-time-shopper concerns.
Increased Traffic and Visibility
With millions of products on Amazon, standing out from the competition is crucial. Prime members are known to be loyal customers who tend to make more frequent purchases and spend more than non-Prime shoppers. By offering Buy with Prime, you’re tapping into a vast pool of loyal customers who are ready to make a purchase. Additionally, Prime-eligible products often receive preferential treatment in search results, making it more likely that customers will find and purchase your items increasing your total Amazon ROI.
No-Stress Fulfillment
Buy with Prime handles all levels of fulfillment — including packing, shipping, returns, and exchanges, so you can focus on other aspects of growing your business. Amazon promises to have packages delivered on time and also offers easy returns for a great customer experience.
The Cons
While there are some very real benefits to offering Buy with Prime, it’s good to have a full picture of what the feature offers and how it works. Here are the potential downsides to adding Buy with Prime to your DTC site.
Limited Control
Because Amazon handles payment processing, shipping, and customer service, merchants selling via Amazon may not have the same level of control over the transaction as they would with their own online stores.
High Selling and Fulfillment Fees
With a growing list of fees, there can be a high cost to doing business on Amazon. The good news is, DTC brands don’t have to sign up for a long-term contract and can pay-as-you-go instead.
Basic fees for adding Buy with Prime include:
- Prime service fee (3% of order value, $1.50 minimum)
- Fulfillment fee (Starting at $5.38 per unit fulfilled)
- Storage fee ($0.87 per cubic foot stored per month, however, storage fees increase from October to January)
- Payment processing fee (2.4% of the order value and $0.30 per transaction)
- Referral fees (can range from 6% to 20% of the total sale price)
- Selling plan fees ($0.99 per item sold, or $39.99 per month
- If you’re selling internationally, there may also be currency conversion fees.
Are these fees worth the possible 25% increase in conversions? For clearer forecasting, check out Amazon’s detailed breakdowns of pricing and fee rates.
Who Owns the Customer Relationship?
While Amazon claims to share shopper order information, including email addresses for customer orders with merchants for customer service and building direct relationships with shoppers, there are plenty of skeptics about how much control you’ll have over the customer journey.
Amazon is a great name to align your brand with, but there’s also an opportunity for branding confusion. Did the product come from your brand, or did it come from Amazon in the buyer’s eyes? When selling via Buy with Prime, you may not have the same level of control as you would with your own store.
Returns
Returns are a part of any e-commerce business, and one of the benefits of Buy with Prime to consumers is an easy return policy.
But with Amazon having full control over the returns process, some potential problems could arise, for example:
- Amazon could accept a return that is in good condition, issue a refund, and charge you a fee. Refunds could also take several days to process.
- A higher return rate can be a problem for merchants who may have to deal with an increased volume of returns and the associated costs, such as restocking fees, shipping costs, and lost inventory.
- Amazon has a generous return policy, which can take up to 30 days for most items. This can be a problem for merchants who may have perishable products or products that become obsolete quickly, as they may not be able to resell returned items.
- Increased returns also mean the possibility of negative reviews. This can lead to a lower seller rating and decreased sales in the future.
Dependency
By relying heavily on Amazon’s Buy with Prime feature, merchants may become overly dependent on the platform for sales. This could make it difficult for you to build your own customer base and establish healthy sales channels beyond Amazon.
Buy with Prime vs. Shopify
What does Buy with Prime mean for the broader e-commerce landscape?
Experts have speculated that Amazon launched Buy with Prime to dampen competition from Shopify. In 2022, Shopify warned its users that adding the Buy with Prime button “violates Shopify’s terms of service” and that customer data could be stolen. Shopify has also accused Amazon of taking control of the merchant’s customer data and not providing that valuable information, such as email address, to the merchant.
Amazon disputes this claim and notes that they provide customers’ names, email addresses, shipping addresses, and phone numbers so merchants can build direct relationships with customers through email and text marketing.
However, recent developments reported by Business Insider show the e-commerce giants may be working towards a solution. Shopify is in talks with Amazon to incorporate the Buy with Prime button into its own platform, despite some skepticism from e-commerce experts as to whether it’s the right choice for Shopify.
Navigating Amazon’s Buy with Prime
Love it or hate it, Amazon is a platform all e-commerce sellers must consider. While Buy with Prime has numerous benefits, it also has some potential risks to be aware of.
When making your decision, consider the importance of each benefit and drawback relative to your business. Evaluate each item objectively, and don’t forget to consider your brand’s bigger picture in mind.
Remember, your decision doesn’t have to be final. You can always test and refine your strategies throughout your growth journey.
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