Shopify has made a groundbreaking decision to collaborate with Amazon Prime, revolutionizing the way merchants on its platform can cater to their customers. With this exciting new development, analysts predict an increase in merchant usage and a host of other benefits for both tech companies involved.
Both Shopify and Amazon.com are major players in the world of online selling, constantly striving to capture a larger share of the market. In a recent announcement made on Wednesday, Amazon revealed that it will be launching an app within the Shopify ecosystem. This innovative app will empower merchants to seamlessly incorporate the highly sought-after ‘Buy With Prime’ option directly into their product pages. Customers will now have the incredible opportunity to utilize their Amazon wallets and enjoy the exceptional advantages of fast delivery and hassle-free returns, which are exclusive to Amazon’s renowned fulfillment network. It is important to note that Shopify’s payment system will flawlessly process these transactions during the checkout phase.
In the past, merchants could only independently add the ‘Buy with Prime’ feature to their individual pages. However, this approach was not fully compliant with Shopify’s terms of service, as it hindered the platform from collecting fees or accessing transaction data.
This game-changing partnership between Shopify and Amazon Prime is set to redefine the e-commerce landscape, offering unmatched convenience and choice to both merchants and customers. By joining forces, these tech giants are on the brink of revolutionizing the way online shopping is conducted.
Amazon’s New Deal with Shopify Offers Easier Path to Capturing Gross Merchandise Volume
According to Wedbush analyst Scott Devitt, the new deal between Amazon and Shopify presents an opportunity for Amazon to capture a larger share of Shopify’s gross merchandise volume (GMV). Devitt predicts that Shopify’s GMV will reach an estimated $230 billion by 2023. The agreement also enhances the value of Amazon’s Prime membership by extending its benefits to more online shopping sites.
Positive Outlook for Amazon and Shopify Stocks
Devitt maintains an Outperform rating for both Amazon and Shopify stocks, with price targets of $180 and $62 respectively. This positive outlook is reflected in the stock market as Shopify’s stock rose by 6% in Thursday’s premarket trading, reaching $63.60. On the other hand, Amazon’s stock remained steady at $135.17.
Increased Potential for Merchants and Customers
With formal support from Amazon, Oppenheimer’s Ken Wong believes that more merchants will be inclined to use the option, leading to a higher conversion rate from browsing to actual product purchases. Wong rates Shopify as Outperform with a price target of $80.
Additionally, the deal alleviates concerns for Shopify investors regarding Amazon’s Buy With Prime feature impacting Shopify’s payment revenue. With transactions processed via Amazon Wallet through Shopify Payments, Wong expects merchants to have full data access and some participation in commission rates.
Consideration for Merchants
Despite the benefits of the new deal, merchants should be aware that they may still have to deal with potentially substantial fees and provide Amazon with insight into their inventory trends.
