Shopify shares rise after deal with Amazon to integrate ‘Buy with Prime’ in Shopify stores

Shopify Amazon e-commerce

Two of the e-commerce world’s biggest rivals have brokered a surprise deal helping their merchants better take advantage of one another’s offerings.

Shopify and announced Wednesday evening that they will soon begin helping Shopify merchants more easily integrate access to Amazon’s sprawling fulfilment network within their Shopify stores.

The competing e-commerce companies said the deal centers on an app Amazon will release within Shopify’s ecosystem over the next month, letting U.S. merchants that use Amazon’s fulfilment network add Buy with Prime to their Shopify checkout process.

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Buy with Prime is an Amazon program that helps merchants offer speedy shipping on orders made through their own sites by leveraging the Seattle-based business’s behemoth fulfilment network.

When it was released last year, many speculated it was designed to counter the growth of Shopify, an Ottawa-based software company supporting the e-commerce operations of thousands of small businesses, nabbing high-profile clients like the Kardashians, Remy Cointreau, Crayola and Glossier and building its own fulfilment network.

This week’s deal, made after Shopify got out of the fulfilment business by selling its logistics arm to Flexport in May, could signal some of the tension between the rivals has eased.

The companies, however, positioned the deal as a way to please merchants. Peter Larsen, Amazon’s vice-president of Buy with Prime, promised in a press release that the partnership would help “merchants not only grow their businesses, but also save time and resources.”

Meanwhile, Shopify president Harley Finkelstein said it would “enable Shopify merchants to offer Prime members fast, free delivery, and easy returns outside of Amazon for the first time ever.

“This will give their customers more flexibility in how they make their purchases from the independent brands they know, love and trust,” he said in a video announcing the agreement.

Before the deal was brokered, merchants signed up with Shopify had to manage Buy with Prime independent of their Shopify stores – an arrangement that made fulfilling orders more complex and time-consuming.

Many yearned for both companies to make their products more interoperable and analysts questioned Shopify executives on quarterly earnings calls over the last year about whether a Buy with Prime agreement would ever be reached.

As far back as October 2022, Finkelstein told analysts Shopify was talking to Amazon about how to implement Buy with Prime “in the right way.”

“When it comes to Buy with Prime, we think any company that’s going to make their infrastructure available to merchants to sell more is a great thing. We like it,” he added in February.

“We’re going to talk to Amazon now to make that work, but it has to be done in a way that we think is important for merchants to have a relationship with their end consumer, and so there’s no update at this time.”

By May, Finkelstein was telling analysts Buy with Prime developments were “moving in the right direction, moving positively.”

Amazon said its new app started rolling out on an invite-only basis to select Shopify merchants Wednesday but will be available to all U.S.-based Shopify merchants using or wanting to use Amazon’s fulfilment network by the end of September.

It claimed Buy with Prime increases shopper conversion by 25 per cent on average.

Rick Watson, founder of RMW Commerce Consulting, saw the partnership as “great for both sides,” but added “Amazon needed this deal more than Shopify.”

“Buy With Prime has always been about leveraging what Amazon does best: logistics,” he wrote in a statement. “In other words, how do we get more volume through the fulfillment network in a way that also increases the value of Prime?”

The deal will deliver more of that volume to Amazon, but also hand business to Shopify with transactions processed through Shopify Payments, a feature helping merchants seamlessly accept credit cards and other popular payment methods.

News of the partnership pushed Shopify’s TSX-listed shares up by almost nine per cent to $88.28 in Thursday morning trading, while Amazon shares rose nearly three per cent to US$138.31.

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