Thursday's announcement by Amazon stated that the "Buy with Prime" service, which will be offered to merchants who ship products via Amazon's warehouse or delivery services, will initially be available only to those who have invited them. It will then be available to merchants who do not sell on Amazon and don't use its delivery services.
Amazon stated that the service would only be available to U.S. customers. Prime was launched in 2005 and has over 200 million members around the world. Prime charges $139 per year or $14.99 per month for faster shipping and other perks like free delivery and returns.
According to the company, Prime members who use "Buy With Prime" will be able see the Prime logo on eligible products and make purchases using their Amazon account payment and shipping information.
The retailer states that merchants will be charged different fees depending on the features they use. It stated that merchants have the option to cancel or expand their selection at any time, without a long-term contract or fixed subscription fee.
Businesses have a very attractive option
Technalysis Research's chief analyst Bob O'Donnell says that the expansion will allow more businesses to use Amazon services, without having to sell goods on its third-party marketplace. This market has been accused of undercutting merchants and making "knockoffs" or very similar products. It also increases their visibility on Amazon.
O'Donnell stated that if you're a merchant and don't want the hassle of shipping, logistics, returns, and all of it, this option becomes very appealing without actually selling on Amazon.
Amazon's expanding logistics arm will help it compete with major carriers such as UPS, FedEx, and the U.S. Although some speculate that Amazon's growing logistics arm aims to further compete with major carriers like UPS, FedEx and the U.S. Postal Service, others are speculating that Thursday's announcement was also meant to dampen the momentum of Shopify, a Canadian e-commerce company that makes software that allows businesses run online shops.
Michael Pachter is a long-standing tech analyst at Wedbush Securities. He believes that the company is expanding Prime benefits in order to keep customers satisfied.
Pachter stated that Amazon is doing this to make it easier for customers to find the products they want, wherever they happen to be looking, to complete the transaction and to remain a customer of the company.