- Online merchants say Amazon's Buy with Prime service has shown mixed results so far.
- Buy with Prime is aimed at extending Prime benefits beyond Amazon's own marketplace.
- An internal Amazon email cited dissatisfaction with unit sales off target "by a wide margin."
Nearly a year and a half since Amazon launched Buy with Prime, users are seeing mixed results, according to sellers who spoke with Business Insider.
That jibes with internal Amazon emails from last year that discussed "dissatisfaction" with unit sales off target "by a wide margin." Still, executives are sticking with the initiative and are confident in its long-term outlook.
"The original adoption from a consumer standpoint is slow," said Craig Leslie, who sells coffee beans through The Bean Coffee Company. Buy with Prime accounts for about 3% to 5% of his sales, though he expects it to eventually grow as more customers become familiar with the tool.
Leslie is one of several online sellers who spoke with BI about this service. While some have seen promising early results, others said they hadn't seen the boost to conversion rates they were hoping for. Others worried about adding customer friction and additional fees cutting into their profit margins.
A 'defensive move'
Amazon made Buy with Prime available to all sellers in January 2023. It's aimed at bringing Prime benefits, such as fast shipping, free delivery, and customer reviews, to websites beyond Amazon.com. By adding the Buy with Prime checkout tool, merchants can sell Prime-eligible products on their own websites directly to customers. Shoppers can check out using the payment and shipping information stored in their Amazon accounts.
The launch was partly motivated by Shopify's explosive growth. Amazon leaders worried about Shopify's rise, which had made it one of the most popular platforms for online merchants. Buy with Prime was a "defensive" move against Amazon's new rival intruding on its turf.
More brands are choosing to sell through their own websites. With Amazon's online-retail business hovering around single-digit growth rates, Buy with Prime could help Amazon reach a wider audience and find new growth opportunities.
Missed goals
Internal emails from last year point to a sluggish start, though. In July, Peter Larsen, the vice president in charge of Buy with Prime, wrote to his team about his "dissatisfaction" with unit sales being off target "by a wide margin." Among the 38 large merchants that had launched Buy with Prime at the time, only five were "generally ramped" in adoption, he added.
Still, Amazon CEO Andy Jassy and the company's leadership team expressed "a ton of confidence" and "optimism" in Buy with Prime because the initiative was in its infancy, Larsen wrote in the July email, addressed to "Santistas," a reference to the project's code name Project Santos.
"Although leadership shares our near-term dissatisfaction, they share our continued optimism over the program's long-term prospects (and the recognition that forecasting a v1 product is akin to planning the weather at the top of Mt. Rainier...)," Larsen wrote in the email, referring to a snowcapped peak near Seattle, where Amazon is headquartered.
'Product-market fit'
Larsen also shared positive developments in the July email. Some sellers were seeing more new customers and improved inventory turnover. Shoppers who purchased through Buy with Prime also spent more on Amazon, he wrote.
In earlier internal email, from April 2023, Larsen also wrote that the strong conversions were "not translating efficiently enough" to higher sales and profits. He wrote that Buy with Prime needed to "increase average order value (or units per order)" to solve this.
He added that "operational friction" was still high for Buy with Prime and that it needed to more deeply integrate with the systems that online merchants use for their daily site operations.
Months later, Amazon struck a deal with Shopify that put Buy with Prime on the Shopify merchant marketplace, extending the tool's reach with sellers.
In that email from April 2023, Larsen said Buy with Prime would know it had found "product-market fit" when people voluntarily started using it more. To get there, he added, Buy with Prime needed to prove this hypothesis: "the upside of the lift that BwP drives more than offsets the downside of fees, operational friction, and questions about working with Amazon."
A key metric that can prove that hypothesis is the percentage of best-selling products merchants sell with Buy with Prime on their websites, Larsen wrote. At the time, 36% of the products were Buy with Prime-enabled.
"When merchants push that metric to >75%, it'll be a good indication that we've found product-market fit," Larsen wrote.
7% to 11%
Anders Piiparinen, a senior e-commerce manager at the acceleration platform Pattern, is seeing some early positive impacts on conversion rates, but he said Buy with Prime still made up a relatively low percentage of sales for merchants.
Tria Beauty, one of the brands he helped adopt Buy with Prime, saw 7% to 11% of its direct-to-consumer sales come from Buy with Prime over the past 18 months, Piiparinen, who's onboarding about 20 sellers to the program, said.
Buy with Prime doesn't always make sense for merchants that sell lower-priced items — say, $20 or less — because Amazon's fulfillment fees make profit margins too thin. He still recommends that brands at least do A/B testing, which Amazon facilitates for sellers considering Buy with Prime.
More friction, tighter margins
Victor Trac has been A/B testing Buy with Prime for his massage-gun brand, Ekrin Athletics, since last fall. He said Amazon typically accounted for more than 50% of his overall sales. With the A/B test in place, half of visitors to his site will see an option to check out with Buy with Prime. About 25% of the site's sales are going to Buy with Prime, but the overall conversion rates are slightly lower. He plans to leave the button active for now.
"I don't feel like it's hurt or helped all that much," he said.
Online merchants who spoke with BI said Buy with Prime could add friction to the checkout process. Customers have to be logged in to their Amazon accounts to use Buy with Prime. They also have to be familiar with what it is, which means that enough sellers have to deploy it on their online stores.
Several sellers said margins were often tighter with Buy with Prime and on Amazon in general. That compares with their direct-to-consumer websites, which avoid various fees that Amazon charges.
For example, Leslie from The Bean Coffee Company said determining the correct price to account for Amazon's shipping and fulfillment fees was the most difficult part of using Buy with Prime.
To use Buy with Prime, Amazon charges merchants a 3% Prime service fee, in addition to fulfillment fees and payment-processing fees. Amazon also recently introduced a low-inventory fee and a placement fee for sellers using its fulfillment services, which many sellers said had further squeezed their profit margins.
However, Piiparinen said the 3% service fee was less than the referral fees merchants pay when selling on Amazon.com. He added that there were benefits to building sales on a brand website versus Amazon. Buy with Prime could help with this, as long as the visitors to their sites are Prime members.
"This is a way to meet the customer where they are and still offer the great benefits of Amazon shipping and reliability," he said. "But now that brand can capture that customer data."
Amazon's statements
In an email to BI, Larsen said his team was seeing "strong adoption" from merchants and positive feedback from Prime members.
"Buy with Prime was designed to be more than fulfillment — it's a suite of conversion and fulfillment services that drives growth for brands as well as the opportunity to build brand loyalty with Prime members," Larsen said in a statement. "Building a new product from scratch takes time, and my emails from April 2023 and July 2023 shared both highlights and areas for improvement during these early days of the product. The data and anecdotes included in this story are focused on the first iteration of Buy with Prime that launched in 2021. We've since introduced two integrations with Shopify and Salesforce that provide a more seamless experience for shoppers and are helping further increase sales for merchants."
Amazon's spokesperson also provided links to case studies that they said showed Buy with Prime's success. The smart-home-device maker Wyze, for example, saw 20% of website orders come through Buy with Prime. The hydration-supplement company HydraLyte is seeing higher conversion and lower costs because of Buy with Prime.
"Buy with Prime's storage and fulfillment fees are comparable to those from other major fulfillment services," Larsen added in another statement. "So far, feedback from most merchants that sell products at all types of price points is that they think the growth they see from Buy with Prime more than offsets the costs, though we are always listening and learning to improve."
An Amazon spokesperson said it's hard to get the unit economics right when selling cheap products online, and this is a common problem throughout e-commerce.
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