- Amazon used six “tenets,” or guiding principles for its partnership with Shopify.
- Amazon and Shopify launched a new Buy with Prime app for Shopify last week.
- An internal document shows Shopify held a surprising amount of leverage over Amazon.
At Amazon, almost every internal project includes “tenets” that serve as the guiding principles for the team. This was true for its partnership with Shopify, a company that Amazon views as a major ecommerce rival.
Last week, after a surprisingly rough negotiation for Amazon in which Shopify had the upper hand, the two companies launched the Buy with Prime app, as Insider previously reported.
Amazon used six tenets to structure the partnership with the goal of a “native (i.e., built within Shopify systems) experience that is so compelling for shoppers, it is irresponsible for merchants not to offer it,” according to an internal document obtained by Insider.
Among the tenets are growing merchant sales volume, ensuring high quality Prime-like delivery, and creating a collaborative environment between the two companies that can “grow the pie” of the overall ecommerce market.
The document said that Amazon sees Shopify as the “largest turnkey ecommerce service provider in the market,” and the partnership a “flagship” goal for its top leadership team.
And it sheds light on the internal deliberations between the two e-commerce giants. Throughout their talks, Shopify held a surprising amount of leverage over Amazon. Many parts of the tense negotiation didn’t go Amazon’s way, and the company had to give major concessions as it sought the cooperation of Shopify.
Buy with Prime, launched in 2022, gives merchants a way to offer Prime benefits, like fast delivery, on websites beyond Amazon.com. Online shoppers can simply click on the Buy with Prime tab on the check-out page to use the payment and shipping information already stored in their Amazon accounts. The new app launched last week makes it easier for merchants that use Shopify-powered websites to install Buy with Prime and offer it as an option for their customers.
Internally called Project Santos, Buy with Prime came out of a secret initiative led by Amazon’s founder Jeff Bezos after the company grew worried about Shopify’s rapid growth, as Insider previously reported.
Buy with Prime has caused major tension between the two companies, with Shopify at one point warning its merchants against using it. Some analysts warned it could be a “Trojan Horse” that helps Amazon take share from Shopify by giving Amazon access to a larger market of merchants.
For instance, Amazon wasn’t too supportive of Shopify handling the backend payment processing system for the new app, the document shows. But Shopify was able to secure that piece of the deal, a big win given that it’s a major source of revenue for the company.
Even without the payment processing, the partnership was still worthwhile for Amazon to secure as it adds incentive for people to get and keep Prime memberships by allowing fast, free shipping to work with lots of other websites. Also, merchants must use the Fulfillment by Amazon (FBA) program for Buy with Prime, where they pay Amazon to store their products in Amazon warehouses. And Amazon gains access to data on the types of items people are buying from sellers outside of its site.
The six tenets sound friendly and cooperative, and shed light on how Amazon goes about turning a rival into a partner. For instance, it says the goal is to build a “better together” experience for all parties including shoppers, merchants, Shopify and Amazon.
Amazon and Shopify declined to comment, beyond their public statements last week.
Here are the 6 tenets:
We prioritize work by its potential to grow overall merchant gross merchandise value (GMV). We do this knowing that growing GMV on Shopify through delightful merchant and shopper experiences is the most likely way to maintain a healthy, long-term partnership with Shopify. Work that will not grow GMV directly or indirectly is not prioritized.
The Amazon “Prime bar” shoppers expect from Amazon.com is maintained on Shopify. This includes free, fast delivery, free returns on eligible items, instant refunds, and Amazon’s A-to-Z guarantee. We do not launch products that do not meet this bar. If an existing product does not meet this bar, we take it down until the bar is met.
If the “Prime bar” is met, we enable Shopify to own CX [customer experience] when they can deliver a superior merchant and/or shopper experience. Examples include Shopify providing a better shopper experience by owning checkout and a better merchant experience by being a central hub for merchants to manage their business.
Merchant data belongs to merchants. BwP transaction data is 1P [first party] for merchants, implying it is the merchants’ choice, not Shopify’s, what is provided to Amazon.
We think decentralized but act centralized. Each team in Santos has a unique set of goals and insights. We aim to empower these teams to own and deliver their roadmaps, but when products are either dependent on or are key enhancements to BwP, we centralize prioritization, communication, and bar raising to maintain a consistent voice with Shopify.
Lean in to the key differentiators each company has to offer. We believe we can build a “better together” shopper and merchant experience with Shopify. We lean in to the key differentiators each company has to offer (e.g., Prime, MCF, Amazon App, Shop App) to “grow the pie.”
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