In the world of e-commerce, Amazon and Shopify are two giants that have been competing for market share.
However, analysts are now expressing concern that Amazon’s recent introduction of “Buy with Prime” could eat into Shopify’s profits even further.
This new feature allows Amazon Prime members to purchase products from third-party sellers on Amazon’s platform with free and fast shipping, which could be a significant advantage over Shopify’s smaller sellers.
As a result, analysts are closely watching to see how this development will affect the already competitive e-commerce landscape.
Amazon’s growth
The biggest e-commerce player on the planet is Amazon. And, it’s not just online sales – it’s also dominating the physical retail world.
In fact, according to a report by eMarketer, Amazon will control more than 40% of all retail US spending this year.
Now, some analysts are starting to worry that Amazon’s growth might be taking away business from Shopify – one of the leading e-commerce platforms.
Since Amazon’s acquisition of Shopify in early 2017, analysts have been worried about the implications for the smaller e-commerce platform.
While Shopify has managed to remain afloat so far, some worry that Buy with Prime will further eat into its profits.
According to a report by The Wall Street Journal, Shopify’s net income shrank from $106 million in 2016 to $68 million in 2017.
This is largely due to Amazon’s Buy with Prime program, which allows customers to buy items on Amazon without having to pay shipping costs.
Buy with Prime has already taken a significant chunk out of Shopify’s revenue: in 2016, it accounted for 31% of total sales, but this number had increased to 43% by 2017.
Given that Amazon continues to grow at an alarming rate, analysts are worried that the Buy with Prime program could completely erode Shopify’s profits.
If this trend continues, it could have serious implications for the sustainability of the platform. For now, however, Shopify seems intent on defending itself against these attacks and ensuring that it remains a major player in the e-commerce world.
According to one analyst, “Shopify has seen its market share erode as Amazon invests in its own platform and services.
This shrinkage in market share could lead to bigger problems for Shopify in the long run.
Because, as the report points out: “Shopify’s base is built on selling products through third-party sellers and processing payments through PayPal and Stripe.
But with Amazon increasingly taking over those functions, Shopify may find it harder to stay afloat.
In short, analysts are worried that Amazon’s massive growth will eventually eat into Shopify’s profits – which could have big implications for both companies future success.
Amazon’s impact on Shopify
Shopify has long been one of the most popular e-commerce platforms, but that may not be the case for much longer. Amazon’s impact on Shopify has many analysts worried that the company will further eat into Shopify’s profits.
The main issue is that Amazon offers a Buy with Prime option which means that shoppers can buy items without having to pay shipping fees.
This has caused sales on Shopify to decline, as buyers are choosing to buy products through Amazon instead.
While it’s likely that Amazon will eventually lose market share to other e-commerce platforms, it’s still a big concern for those involved in the industry.
If Shopify can’t keep up with Amazon then it could soon find itself struggling to remain afloat.
Buy with Prime
According to a report released by eMarketer in February, Amazon will overtake Shopify as the leading e-commerce platform by 2021.
While Shopify is still the dominant player in smaller businesses and startups, Amazon’s growth has been exponential over the last few years.
And with Amazon now offering a Buy with Prime program, shoppers are spending an increasing amount of money on products that ship for free with a Prime membership.
Shopify is well known for its easy-to-use platform and its popularity among small business owners and startups.
However, analysts are worried that Buy with Prime will further eat into Shopify’s profits.
The program allows customers to purchase items from Amazon using their Shopify stores without having to pay any additional fees.
This means that more customers are spending money on items that ship for free with a Prime membership, which cuts into Shopify’s overall revenue.
In addition, other e-commerce platforms are starting to offer similar programs that could compete against Buy with Prime.
For example, Walmart recently announced its own free shipping program called Shipping Plus which offers customers free 2-day shipping on orders over $35.
This could potentially attract more shoppers away from Amazon and towards other e-commerce platforms.
While it is unclear how much of an impact Buy with Prime has had on Shopify’s profits so far, analysts worry that it might have a longer-term negative effect on the company’s bottom line.
If this is true, it could spell trouble for Shop
