What Are the Cons to “Buy with Prime”?
Buy with Prime might look like a convient solution for securing sales on your webiste, but there are many cons for Buy with Prime that should be considered first. While Buy with Prime offers a convenient solution for DTC merchants’ fulfillment and checkout needs, this ease comes with a cost. Sellers aiming for independence or following a multichannel strategy benefit from keeping distance from major marketplaces, and adopting Buy with Prime may blur those boundaries, risking more than they stand to gain.
In this article, we will discuss three cons to working with “Buy with Prime” as a online DTC seller. First, we’ll explore how integrating this check out process can snag a sale, but concedes control to Amazon – ultimately putting customer loyalty into question. Additionally, Sellers will need to pay to play with Buy with Prime. Amazon is sure to charge an exorbinant amount of money to process, pick, pack and ship your order the client. That’s cash in the trash for sellers. Lastly, we’ll look at the inventory limitations component of this equation. If you drive alot of traffic to your site, but Amazon doesn’t have the inventory to fulfill sales – this may spell trouble. Let’s review all three cons to “Buy with Prime” and see if they are a good fit for your online brand.
A Con to Buy with Prime is that Amazon Steals Ownership of Your Customer
If Amazon’s branding becomes a part of your checkout process and the conversion occurs because the buyer trusts Amazon, who ultimately owns that customer? Worse, will the customer even stay on your website? This is a serious con to consider when flirting with Buy with Prime.
Many DTC sellers have built their brands independently to distance themselves from Amazon’s controversial business practices. By owning the customer relationship, they cultivate long-term loyalty, which leads to repeat business and improved customer lifetime value, forming the cornerstone of profitability.
However, the con with Buy with Prime is incorporating Amazon into the equation and risking undoing all the effort DTC sellers have invested in fostering these unique customer relationships. While faster, free shipping might boost new customer acquisition, Amazon’s branding could nudge shoppers to visit their platform for price comparisons or to explore competing offers. Considering that over half of product searches begin on Amazon, do you really want to give customers a reason to leave your site for the ecommerce giant after you’ve invested in attracting them?
High Amazon Fees for “Buy With Prime”
In Q4 2021, Amazon generated $30.3 billion in revenue from third-party seller services, which include commissions, fulfillment, and shipping charges. Although the fee structure for Buy with Prime hasn’t been fully disclosed, all signs suggest that Amazon aims to make this the next Amazon Web Services (AWS). In recent years, the company’s core retail business has been a loss leader, while AWS and its advertising arm deliver substantial profits. This is a con of Buy with Prime – the high cost of pay to play Amazon’s game here.
AWS began as an internal service for Amazon before being offered externally, and Amazon FBA has followed a similar trajectory. Initially created for Amazon’s own orders, FBA was later extended to third-party sellers, and now it’s being made available to DTC merchants. It’s likely that Amazon is targeting high margins with this service, potentially rivaling AWS’s 60%+ operating margin.
For DTC merchants, this means tighter profit margins. While the Prime badge may drive more conversions, the associated fees could reduce profitability. If the additional revenue doesn’t translate into higher net income, is Buy with Prime truly worth it?
FBA Inventory Limitations
For multichannel sellers balancing Amazon and DTC sales, all inventory is pooled together within FBA, meaning orders from both Buy with Prime and Amazon come from the same stock. Why is this an issue?
While this simplifies inventory management, this is a big con to Buy with Prime. Amazon is notorious for imposing restrictive FBA inventory limits and experiencing long delays in processing inbound shipments. By relying exclusively on FBA, sellers make themselves vulnerable to sudden changes in inventory restrictions or prolonged delays in receiving stock.
These frequent changes to FBA inventory limits continue to frustrate sellers. If a receiving delay depletes your inventory, it doesn’t just hurt your Amazon sales rank; it can also undermine your DTC store’s SEO and advertising efforts. Despite Amazon’s attempt to position Buy with Prime as a comprehensive solution for DTC merchants, depending entirely on FBA could prove detrimental in the long run. Diversifying your fulfillment strategy is essential to protect your business from Amazon’s unpredictability.
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