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Shopify president Harley Finkelstein said a partnership with Amazon will soon allow merchants who use its platform in the United States to include Buy with Prime features in their stores.Chris Wattie/Reuters

Shopify Inc. SHOP-T is integrating Amazon.com Inc.’s AMZN-Q Buy with Prime services into its own e-commerce platform, signalling growing co-operation between the two online retail giants after years of rivalry.

In a post and video on social media, Shopify president Harley Finkelstein said the Ottawa-based company will soon allow merchants who use its platform in the United States to include Buy with Prime features in their stores. This means customers who buy products from these merchants through Shopify’s checkout system will be able to use their Amazon wallets.

Customers will also be able to use the free shipping Amazon offers those who subscribe to the company’s Prime program. Shopify merchants will have the option of using delivery and return services provided by Seattle-based Amazon’s global fulfilment network, but will retain ownership of their customer data and branding, the two companies said.

“What matters most to our merchants and their customers is choice. Well, today, we’re giving merchants even more choice,” Mr. Finkelstein said late Wednesday after markets closed.

The news sent the price of Shopify’s shares higher on Thursday. They climbed 10.69 per cent to close at $89.89 on the Toronto Stock Exchange. Shares of Amazon rose by 2.18 per cent in New York, and closed at US$138.01.

In a separate statement to The Globe and Mail, Peter Larsen, an Amazon vice-president who oversees Buy with Prime, said the company collaborated with Shopify on the rollout of the new features, after some merchants had sought to incorporate them on their own. Shopify stores will be able attract new customers and provide additional value to their existing customers through Buy with Prime, he added.

The Buy with Prime application will start rolling out on an invitation-only basis to select Shopify merchants this week, Amazon said in a statement, and will be available to other businesses by the end of September. For now, the integration is launching only in the U.S., where about half of Shopify’s nearly 1.75 million merchants are based.

Amazon launched Buy with Prime in April, 2022. The program allows third-party vendors to add Amazon purchase buttons to their own websites. The company will continue to offer these services to merchants outside the Shopify platform.

The announcement extends a strategic shift for Shopify, which has long competed with Amazon and as recently as last year was warning its merchants not to use Buy with Prime.

Shopify spent years and billions of dollars building up freight and warehousing operations to compete with Amazon’s, but in early May it sold them off. At the time, Shopify chief executive Tobias Lütke referred to the logistics arm as a “side quest” that was distracting the company as he strove to recapture momentum for its core e-commerce business after a year-long slump.

On a conference call with investors a few months before that, during a discussion of Shopify’s softer-than-expected forecast for the current fiscal year, Mr. Finkelstein said Amazon had been in talks with Shopify on ways of working together on parts of their businesses.

Explaining the shift toward Amazon this week, Mr. Finkelstein said Shopify is working to allow its merchants to expand their businesses. “Shopify gives entrepreneurs the ability to access and sell across the internet wherever their customers are. Period,” he said. “More choice means more opportunities to succeed.”

Rick Watson, chief executive of RMW Commerce Consulting, an e-commerce firm based in New York, said he believes Amazon “needed this deal” more than Shopify did, because “without official Shopify support, there is almost not a real Buy with Prime program.”

But Mr. Watson said Silicon Valley-based Flexport Inc., which bought Shopify’s logistics operations this year – including San Francisco startup Deliverr Inc., which Shopify spent US$2.1-billion on last year – might have reason to worry. Flexport is powering Shop Promise, Shopify’s delivery service, which is currently in testing mode. That service now has a new “competitor and alternative,” Mr. Watson said.

Flexport spokesperson Liyan Chen said in a statement that the supply-chain management company works with all major e-commerce marketplaces. “Merchants who use Amazon’s fulfilment network on Shopify will be able to leverage Flexport’s all-in-one solutions, including our automated replenishment services,” she said.

National Bank of Canada analyst Richard Tse said the deal between Shopify and Amazon has been “a point of contention, given the uncertain economics of such an arrangement.” Still, he added, it’s important to note that Shopify will continue to process all payments through its own marketplace system and earn money from each transaction.

“No doubt, negotiations likely involved who would process the payments, data ownership, as well as Shopify assessing the impact it would have on its former fulfilment network,” Mr. Tse said. “But with Shopify divesting its fulfilment business, it likely lifted the obstacle for this co-opetition move.”

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/02/24 2:18pm EST.

SymbolName% changeLast
SHOP-T
Shopify Inc
-1.2%102.43
AMZN-Q
Amazon.com Inc
+0.06%173.64

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