By Sam Boughedda
UBS analysts said in a research note Tuesday that Amazon's (NASDAQ:AMZN) Buy with Prime (BwP) expanded rollout puts additional pressure on Shopify (NYSE:SHOP).
Amazon announced Buy with Prime, which improves conversion rates by 25% on average, will become widely available in the U.S. starting January 31, writes the analysts.
They added that BwP merchants will be able to display their reviews from Amazon on their online stores, which "should also help with shopper trust and conversion."
"In our view, this is negative for SHOP for a number of reasons," the analysts said, explaining that BwP was in a limited beta and available to sellers on an invite-only basis until now.
They also stated that Shopify has "said BwP is not consistent with its terms of service, and yet our survey suggests 15% of its sellers that sell through Amazon use BwP already," while the expanded availability of BwP, as well as the announcement from BigCommerce about integrating BwP within their solution, will put additional pressure on Shopify to open its platform for BwP.
Furthermore, they argue that it directly disintermediates Shopify's payment processing fee revenue, and "even if they were to charge an additional fee for using BwP, the availability of additional logistics options for Shopify sellers could remain a check on its pricing for SFN/Deliverr, which could impact their margins."
Shopify shares are down over 2%, while Amazon has risen more than 2% in Tuesday's session.