Marketplace Briefing: Amazon’s pitch to DTC brands is evolving as it courts big names like Adidas to Buy With Prime
This is the latest installment of the Marketplace Briefing, a weekly Modern Retail+ column about the ever-changing e-commerce marketplace landscape. More from the series →
Amazon is ramping up its pitch to direct-to-consumer brands as it expands Buy with Prime, its DTC offering, to major names like sportswear company Adidas.
On Thursday, Amazon announced the expansion of Buy with Prime, which lets merchants offer Prime benefits — like fast shipping and free delivery — beyond Amazon’s own marketplace, to include Adidas’s DTC website and the brand’s shopping app. Starting this spring, Prime customers will be able to buy products on Adidas’s own shopping channels, checking out using the payment and shipping information stored in their Amazon account, and Amazon will fulfill all Prime-eligible items in the order.
The news comes as Amazon has been ratcheting up efforts to expand its foothold to websites outside of Amazon.com by making itself more appealing to DTC brands. Earlier this month, for instance, Amazon expanded Buy with Prime to global watch and accessories brand Fossil.com. Cosmetics brand Laura Mercier has also made Buy with Prime available on its webstore. In September, Amazon said it increased the number of Buy with Prime merchants by more than 25% year over year.
Last week, Amazon also announced the test of a new feature that redirects shoppers to other brands’ DTC websites if they search in the app for a product that Amazon doesn’t carry. Currently, it’s only a test and available to a limited set of U.S. customers who shop within the company’s mobile app. The experience won’t be limited to brands offering Buy with Prime, though Amazon did not disclose which exact brands are participating. But in a press release touting this new feature, Amazon staff also pointed to all of the products from premium brands that it added over the past year, ranging from Oura to Kiehl’s.
Put together, all these moves highlight how Amazon is trying to court more business from premium and DTC brands, some of whom may have been hesitant about selling through Amazon in the past. These moves could help further cement Amazon’s status as the Everything Store, a task that has become more complicated, especially as China-founded e-commerce sites like Temu, Shein and TikTok Shop encroach on the retail giant’s turf. What’s more, Amazon’s merchants are increasingly diversifying beyond Amazon’s own marketplace and to Shopify, which competes with Amazon over the same merchants who want to sell their products online.
“Amazon is taking an agnostic approach to whether consumers buy a product on Amazon or off Amazon, as long as Amazon gets a cut somewhere of the sale,” said Sky Canaves, a retail analyst at eMarketer. “All of these parts work together to create an offer that’s becoming more and more appealing to premium brands that have traditionally shied away from selling on Amazon.”
DTC partner
Amazon has been experimenting with sending its shoppers to brands’ DTC websites for some time now, according to Anders Piiparinen, senior e-commerce manager at the acceleration platform Pattern.
For one, there’s the Buy with Prime landing page on Amazon.com. Amazon has been driving traffic from this page directly to the DTC websites of brands using Buy with Prime, which has been a top organic referrer during tentpole events like Prime Day. According to Amazon, Buy with Prime helped drive a 300% increase in the number of orders for Buy with Prime merchants during the last summer Prime Day event.
Amazon has also been featuring the Buy with Prime button more prominently on its website, like on the top navigation, to drive awareness and traffic to the DTC sites, Piiparinen said.
Amazon has previously toyed with various ways to pitch itself as a valuable partner to DTC brands. For example, Amazon Webstore was an early attempt from the company to compete with Shopify and get brands to use Amazon’s tools to build their e-commerce sites. Webstore first launched in 2010 and was shuttered in 2015.
Amazon’s latest efforts — recruiting more enterprise brands to use Buy with Prime and testing out a new feature that redirects shopping to other e-commerce sites — build on those previous strategies to position itself as a retailer partner, rather than a competitor, to DTC brands.
“These efforts ultimately enhance Amazon’s value as a platform because consumers want to be able to find top brands on Amazon,” said eMarketer’s Canaves. Plus, many brands, particularly well-known and premium labels that have historically shied away from selling on Amazon, tend not to list their full product assortment on Amazon and reserve the entire catalog for their own DTC sites and wholesale, she added.
Amazon opened Buy with Prime to all sellers in January 2023. The feature was rolled out to fend off growing competition from the likes of Shopify as a growing number of brands have sought to sell through their own websites and rely less on Amazon to drive sales.
Buy with Prime got off to a slow start when it was first introduced, Modern Retail reported at the time, in part due to the fact that Shopify initially cautioned brands against using it. Eventually, though, the two companies came to a truce.
Now, according to Piiparinen, around 25% of Pattern’s brands use Buy with Prime. That said, it still makes up a relatively low percentage of sales for those merchants, between 5-10%, he said.
In the first nine months of 2024, Amazon saw an uptick of more than 45% in Buy with Prime orders year-over-year through merchants’ websites, with brands generating an average 16% increase in revenue per shoppers from Buy with Prime, the company said in September.
In general, it behooves Amazon to cozy up to DTC brands, particularly those with name recognition, said eMarketer’s Canaves. There are a few reasons for that.
Millions of merchants sell on Amazon, accounting for more than 60% of the company’s retail sales and $156 billion in revenue Amazon rakes in from the fees it charges those sellers. But many merchants have previously told Modern Retail they’re diversifying beyond Amazon as it becomes more difficult to sell on the e-tailer’s marketplace. Many are choosing to focus on growing their own DTC sites.
Additionally, China-founded e-commerce players including TikTok Shop, Temu and Shein have all been wooing Amazon merchants. Some of those sellers have been looking to seize on the surging popularity of those sites, especially as seller fees rise on Amazon and consumers trade down to cheaper goods, Modern Retail previously reported.
Then, there’s the China-based merchants, who claim 50% of the market share on Amazon’s U.S. shopping site, according to e-commerce data firm Marketplace Pulse. As e-commerce brands stare down tariffs on goods imported from China, Amazon is disproportionately exposed, according to Morgan Stanley analysts.
“It really is about Amazon expanding its reach with brands and expanding its appeal to brands, particularly as we’re looking at the broader potential impacts of tariffs and what that could do to the Chinese sellers that make up so much of Amazon.com as we know it today,” Canaves said. “There’s definitely a need to appeal to and onboard more brands.”
Marketplace news to know
- Amazon’s retail CEO Doug Herrington told employees more cost cuts are needed to afford “big investments in big new businesses,” per Business Insider.
- Etsy missed Wall Street estimates for sales during the holiday quarter, citing weaker consumer spending on discretionary goods and heightened competition from rivals like Amazon and Temu.
- Fast-fashion retailer Shein’s executive chairman told investors in a letter on Monday that “growth remains strong,” despite the Trump administration’s crackdown on duty-free shipments from China and hiking tariffs, per Reuters.