E-commerce giants Shopify and Amazon are both seen as benefiting from striking fulfillment pact
Sean Gallup
The deal between Shopify (NYSE:SHOP) and Amazon (NASDAQ:AMZN) to allow Shopify merchants to offer a Buy with Prime option for payment processing and fulfillment is seen as a potential win-win for the two e-commerce giant.
Bank of America analyst Justin Post said the news of a partnership should be viewed positively by investors, as it allows Shopify (SHOP) to maintain a more capital-light model. For Amazon (AMZN), the deal is seen as Amazon (AMZN) executing on our Logistics-as-a-Service (LaaS) thesis.
ARK Invest's Andrew Kim noted that as the two companies were battling for market share in the past, Shopify (SHOP) warned merchants that offering Amazonâs (AMZN) Buy with Prime violated its terms of service.
"Now, having sold Shopify Logistics to Flexport, Shopify no longer competes with Amazon in fulfillment, which has paved the way for compromise. Although Shopify now owns 6% of Flexport, the lower priced logistics service, the introduction of Amazonâs fulfillment services does erode its moat as Shopifyâs official logistics provider."
Kim thinks Amazon (AMZN) should benefit from a new customer acquisition channel and higher fulfillment revenue, and Shopify (SHOP) merchants will upside from the ability to access Amazonâs (AMZN) fulfillment network as Shopify processes the underlying payments. New Amazon Prime subscribers are also seen benefiting from the value of Prime's 1â2-day delivery, order tracking, returns, and easier checkout. Crucially, Shopify (SHOP) merchants will continue to control 100% of their customer and transaction data, which could alleviate fears that Amazon (AMZN) might take competitive advantage of the new e-commerce deal.

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