Shopify Inc. shares rose 4% in Wednesday’s aftermarket action after Amazon.com Inc. announced an enhanced collaboration between the two companies.
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said it was launching the Buy with Prime app for Shopify
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an integration that will let merchants more easily offer shoppers the option to buy items using their Prime benefits, such as fast delivery and returns that are managed through Amazon’s fulfillment network.
While Buy with Prime already existed, the new app in Shopify’s ecosystem simplifies the management process for merchants and “removes a modest overhang” from Shopify shares, according to Barclays analyst Trevor Young.
“Specifically, checkout will remain on the merchant site, allowing merchants to ‘own’ the customer relationship and customer data, while payments will be processed by Shopify Payments,” Young wrote.
While he thought there were still some unanswered questions about the economics of the arrangement, he deemed Shopify’s ability to give merchants “best-in-class” fulfillment options while retaining their customer control as “positive.”
Shopify has pulled back on its own logistics efforts in a bid to improve metrics like free cash flow and make the company more focused.
As for Amazon, the company “benefits from the marginal utilization/optimization of fulfillment capacity, but over time we think it will benefit from the data it gleans from this fulfillment for [direct-to-consumer] brands that might not have otherwise sold/fulfilled through Amazon,” he wrote.
And perhaps there’s even a bigger objective. “We also wonder if there is something more at play here for Amazon long term that isn’t readily apparent at present,” Young added.