Amazon's "Buy With Prime" Will Ruin PayPal - DirectPayNet

Amazon’s “Buy With Prime” Will Ruin PayPal


PayPal, once the king of easy one-click checkouts on online shopping portals, is under serious threat. Amazon’s new “Buy With Prime” button will overtake PayPal’s reign as a the one-click purchase gateway.

Known for their ability to topple giants like eBay and Craigslist, Amazon will use its massive user base, reputation, and logistics to chew up PayPal.

What “Buy With Prime” Means for Merchants

The future of eCommerce just got a lot more exciting. Amazon is set to launch a “Buy With Prime” button, which will allow merchants to sell outside of the Amazon Marketplace while leveraging their existing payment and fulfillment network.

Easy for Merchants, Easier for Customers

Everyone has an Amazon account. Now, the e-commerce giant is redefining the value of its Prime service, overcoming its own limitations and shortcomings.

The button, which was announced in May of this year, allows merchants to add the “Buy With Prime” button to their own storefronts to give customers the same benefits of Amazon Prime’s two-day shipping and retailers the benefits of Amazon’s fulfillment services.

“Buy With Prime” Merchant Advantages

The button is an extension of Amazon’s Fulfillment by Amazon (FBA) program, which allows vendors to ship their inventory to an Amazon warehouse for storage instead of keeping it on hand themselves. This has a few major advantages for small businesses:

  1. It frees up space in the business’ own inventory area, allowing them to order more products from vendors or use that space for another purpose.
  2. It gives them access to a vast network of warehouses across the country, allowing them to reach customers much more quickly than they could otherwise.
  3. Merchants no longer have to package their own products because they can leverage the packaging and fulfillment offered by FBA.

Of course, merchants will have to pay an undisclosed fee to use these services, especially if they don’t already have an Amazon store.

Why would merchants want to use the “Buy With Prime” button?

Amazon is the #1 shopping site in the world. Consumers go to Amazon before they search anywhere else for a product.

That means there are millions of products to browse through, and an e-commerce business own just has a handful of them. By adding Amazon’s “Buy With Prime” button to your website, you add Amazon’s benefits to your own custom website.

Amazon has a streamlined experience, giving all merchants the same look and feel and customers the same experience. Your own site lets you customize each aspect of the customer journey.

That’s not to mention Amazon’s track record of knocking off 3rd-party products that sell well. When it’s your own site, you can avoid Amazon’s invasive, prying eyes.

BWP Customer Advantages

Customers trust Amazon and have grown to rely on their shopping and 2-day delivery services for a couple decades, now. Amazon is convenient. It’s often too convenient.

Many customers find products they like online and immediately go to Amazon to buy it instead of the site they discovered the product on. With “Buy With Prime”, prime members can take advantage of Amazon’s convenience without leaving the merchant’s site. Here’s a breakdown of the Prime benefits they can use:

  1. Customers can take advantage of Prime’s free delivery and free returns without having to navigate to Amazon’s own website.
  2. All shipping data and credit card information is retrieved in an instant since it’s stored in the customer’s Amazon Prime account, offering a 1-click checkout experience.
  3. Solves the “inconvenience” of not buying on Amazon, which many prime subscribers prefer.

Assisting in Expanding Amazon’s E-Commerce Domination

The new feature is in line with Amazon’s recent strategy to grow its e-commerce network beyond just its own site and fulfill third-party purchases. The company has been working to become the backbone of e-commerce, offering retailers services that allow them to store and ship their own orders through Amazon’s warehouses.

By helping other sellers reach customers faster, Amazon can gain more business and continue expanding its empire. The “Buy With Prime” button is clearly a way for the company to capitalize on the popularity of Amazon Prime memberships and perks.

Even if customers aren’t browsing Amazon for their next product, Amazon can still take a cut of the sale. It’s another smart move to total online shopping domination.

Simplifying Your Online Store

Before the “Buy With Prime” button, when a merchant opens their own online store, they need to:

  • Build a storefront
  • open a merchant account
  • set up the payment gateway
  • store, pack, and deliver orders

Amazon’s new button removes 3 of those 4 steps. Shopify continues to try and create a solution for merchants who want a custom shopping experience, but they can’t match the scale of fulfillment like Amazon.

Once we get some real world data, who knows—we might start telling startups and new business owners to plop Amazon’s button on their page instead of going with Stripe. But that’s something we’ll figure out in the coming months.

“Buy With Prime” vs. PayPal

Here’s where things get even more interesting. PayPal is the king of 1-click checkouts. It does everything the “Buy With Prime” button does EXCEPT order fulfillment. That will be its downfall.

As a standalone service, PayPal doesn’t actually offer that much in terms of benefits to merchants. It’s all customer-based advantages, which can trickle down into a slight bump in conversions for merchants. But if it’s all based on conveniently entering shipping and credit card data, PayPal must be shaking in their boots. Android and Apple might be sweating, too.

PayPal Is the Second-Most Popular Method of Payment

Right now, the most common way to pay for something online is by credit card (or debit card), followed by PayPal. As the popularity of “Buy With Prime” grows, it’ll be more convenient for consumers than clicking two buttons on their phone or computer: one for entering their credit card information, and another to complete their purchase.

Amazon has had its finger on the pulse of what consumers want since its inception, and now it’s anticipating their next big desire: to get rid of that pesky middleman.

With Amazon “Buy With Prime,” even typing your username and password is no longer required. All it takes is a click of a button. And as we all know, when something is easier to do, we’re much more likely to do it.

Potentially Safer than PayPal

We’ve all gotten phishing scams that seem official enough to make us question whether they’re real or not—but because this new feature is powered through existing Amazon accounts, it promises to be safer and more trustworthy than other third-party apps, including PayPal.

Because the items are fulfilled by Amazing, there’s more guarantee that purchases arrive to customers.

For example, if you buy something with your PayPal account and it never shows up, PayPal has no way of tracking down who took your money or why it wasn’t delivered—you’ll just be without the money you spent or the item you ordered.

But if you use Amazon’s “Buy With Prime” button, you’ll have a better chance of getting what you paid for (and when you paid for it), because Amazon has access to the delivery service and can follow up with them about where your package is.

Even if there’s a problem with the payment itself, Amazon can still help you get your money back or return what you’ve bought without as much hassle as PayPal. You can’t yet add Buy With Prime to your site, but the feature will be launched shortly.

Why You Still Need a Merchant Account

PayPal is what we call a payment aggregator, 3rd-party processor, or payment service provider. They offer a flat fee for every transaction and don’t allow high-risk merchants to use their service. When your business is discovered to be high risk (FYI, most online businesses are), it will be shut down.

The same is true for Amazon currently. They are a PSP and use Chase Paymentech for payment processing.

PSPs don’t work well with high risk businesses. You are free to use one, but understand the high potential of getting your account terminated.

You need a merchant account that supports your business. DirectPayNet will help you open a high-risk merchant account, even as a backup account, so your business can continue to run smoothly.

About the author

As President of DirectPayNet, I make it my mission to help merchants find the best payment solutions for their online business, especially if they are categorized as high-risk merchants. I help setup localized payments modes and have tons of other tricks to increase sales! Prior to starting DirectPayNet, I was a Director at MANSEF Inc. (now known as MindGeek), where I led a team dedicated to managing merchant accounts for hundreds of product lines as well as customer service and secondary revenue sources. I am an avid traveler, conference speaker and love to attend any event that allows me to learn about technology. I am fascinated by anything related to digital currency especially Bitcoin and the Blockchain.