Amazon and Shopify are teaming up for a big change in cross-border business
Time： 2023-04-10 15:14
Amazon and Shopify, the two camps, have been at each other's throats for years. But the emergence of new contenders such as Temu and Shein poses a serious threat to the two giants. Amazon and Shopify may have to bury the feud and team up to take on the new power.
Former adversaries unite when a common enemy appears. Amazon and Shopify, once at loggerheads, are now sitting at a table drinking tea.
Evan Consulting examines the current internal and external tensions between the two opposing camps, as well as future cooperation patterns.
First, Amazon and Shopify are under pressure to grow internally
Over the past few years, Amazon and Shopify have represented two e-commerce models, with Amazon offering huge shopping traffic and sophisticated infrastructure, while Shopify offers buyers and sellers the opportunity to operate on their own and have a wide range of choices. Each of them, in his own way, has enjoyed his own moment of glory.
However, in the era of rapid development, there is never always a winner. In 2022, as the United States entered the winter of technology, Amazon also entered a period of sluggish growth. In 2022, Amazon's net loss was 2.7 billion dollars, the worst performance in the history of Amazon. Amazon's self-run e-commerce sector and third-party platform business have shown obvious flagging state. Amazon's share of the US online retail market has fallen from 43% to 38%. Shopify also faces the problem of disappearing standalone dividends. There are no more opportunities for new sellers to grow in this space, and there will be less and less room in the future. Not to mention, Shopify never provides users with traffic. The fact that the two opposing e-commerce models have both hit growth bottlenecks has served as a palliative for their tit-for-tat rivalry.
If Amazon wants to consider sellers' demands for branding, it must involve the business model of independent stations. If Shopify doesn't provide platform traffic, then the sales will have to be done on their own. In the long run, the sellers who don't have the traffic password won't survive. Shopify has to solve this problem to retain those customers who subscribe, so it has to turn to the platform for help.
Second, the external face of Temu and Shein grab resources
In addition to internal pressure to grow, the rise of Temu and Shein has taken away many users from Amazon and Shopify.
Since its launch in September 2022, Temu has topped the App Store for 69 days with more than 40 million new APP downloads. Temu, which sells a wide range of groceries at a fraction of the price, is a "low-price" version of Amazon. Temu is gaining momentum by naming the 2023 Super Bowl in North America.
Shein's fast-fashion model has also allowed it to make money that Amazon and Shopify cannot. Shein's precise positioning and more mature grasp of fashion trends and clothing consumer psychology have formed an independent flow pool in the field of fast fashion. Amazon's Amazon Fashion and Amazon Style didn't make much of a splash. Shein is in an absolute crushing position in this area.
Sellers on Shopify, already struggling with a lack of traffic, are being pushed into a corner by integrated platforms like Temu and Shein with a large volume, low price and high traffic. Sellers have to turn their heads to build their own brand differentiation.
Third, the two major confrontation camps will move towards win-win cooperation
The hardline stand-off between Amazon and Shopify has loosened amid internal and external concerns. Amazon is reaching out to independent sites with "Buy with Prime," and Shopify wants to lend a hand.
"Buy with Prime" is a special feature of Amazon's Prime membership program. Merchants who sign up for the program will be able to add the Prime logo to their standalone product pages, and Amazon Prime members will be able to take advantage of additional benefits and convenience when purchasing such items, such as faster free shipping, free returns, additional discounts and more.
In this way, Amazon transforms the independent stations built by each seller into "brand flagship stores"; Sellers using Shopify can also manage Amazon stores and branded stand-alone sites more effectively. At the same time, they can gain a large number of premium customers with Amazon Prime membership. Stand-alone sites can win a lot of traffic. Users can buy products from independent sites other than Amazon, while also enjoying the fast and convenient service of Amazon Prime membership. In this way, the cooperation is beneficial to all parties.
Now, Amazon and Shopify have been in talks for months to work together on this. In a recent earnings call, Shopify President Harley Finkelstein made it clear that the two companies are likely to work together, not against each other. If this news hits the ground in the near future, the landscape of cross-border e-commerce will change dramatically.