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Amazon and Flipkart will share their logistics services with other online sellers

What does it mean for Shopify that’s emerged as a viable third option?

E-commerce companies Amazon and Flipkart are moving beyond aggregation by opening up their logistics services to sellers not using their platforms. This is an interesting move by the two platforms as it will support and drive growth in sales outside of their platforms. While Amazon has introduced its Buy with Prime service to sellers in the US, Flipkart’s internal logistics arm eKart is now open to all Indian merchants.

What is Amazon’s Buy with Prime?

Amazon US on April 22 announced that Buy with Prime will allow US-based Prime members to shop directly from third-party online stores (instead of on Amazon) but avail the Prime delivery benefits such as fast, free delivery, an easy checkout experience, and free returns on eligible orders.

Buy with Prime will initially be available to select merchants using Fulfillment by Amazon (FBA) but will be rolled out through 2022 to those not using FBA, Amazon said. The service is designed to work with most online stores, including e-commerce service providers such as BigCommerce, Amazon added. Basically, merchants can add a Buy with Prime button on their check-out page and allow Amazon to take care of all the processes after that.

“Allowing merchants to offer Prime shopping benefits on their own direct-to-consumer online stores is an exciting next step in our mission to help merchants of all sizes grow their business—whether on Amazon or beyond. With shoppers purchasing directly from merchants’ online stores, Buy with Prime will allow merchants to build customer relationships and brand loyalty while offering conversion-driving benefits like fast, free shipping.” – Peter Larsen, Amazon’s vice president of Buy with Prime.

Merchants that choose to use Buy with Prime, pay Amazon a service fee, a payment processing fee, and fulfilment and storage fees that are calculated per unit.

What is Flipkart’s eKart offering?

Following on the heels of Amazon’s announcement, Walmart-owned Flipkart on April 28 announced that its supply chain arm, eKart, will offer its end-to-end supply chain solutions such as logistics and warehousing to brands, platforms, and small and large businesses across the country.

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This means direct-to-consumer brands as well as other platforms like Nykaa and Meesho, all of whom currently rely on third-party services like Delhivery and Ecom Express, can now start using eKart Logistics as well.

eKart launched in 2009 to serve as the logistics and warehousing arm of Flipkart and now has sortation centres and delivery hubs across the country and delivers over 100 million shipments a month, Flipkart said.

“As a supply chain that has grown and evolved with the e-commerce industry, we understand the unique opportunities and challenges present in the Indian market and are agile to evolve with them to provide the most efficient delivery service for businesses. We are delighted to bring our deep expertise and capabilities to the small, medium and large businesses seeking to reach customers and clients across the country through our tech-driven dependable supply chain.” – Hemant Badri, Senior Vice President, eKart

Trouble for Shopify

While this move might be a boon for online merchants not on Amazon and Flipkart and consumers, it could spell trouble for Shopify, the go-to platform used by sellers not on Amazon or Flipkart, because Shopify has been building and pitching its own fulfilment network to sellers. But despite the rapid expansion of Shopify Fulfillment Network in recent months, it does not yet match the speed and convenience offered by Prime, which could tempt developers to go with Amazon’s new service instead. However, the one big reason developers might choose not to go with Buy with Prime is because of the additional customer data that Amazon can collect and fears as to how the e-commerce giant might use it to build its own products and platform.

For more on what this move means for Shopify (historically as well as in the future), here’s analyst Ben Thompson’s deeply-reported newsletter.

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