Amazon extends Prime membership bennies to fashion retailer
Amazon.com wants everyone to be a member of Amazon Prime and it is willing to extend the perks of the program to other sites to make that happen. Yesterday, Amazon announced that AllSaints, a British fashion retailer, would offer Prime members free, next day shipping on purchases made, not on Amazon’s marketplace, but on AllSaints.com.
The news of this deal comes on the heels of competitive analysis research by Upstream Commerce, which claimed to have found compelling evidence that Amazon tracks third-party sales on its site and uses the data to directly compete with sellers on its marketplace.
The trust factor may loom large in Amazon’s ability to find partners beyond AllSaints. According to Re/code, Abercrombie & Fitch and Neiman Marcus both declined similar offers.
As to how the program will work with AllSaints, the retailer’s products will show up in Amazon search results. Shoppers, who like what they find during the search, will have to click on a link taking them to AllSaints.com. Once there, they log in with their Amazon usernames and passwords and use the payments methods stored with Amazon to take advantage of the free shipping deal. Amazon will get an unspecified "small fee" when shoppers click through from its site to AllSaints, but will not get a cut of the sale.
As a GeekWire report pointed out, Amazon will not handle fulfillment for AllSaints and purchases will not come in the e-tail giant’s packaging. Brands such as AllSaints might find this important as they seek to reinforce their own brand image with customers.
Rich Ascott, AllSaints’ global digital director, told Re/code that AllSaints will run a storefront on Amazon, but that all goods will be purchased through that location and never through Amazon.
"I can see a day when Prime members will have access to sneak previews and first chance to shop our new collections," Mr. Ascott said at the Money 2020 conference in Las Vegas yesterday (via Mashable). "What this means for AllSaints is that we can leverage Amazon’s payments expertise and global reach to introduce new customers to AllSaints by providing a better buying experience."
- Amazon Begins Extending Prime-Member Perks to Other Shopping Sites – Re/code
- AllSaints – website
- You can now use Amazon Prime to buy stuff that’s not on Amazon – Mashable
- Third-party retailers begin offering Amazon Prime members free shipping – GeekWire
- Study: Amazon goes all predatory on marketplace sellers – RetailWire
Discussion Questions
What is your reaction to Amazon extending its Prime program through other retailer sites? What do you see as the benefits and drawbacks for Amazon and companies such as AllSaints?
I suppose an upstart brand might see benefits to accessing a larger audience, but I can’t see more established retailers trusting Amazon. Why do anything to make your competitor stronger?
The AllSaints/Amazon deal is a win for both companies. AllSaints gets access to Amazon’s customer base and payment systems, while Amazon extends the benefits of Prime.
On the downside Amazon will collect data on AllSaints purchases, which could be used against AllSaints in the future. AllSaints will have to work hard to build its brand identity separate from Amazon.
These partnerships can be mutually beneficial and offer ways for smaller brands to go big in e-commerce.
What I find interesting is that AllSaints is bearing all the cost for this program. AllSaints pays for the free express shipping for Amazon Prime customers. In effect they are giving their best service to Amazon’s customers rather than their own customers.
It is a good experience for customers, many of whom already have Prime memberships and now get faster checkout through their Amazon credentials and free two-day shipping. It feels like a very risky position for AllSaints who are essentially putting Amazon between themselves and the bulk of their own customers. AllSaints doesn’t sell on Amazon or the Marketplace, so clearly they feel Amazon isn’t a competitor because consumers still have to end up on AllSaints.com to purchase, but that’s a very risky position to take.
Even if we believe that Amazon can’t see the actual SKUs consumers are buying on AllSaints, the data gurus at Amazon now have a perfect segment of Prime members who have an affinity for luxury fashion at affordable prices. If Topshop started selling through Amazon, does anyone really think Amazon won’t market directly to that AllSaints segment that AllSaints helped them build (and even pay for)?
I don’t expect a lot of major brands to follow suit, it’s just too risky.
This is a great example of un-thinking our assumptions about how retail works.
On one hand it is a new version of eyeballs and impressions: AllSaints gets a much higher digital profile by being included in Amazon’s search. Most people searching for products go to Amazon first. Amazon gets a bit of fashion cache (maybe, maybe not) but more importantly, they start to extend their Prime brand beyond their vast porous walls.
Don’t underestimate Amazon’s interest in the much larger world of in-store merchandising and behavior.
I wouldn’t be surprised to see that Prime logo on a display someday or pop up on my phone when I’m shopping for jeans at AllSaints.
Is it a halo effect or an ingredient brand? I’m sure they’ll let us know when they figure it out.
Makes sense as it reflects that Amazon is open to experimenting with new ideas. It extends the benefits of Prime for members and as far as I can see there are no drawbacks. It’s more a challenge to Google, as Amazon is betting on people finding what they want searching at Amazon as opposed to Google.
OK so Amazon is collecting data to use for competition. Assuming this is true, the data is just a more accurate version of estimates that a lot of the big online retailers have anyway. AllSaints is taking a chance that Amazon is collecting data about traffic and sales from Amazon customers doing business with AllSaints. In exchange, AllSaints is getting a ton of new traffic.
AllSaints is already in competition with all these other online retailers. I think this is a great move for them. If you don’t care for the extra traffic, don’t do it. I have a feeling more retailers will jump on this in the next year.
I’m with David. This may be a puzzling move for AllSaints, but a retailer that charges $195 for a t-shirt can make all kinds of interesting moves!
Most interesting about this is Amazon stepping outside of their own site/store. Not sure how that works but they could very easily become invisible doing that, which is a good thing given that their brand perception will fluctuate with consumers. From their perspective it’s brilliant, and for AllSaints it’s just a good business move.
Giving something away for free cheapens it. For Amazon, this provides a great hook to draw and control less experienced retailers. Unless Amazon makes real advancement in online shopping this will only be a short-term approach. Amazon will record some of the retailer’s sales in their numbers without cost. For AllSaints it will jump their sales short term from Amazon customers that meet their target market. It will not help them with the segment of their target market not following or using Amazon.
Niche branded sites like AllSaints face higher-than-average cart abandonment rates, and the primary reason is the checkout process of entering customer data, credit cards, a different ship-to address if it’s a gift, etc.
Checkout-by-Amazon (CBA) addresses that issue because it makes the checkout process seamless. Buyers have all the data in their Amazon account and it’s a couple of clicks and done. No typing of your address, no reaching into your wallet for the credit card.
Its the same reason publishers love “log-in with Facebook.”
Additionally CBA raises the checkout trust that also contributes to cart abandonment. Buyers trust Amazon, so CBA makes a lot of sense for AllSaints and they will likely see a one to two percent spike in conversions. With an average order value north of a $100, and based on the traffic data I see for that site, I estimate this will add 500-1500 orders a month.
Regarding the fulfillment, Amazon’s multi-channel fulfillment is probably ideal for AllSaints because Amazon handles returns, inventory management and other soft costs that AllSaints would have to build infrastructure for.
As mentioned, a t-shirt for $125 can absorb a $9 fulfillment fee when you factor in that all of the shipping and reverse logistics are handled by Amazon.
I don’t really know this brand but like Cathy said, if they can charge over $100 for a t-shirt, I guess they can absorb shipping costs.
This is a very interesting move by Amazon and had they negotiated more than a small fee for the services of their broader audience and payment handling, I might even have considered it a smart move.
Amazon is under pressure to find more profitable avenues so it bewilders me that they didn’t take this a bit further. OK, so it takes a special retailer for this partnership but I think there may be something in it and Amazon has always been good at figuring these sorts of things out … For my two cents.
Ask Target and Toys ‘R’ Us how that relationship worked for them.
Retailers who have very unique product sourcing could be successful in a long-term relationship with Amazon. Only in this case can you say that Amazon would not likely emerge as a competitor.
However, even this begs the question: if your product sourcing is that unique, can’t you sell it in a way that allows you to build customer data for future marketing?
Interesting decision by AllSaints. I do wonder what the back-end agreement is in terms of branding and data collection between the two companies. This could be an experiment on AllSaints’ side to see if they experience an increase in traffic/sales conversion without a lot of risk. It doesn’t look like Amazon is doing any shipping for AllSaints, so it is basically a marketing/promotion agreement only.
Methinks that Amazon is guarding their flanks from a genie…Alibaba has sound experience with the launch of TMall. Besides being able to build their net from 1% towards the more enviable 50% that Alibaba enjoys, Amazon is dipping their toe in the water of testing whether they may not be able to invent all things.
Perhaps, listening to disparate voices really do pay off.
Seems to make total sense in terms of two companies likely taking an agile approach to innovation and trying something new and different to see if it really works and if it should be extended further. Innovation is never without risk, many of them outlined in prior responses, and both Amazon and AllSaints should be congratulated for the attempt.
Biggest benefit to AllSaints is of course great exposure to a vast set of shoppers who already have payment capabilities set up with Amazon. Biggest benefit to Amazon is testing a new go-to-market model in a pretty limited fashion with little downside risk.
I will continue to not underestimate Amazon’s creativity and capabilities while applauding those looking to continue to challenge the status quo and market leaders.
Amazon is always finding clever ways to be a part of everything that is happening in ecommerce. This is a brilliant idea because it benefits both retailers: AllSaints will probably get more traffic/sales and Amazon will get a cut (if shoppers actually click through). The only drawback for Amazon is if shoppers don’t click.
I would not be surprised at all if Amazon used this as an opportunity to learn more about the AllSaints customer base and started selling the products for less than the brand itself. This is unfortunately common and it is demonstrated in this new campaign that unites retailers. I’m interested in what you think about it.
I was looking at this further and saw that in fact AllSaints is doing the shipping. I’m not sure why, because if they used Amazon as the fulfillment provider it would be cheaper in many ways.
I’m wondering if AllSaints can actually express ship every order and still meet the KPIs that Amazon and Prime members expect. This is a unique relationship, and AllSaints paid a $100,000 integration fee. Interesting for sure.
ShopRunner, the last integration it did, was in 2013 and it was $26,000.