Fast Five Shorts | Pros And Cons Of Amazon Featuring Products From Other Websites Within Its App

Summary

Omni Talk Retail Podcast Summary

Episode: Fast Five Shorts | Pros And Cons Of Amazon Featuring Products From Other Websites Within Its App

Release Date: February 20, 2025

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Introduction to Amazon's New Feature

In this episode of Omni Talk Retail, hosts Chris Walton and Anne Mezzenga, alongside guest Lisa, delve into Amazon's latest initiative: integrating products from other websites into its mobile shopping app. Released on February 11th, Amazon is currently testing a feature that allows users to discover select products from external sites directly within the Amazon Shopping app. This beta feature, known as the "Shop Brand sites" directly feature, is accessible to a limited group of US customers, with plans for a broader rollout based on user feedback.

Key Details:

• Functionality: Users can search for products on the Amazon app and find items that Amazon does not sell alongside those it does. Clicking on an external product link redirects users to the brand's website.
• Prime Integration: If the external brand supports "Buy with Prime," Prime members benefit from Amazon's renowned free delivery, easy returns, and customer support, even when purchasing directly from the brand's site.

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Pros of Amazon's Feature Integration

David highlights several advantages, emphasizing Amazon's strategic maneuvering to enhance its ecosystem:

• Data Collection & Insights (00:00 - 01:13): Amazon gains valuable consumer data and insights into products they don't currently offer. This allows the company to refine its algorithms and understand consumer behavior across different platforms.

  David: "They're collecting data, they're gaining a financial benefit, they're also gaining insights of what don't I have on my site." [00:45]

• Strengthening Partnerships (01:13): By supporting brands externally, Amazon fosters stronger relationships, offering brands broader exposure even if they choose not to list exclusively on Amazon.

  David: "It's a win for those brands that don't have great accessibility." [01:20]

• Revenue Streams (03:40 - 04:35): Chris points out that this feature opens new revenue streams for Amazon, leveraging its robust supply chain and AWS capabilities to enhance profitability.

  Chris: "It's a perfect revenue stream for Amazon." [03:40]

• Enhanced Consumer Experience (02:51): The integration ensures that consumers continue to enjoy Amazon's fast and reliable shopping experience, now extended to products outside Amazon's direct inventory.

  David: "Amazon does get from this. Plus, in a lot of ways it'll benefit their partners." [02:20]

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Cons of Amazon's Feature Integration

While the discussion predominantly focuses on the benefits, subtle concerns arise regarding competition and market dynamics:

• Search Competition (02:51 - 03:40): Lisa raises the issue of Amazon competing with other search engines like ChatGPT and Google for product visibility, stressing the importance of Amazon maintaining its position as the primary destination for product searches.

  Lisa: "Amazon wants to be the first place that you go when you're looking for products." [02:51]

• Potential Overreach: Although not explicitly stated, the integration could lead to Amazon exerting significant influence over external brands, potentially limiting their autonomy in the long run.

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Insights from the Panel

Anne provides a strategic perspective, framing Amazon's move as a defensive strategy against emerging competitors in the AI search space:

• Defensive vs. Offensive Move (04:39 - 05:31): Anne suggests that Amazon's feature is more about defending its market position rather than aggressively expanding. With the rise of generative AI in search, Amazon needs to innovate to prevent losing ground to tech giants like Google and emerging AI-driven search engines.

  Anne: "Amazon has no choice to go but to go in this direction... otherwise they're going to give up the game to Google and any startup gen AI search engine." [04:39]

• Buy with Prime Hook (05:00): The "Buy with Prime" integration is highlighted as a pivotal feature that enhances the appeal for both consumers and brands by simplifying logistics and leveraging Amazon's superior supply chain management.

  Anne: "Amazon knows how to get shoppers and convert them to buyers faster and better than anyone." [04:55]

Chris reiterates the synergy between Amazon's core competencies and the new feature:

• Supply Chain Mastery (03:54 - 04:35): Chris emphasizes that Amazon's expertise in supply chain and logistics makes this feature a natural and profitable extension of their existing operations.

  Chris: "This is a perfect evolution of what they're already doing to make them a bunch more money." [04:10]

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Conclusions and Final Thoughts

The panel reaches a consensus that Amazon's integration of external products into its mobile app is a strategic advancement that leverages its existing strengths in supply chain management, data analytics, and customer loyalty through Prime. While primarily seen as a positive development enhancing consumer choice and supporting partner brands, it also underscores Amazon's proactive stance in maintaining its dominance in the evolving retail landscape amidst rising competition from AI-driven search technologies.

Final Quotes:

• Anne: "I think Amazon has a good footing in there as they're developing what the next generation of search commerce looks like." [05:10]
• Chris: "For a lot of the bigger brands, it's a win-win." [05:15]

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This episode provides a comprehensive analysis of Amazon's latest feature, highlighting its potential to reshape the retail ecosystem by blending in-house strengths with external brand collaborations, all while navigating the challenges posed by emerging technologies and competitive pressures.

Transcript

[Lisa]

Amazon's mobile shopping app is now featuring products from other sites. Amazon is testing a new feature that enables users of the Amazon Shopping app to find select products from other sites and go there to purchase them. Currently in beta, the Shop Brand sites directly feature is live for some US Customers and will be rolled out to more based on feedback, the company said on a Tuesday, February 11th press release. Customers who have access to this beta search will find in their search results select products that Amazon doesn't sell in its store alongside the products that Amazon does sell. And they will see a link to the brand's website, according to the release. When customers click on that link, they will receive a notification that they are leaving Amazon and will go directly to the brand's website where they can evaluate the product and make purchases directly from that brand. Now, here's the kicker. If that brand happens to have Buy with Prime enabled products, prime members will then be provided with free delivery, easy returns and customer support for the items that they purchase directly on that brand's website. Lisa, we're going to you here with this one. Again, what are the pros and cons here of Amazon testing if consumers will want to buy products from other websites via the Amazon mobile app?

[David]

Yeah, look, we all know there's always an angle with Amazon, right? How they're going to drive more, right? So I think at the end you kind of hit on it. Look, if it's Prime, Amazon's winning anyhow, right? Because they're doing the back end of that execution. They're collecting data, right. They're gaining a financial benefit. They're also gaining insights of what don't I have on my site. You know, maybe their algorithms aren't perfect, but now this will be a new algorithm they can add because they'll have some access, some way to understand how the consumer, you know, is going from site to site. Look, I, I don't know that I can necessarily see a con on it at the end of the day because ultimately there's so many different learning and revenue streams and opportunities that I think Amazon does get from this. Plus, in a lot of ways it'll benefit their partners. So it actually, in a different way is, is a new positive shift on their partnerships because they're saying, hey, if you don't allow us to carry this from you on our site, we're going to still support you. Now, likely they're driving that kind of prime deal with them simultaneously. But honestly, I think generally speaking for amaz, a win win for brands that don't have you know, great accessibility. I think it's a win for those brands. So I'm not really sure I see a big con here as it relates to Amazon and the consumer experience here because basically the consumer wants fast. Amazon has trained them that way and they're going to get it any way they want it now.

[Lisa]

Yeah, I mean, I think you did. I agree with everything that you said, Lisa. I think it's also the only thing that I would add in is that it's still a search game and Amazon wants to be the first place that you go when you're looking for products they want. They're in competition now with, you know, ChatGPT or with ChatGPT, with Google, with all these other search engines to get that traffic to be the place where you can find the product the fastest that you're looking for. And so I think that's the biggest component here is, you know, it comes down to where can I go that I can confidently find those products? And then, of course, Amazon's getting all of this information and setting up their sales team is to be like, you need to go talk to this person, because people are, people are looking for this on Amazon and they're, they don't have buy with prime set up. David, where do you land on this?

[Chris]

You know, I think when you got to pay for a $600 million wedding or replace the teak on your boat because you use the legal ones, you need another revenue stream, right? And this is a perfect revenue stream for, for Amazon.

[Lisa]

This is, this is buying.

[Chris]

Pointed it out earlier, Right. You know, Amazon's a nerdy tech company and effectively a supply chain company. So it's a perfect play. I mean, this is an AWS and supply chain play, right. It's the natural extension of what they're already doing. The all the brands already have branded stores on Amazon. So what's the difference now if it actually just goes back to their site and, you know, and Amazon does the fulfillment on it, which is, you know, most of the products will probably be prime enabled anyways. So it's, it's a perfect evolution of what they're already doing to, you know, make them a bunch more money.

[Lisa]

Right. Chris, how do you, how do you think about this?

[Ann]

I don't have much to add. I think the point I bring in here is I think this is a little bit more. This, a little bit more of a defensive move than an offensive move. Have we been. As we've been discussing. And I think it goes back to what you said, and I think it's because of the rise of gen AI search. I think, you know, Amazon has no choice to go but to go in this direction. That's my opinion because, you know, otherwise they're going to give up the game to Google and any startup gen AI search engine over time. And. But the thing that Amazon has in its back pocket that makes me think this could work to the point that you guys are saying is, and Ann, you said it too. Amazon knows how to get shoppers and convert them to buyers faster and better than anyone. So, you know, as they're developing what the next generation of search commerce looks like, I think Amazon has a good footing in there. And the buy with Prime Hook, as I think about that evolution is also really interesting to me as well. So yeah, that's, that's my take. I think universally we all are kind of agreeing this one and I think.

[Chris]

That the buy with Prime Hook is, is really interesting because the things that most of the, you know, kind of the national brand struggle with more than anything else is the supply chain and the shipping side and dealing with returns. It's, it's really what is killing them. And now they've effectively just outsourced it to Amazon. So I do think for a lot of the bigger brands, it's a win, win.