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The My Wife Quit Her Job Podcast With Steve Chou
594: This Amazon Feature Looks Helpful – But It’s Stealing Your Customers
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In this episode, I discuss a new Amazon feature that seems super helpful but might actually be sneaky and stealing your customers. We’ll break down how it works and what you need to watch out for so you're not caught off guard.
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Steve Chou
Welcome back to the podcast, the show where I cover all the latest strategies and current events related to E commerce and online business. Now, the other day a student asked me how I felt about Amazon Buy with Prime and whether to add it to your Shopify store. So in this episode, I give you the unfiltered truth about what Buy with Prime actually does behind the scenes and why it might be hurting your business more than helping it. You'll learn how this seemingly helpful feature could be quietly siphoning your customer data and handing it over to Amazon. But before we begin, I want to let you know that the recordings are now on sale for Seller Summit 2025 over@sellersummit.com if you missed the event, this is your chance to catch every keynote, every session and every strategy that was shared on stage. These recordings are packed with actionable insights from seven figure sellers and e commerce experts, so don't miss out. Welcome to the My Wife Quitter Job Podcast. Today's episode is a little Because I need to warn you about an Amazon feature that sounds great on paper, but it's actually quietly undermining your business. Now, Amazon is stealing your customers, and if you're using this feature, you're actually the one handing them over. You built a brand, you actually paid money for traffic and you earn that sale. But if you use this feature, Amazon gets it. Now, here's what no one's telling you. While you're busy scaling your Shopify store, which is what you should be doing, Amazon is quietly slipping into your checkout flow with a feature that looks helpful but is actually a data siphoning trojan horse. And it's called Buy with Prime. Now with Buy with Prime, you get faster shipping and it can boost conversions. But the customer that you just paid to acquire, you end up not owning them at all. You don't get the real email, you can't retarget them, and you can't get repeat business or loyalty. Because Amazon owns the data, Amazon owns the customer, and you, you end up just paying more money. So if you think Buy with Prime is helping your business, you're not seeing the bigger picture. Because Amazon doesn't want to help your store. They want to be your store. So in this episode, I'm going to show you exactly how it's happening and what you need to do before it is too late. So let's break it down. Buy with prime is Amazon's move to extend its reach outside of Amazon. It lets you, the brand owner, add a little prime badge to your product pages and Then shoppers can then click the Buy with Prime button, breeze through checkout using their Amazon account and get access to two day prime shipping. Now, on paper, this sounds amazing. You don't have to handle inventory, you don't have to handle fulfillment, and you don't even have to earn their trust. Because Amazon does all that for you. And Amazon claims it works. They say that brands see a 25% increase in conversions just by placing the Buy with Prime badge on the page. Now I don't know if that's true in practice, and according to some of my colleagues, they haven't seen anywhere close to that lift. But regardless, here's what Amazon doesn't tell you. That sale. It might be the last time you ever hear from that customer again. Because the moment they click that prime button, it is no longer your checkout, it is no longer your funnel, and they're definitely not your customer anymore. Now sure, Amazon claims that you'll get 25% more sales with Buy with Prime. And it sounds great. But let me ask you this. Can you email that customer again? No. When someone checks out using Buy with Prime, Amazon gives you a masked email, something like abc123@marketplace.Amazon.com and that's not their real email. So you can't send them a thank you note, you can't check in on their order, and you definitely can't upsell or launch new product campaigns. And this matters a lot because email is how DTC brands survive. It is your direct line to the customer. You don't have to pay for ads. And every email drives revenue. Think about abandoned cart reminders, restock alerts, vip, early access, deals, sales coupons. It all starts with email. And no email equals no relationship. Just a one time transaction you'll probably never see again. Now if you think you'll retarget these Buy with Prime customers again later with ads, it's just not going to happen. Because Buy with Prime moves the customer off of your site and onto Amazon servers. Which means you're tracking pixels on Facebook, Google, TikTok. They're just not going to fire. So you can't do retargeting. No lookalike audiences, no attribution, no follow up. Now here's why that's a massive problem. I run a seven figure store. You guys all know Bumblebee linens. We sell personalized handkerchiefs for weddings. Now you would think that we don't get that much repeat business even though the divorce rate is around 50%. You know, we don't get that many People getting remarried and getting handkerchiefs. But here are the numbers from our store. Only 12% of our customers come back and buy again. But that 12% actually generates 36% of our revenue. And we're in a niche with low repeat sales. For most stores, the numbers are way higher, which means that if you can't follow up, if you can't retarget or email again, you are leaving a huge chunk of money on the table. Now, this is not a fluke. This is how running a successful brand works. Your first sale is just the beginning. The real profit comes after the first order, if you can get them to come back. But with Buy with prime, the door slams shut, you don't get the data, there's no contact, there's no chance to build loyalty. So, sure, Amazon might help you close the sale, but they're stealing the relationship. And without that, you're not building your business. You're actually building theirs. Now, let's switch gears and talk about numbers, because Buy with prime might look like a conversion booster, but under the hood, it's actually a profit killer. Here's what you're actually paying for with every order that gets conducted with Buy With Prime. So, first off, Amazon takes a 3% cut of your order just for using the Buy with prime service. This is their platform fee, basically a toll to access their checkout and prime badge. Then there's the Amazon fulfillment fee. This is what you pay Amazon to pick, pack, and ship your product using their warehouses. The exact cost is going to depend on the size and the weight of your item. But for most standard products, let's call it around five to six bucks per unit. And that's just today's rate because Amazon keeps raising prices, and fulfillment rates have doubled since 2020. A 96% increase doesn't stop there. Since Amazon controls the checkout, they also charge a payment processing fee of 2.4% plus $0.30 per transaction, which is similar to what Stripe or Shopify payments charges. Now, 2.4% might not sound like much, but just for comparison, I only paid 2.1% to process credit cards on my own store, so even that adds up fast. So let's break down all those fees on a $50 product that's being sold on your website. The Buy with prime fee is a buck 50. FBA fulfillment is around $5.38, and payment processing is about a buck 50. So let's just call it $8.38 in fees just to fulfill and process a single order. And that's before you Factor in your costs, your ad spend, your team, your rent, all the things you need to actually run your business. So if you're operating on a 30 to 40% margin, like most brands buy with prime is eating up 25 to 30% of your profit every single time. Meanwhile, what do you get in exchange? You don't get email, you can't retarget, you don't get brand loyalty, and chances are there's no second sale. You are literally paying Amazon to take your customer and your margin. It's kind of like hiring a middleman to show up at your own checkout, close the sale, and then walk away with the customer data while charging you for that privilege. So, yeah, your conversion rate might go up, but if you're losing money on every order, what exactly are you celebrating? Now, at this point, some of you might be skeptical, and you might be thinking to yourself, okay, I lose a little margin, maybe some data, but if it helps me grow, isn't it worth it? Well, here's the part that no one's talking about. Amazon's not just helping you, they're actually studying you. Every time a customer checks out with Buy with Prime, Amazon learns what's selling on your store, what kind of customer buys it, what price points convert the best, and which products are scaling fast away from the Amazon marketplace. They're collecting data on your product marketing fit, your positioning and your brand story. And they're doing it without taking any inventory risk themselves. And that should scare you, because this isn't speculation. Amazon has a long track record of spotting winning products and then launching their own versions. One of my friends, Carol, she used to sell emu oil, and she built a solid business until Amazon stepped in, launched their own emu oil, and undercut her price by 30%. And to make things worse, they started running ads for their product right on her product listing. So her revenue ended up tanking almost overnight. This isn't just happening in niche products either. Not long ago, I was shopping for garbage bags. And as I'm shopping for glad bags, which is what I typically buy up, pops Amazon's own branded version at 30% cheaper. Now, let's be honest, I'm going to throw these bags away anyway, so I bought Amazon's version. And this kind of thing happens way more often than you think. Amazon has done it to luggage companies, battery brands, fashion labels, even household goods with millions in revenue have gotten cloned and crushed. And now if you use Buy with Prime, you're handing them the blueprint voluntarily. Buy with prime isn't just a checkout button, it is surveillance software disguised as a growth hack. You're feeding the algorithm with your best data on your dime. And if you think Amazon's not planning to use it, you just haven't been paying attention. Because Amazon doesn't just want to support e commerce brands, they want to replace them. Now look, I'm not saying you should never use Buy with Prime. There are situations where it makes sense. But if you're going to use it, you need to be strategic and not blind. Buy with prime can work well for impulse buy products, especially those under 30 bucks. If you're selling something quick and giftable and you're trying to convert cold traffic, people who've never heard of your brand before, the prime badge can absolutely lift conversions. And if you're already fulfilling through Amazon FBA and your margins can handle the fees, it can be useful as a short term tool. But here's when it becomes a problem. If your business relies on repeat purchases, email marketing, SMS or loyalty flows, Buy with Prime breaks that engine. You don't get the real email, you can't retarget and you lose the chance to build a real relationship. And it's not just the customer data, it is the entire Shopify ecosystem. Your discount codes aren't going to work. Your subscription plugin is not going to work either. In any post purchase, upsell or cross sell apps you have will be completely bypassed. Buy with prime is a black box. It takes your customer out of your normal Shopify checkout flow and breaks the tech stack you spent years optimizing. And let's be honest here, you can't build a sustainable DTC brand off of one off sales. In my business, only 12% of my customers are repeat buyers, but they generate 36% of my revenue. Our top 10% of customers generate nearly 50% of our overall sales. And, and that is where the profit is. That is where the scale happens. So if you're going to use Buy with Prime, use it surgically. Use it on cold traffic, on low margin one and done products where customer retention doesn't matter. But when it comes to your core products, your VIP customers and anything you're trying to grow long term, keep that checkout in house. Own the customer, own the data, own your future. Because if you hand Amazon the keys to your checkout, don't be surprised when they drive off with your business. So yeah, Buy with Prime might boost your conversions in the short term, but you have to factor in the risks. Whenever it comes to business, I always ask myself what are you really building? You didn't start your own brand just to hand your customers over to Amazon. You started it to build something that you own. Something lasting. Something that grows with every sale and not resets to zero. I've been running my 7 figure E commerce store for 18 years now and Amazon is only a small fraction of our sales on purpose. Do not trade short term wins for long term control. Don't give away your most valuable asset, your customer, just to get a couple more checkouts today. Because Amazon isn't here to help your brand win. They're here to replace you the second you become profitable enough to matter. So use Buy with Prime if you must, but do it with your eyes wide open. And remember, in E commerce, whoever owns a customer owns the future. Hope you enjoyed that episode. If you're considering Amazon, buy with prime then proceed with caution. For more information and resources go to mywifequitherjob.com Episode 593 Once again, the recordings for Seller Summit 2025 are now on sale over at sellers summit.com if you missed the event, this is your chance to catch every keynote, every session and every strategy that was shared on stage. Go to sellersummit.com and if you're interested in starting your own e commerce store, head on over to my wife, quitherjob.com and sign up for my free six day mini course. Just type in your email and I'll send the course right away via email.