Amazon’s (AMZN) soon-to-be-widespread Buy with Prime service, which allows Prime members to use their Amazon accounts to shop at other online retailers, could be a profitable revenue channel for the e-commerce giant. However, Club Holding shares are still expensive, a high multiple compared to the broader stock market. Amazon announced Tuesday it was making Buy with Prime, which launched last year as an invitation-only program, available to all US online retailers through the end of January. The service allows Amazon Prime members to shop directly on other retailers’ websites, which in turn helps those outlets tap into Prime’s approximately 200 million members. The service also guarantees free delivery within 2 days. The company expects that Buy with Prime will increase shopper conversions from browse to purchase by about 25%. Buy with Prime “allows merchants to build customer relationships and brand loyalty while providing conversion-boosting benefits,” Amazon said in a statement. Amazon’s stock, which ended 2022 down more than 50%, has recovered somewhat earlier this year. The stock was up about 2.7% to $89.69 a share as of Tuesday afternoon. The news comes as Amazon faces slowing sales growth and macroeconomic headwinds. At the same time, the company has been plagued by skyrocketing expenses and a bloated workforce, partly the result of over-hiring at the height of the Covid-19 pandemic when e-commerce demand was more robust. CEO Andy Jassy last week announced plans to cut 18,000 jobs at the company – a move that probably doesn’t go far enough. But Buy With Prime should help Amazon utilize some of the excess storage capacity it invested in earlier in the pandemic and contain associated costs, analysts said. “By reselling some of their logistics/distribution/fulfillment capacity, they generate additional revenue and better optimize their cost structure,” Mark Mahaney, head of Evercore ISI’s internet research team, said in an email to CNBC on Tuesday. “I would also think that given AMZN’s logistical excellence, this is a service that would be well received by both merchants and consumers,” he added. Aaron Kessler, Raymond James’ managing director for Internet Sector Coverage, said in an email to CNBC on Tuesday that “Buy with Prime” will help improve Prime usage [Amazon’s] Fulfillment network.” The new service offers members well-known Prime benefits such as fast purchases and fast delivery. In addition, Amazon handles the lifecycle of purchases, including order processing, packaging of goods, and delivery. The club adopts Amazon’s “Buy with Prime” offer. is positive for its potential to fill in excess capacity, allow merchants to maintain customer relationships, and provide another way to sell to customers who don’t start their search on Amazon’s website. Stocks look cheaper. And we’re not buying any more stocks on Tuesday’s news. We continue to look to Amazon to reduce headcount and better manage its spend. At the same time, we remain cautious on the potential for further rate hikes by the US federal government Reserve to further undermine the growth of the high-priced e-commerce giant (Jim Cramer’s Charitable Trust is long AMZN. For a full list of shares see here.) As a su As a CNBC Investing Club subscriber with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling any stock in his charitable foundation’s portfolio. When Jim spoke about a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS GOVERNED BY OUR TERMS AND CONDITIONS AND PRIVACY POLICY ALONG WITH OUR DISCLAIMER. NO OBLIGATION OR OBLIGATION SHALL BE OR CREATED BY YOUR RECEIVING OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC RESULT OR PROFIT IS GUARANTEED.
Workers load packages into Amazon Rivian Electric trucks at an Amazon facility in Poway, California on November 16, 2022.
Sandy Huffaker | Reuters
AmazonAMZN’s soon-to-be-widespread Buy with Prime service, which allows Prime members to use their Amazon accounts to shop at other online retailers, could be a profitable revenue channel for the e-commerce giant. However, Club Holding shares are still expensive, a high multiple compared to the broader stock market.