Is Buy with Prime Worth It? How to Leverage Its Perks While Protecting Your Profits

At Accelerate 2024, Amazon reports that sellers using Buy with Prime (BWP) have seen impressive results: 45% more orders and a 16% boost in revenue. With numbers like that, it’s clear that BWP has the potential to transform your business. But as with anything, there’s a catch—those extra fees can quickly add up and eat into your margins.

The real trick is making the most of those perks without letting the costs eat into your profits. Let’s break down the benefits, navigate the pricing, and explore how you can use BWP to grow your business while staying profitable.

What are the Perks of Partnering With Buy With Prime?

In early 2024, we sat down with Amazon’s Senior Partner Development Manager, Derek Majewski, to answer questions like what is Buy With Prime and what are its game-changing benefits. Beyond the obvious perks like leveraging Amazon’s reputation for fast, reliable shipping, the latest developments unlock even bigger opportunities for brands:

Higher Conversion Rates

As mentioned earlier, sellers using Buy with Prime (BWP) continue to report significant increases in conversion rates and revenue. On average, merchants have seen a 16% boost in revenue per shopper and a 45% growth in orders year-over-year. By offering trusted Prime shipping directly on their websites, sellers gain a competitive edge that leads to higher sales conversions.

Enhanced Customer Experience

BWP enhances the customer journey by providing fast, reliable shipping and the familiarity of Amazon’s checkout process. These conveniences build trust and encourage repeat purchases, making Prime members more likely to return to BWP-enabled sites. With PayPal integration coming in 2025, customers will also have more payment flexibility, reducing friction at checkout and further enhancing the shopping experience.

Expanded Reach Through Strategic Partnerships

Amazon’s integration with platforms like Shopify and Salesforce Commerce Cloud has opened up new opportunities for sellers to offer BWP, no matter where they host their e-commerce store. These partnerships simplify implementation and allow brands to extend the Prime experience to a wider audience while benefiting from increased traffic and brand visibility.

Breaking Down Buy with Prime Fees

When using Buy with Prime (BWP), sellers incur several key fees that impact profit margins:

1. Prime Service Fee: 3% of the order value (minimum $1).
2. Fulfillment Fee: Starts at $5.33 per unit for 1-2 day shipping.
3. Payment Processing Fee: 2.4% of the order value, plus $0.30 per transaction.

Additionally, storage fees apply based on inventory volume, with peak season surcharges from October 15 to January 14. These fees can compress margins, especially for low-margin or bulky items. Sellers need to factor in these costs when pricing products to ensure profitability. (For more information on the pricing, visit this page.)

There’s no such thing as a free lunch here, but you can still manage these costs effectively. So, how can you balance fees and protect your profit margins while enjoying the increased sales and conversions that Buy with Prime delivers? Let’s dive into some actionable strategies.

How to Boost Sales Without Sacrificing Margins with Buy with Prime

Prioritize Selective Offerings to Maximize Profitability

To get the most from Buy with Prime (BWP) while protecting your margins, focus on offering high-margin, premium, or fast-moving products. These items are more likely to absorb the associated fees, like fulfillment and shipping, without cutting into profits.

At the same time, exclude low-margin or bulky items, as they can lead to margin compression due to higher fulfillment costs. This strategy ensures you can tap into BWP’s conversion benefits while maintaining profitability on every sale.

Example Scenario: Brand X sells a mix of premium skincare products and everyday household items on their e-commerce site. By enabling BWP for their high-margin skincare line, like luxury serums priced at $80+, the shipping and fulfillment fees are easily absorbed without eating into profits. These premium items also benefit from faster shipping, increasing conversion rates.

In contrast, offering BWP for bulky, low-margin items like detergent, which has high shipping costs and a narrow profit margin, could erode profitability, making it less viable for BWP.

Consider Strategic Pricing Adjustments

Slight price adjustments can help offset the costs of Buy with Prime (BWP) without hurting conversions. Raising prices slightly ensures that the fulfillment and transaction fees are covered, keeping your profit margins stable. By carefully balancing price increases, sellers can absorb shipping costs while maintaining competitive pricing, preventing a dip in sales. This tactic allows you to maintain profitability without sacrificing the customer experience that BWP enhances.

Additionally, implement dynamic pricing models to maximize revenue during peak demand periods like wedding or holiday seasons, where customers are more willing to pay higher prices. This strategy ensures you’re making the most of high-traffic times while maintaining profitability.

Example Scenario: Brand Y sells a range of fitness supplements. They increase the price of a popular protein powder by 5%, which covers BWP fulfillment fees while still keeping the product competitively priced. During Prime Day, they leverage dynamic pricing to further increase the price by 10%, taking advantage of the higher demand.

The small price adjustments help maintain profitability despite the added costs of offering Prime shipping, without driving customers away.

Capitalize on Amazon’s Supply Chain Solutions

To effectively manage fulfillment costs, utilize Amazon’s Supply Chain services, which offer significant discounts like 25% off AWD storage fees and 15% off transportation costs. These savings directly reduce overhead for sellers, especially when dealing with high inventory volumes.

By taking advantage of Amazon’s managed logistics services, you can optimize inventory placement in fulfillment centers, allowing for faster shipping and improved delivery times, which boosts conversion rates and enhances customer satisfaction.

Example Scenario: Brand Z sells electronics. They store high-demand products closer to key customer locations, reducing shipping times and transportation costs. With Amazon’s 15% discount on transportation, they can lower shipping expenses while maintaining fast delivery, leading to higher conversion rates without sacrificing profit margins. Additionally, the 25% AWD storage fee discount helps them manage bulkier items more cost-effectively, especially during peak seasons.

Maximize Volume with Targeted Promotions

To absorb the costs associated with Buy with Prime (BWP), focus on increasing order volume during high-traffic events like Prime Day and Prime Big Deal Days, Black Friday, or Cyber Monday. These events drive significant traffic, allowing you to move more products and better distribute fulfillment costs.

You can also bundle products or offer subscriptions to increase the average order size, making BWP more cost-effective. Larger orders not only justify the shipping fees but also provide more value to the customer, increasing profitability.

Example Scenario: Brand A sells beauty products. During Prime Day, they bundle complementary items like moisturizers and serums, offering a discount for the set. This boosts the average order value and absorbs BWP fees more efficiently. Additionally, offering a subscription for repeat purchases of a high-demand item, like a facial cleanser, increases customer lifetime value, making the fulfillment costs more manageable while driving consistent sales.

Conclusion

 Buy with Prime offers more than just fast shipping—it can help significantly boost sales, improve customer loyalty, and expand your brand’s reach. While fees may feel like a hurdle, with smart strategies in place, you can turn those costs into opportunities for growth. From optimized pricing to targeted promotions, Buy with Prime can elevate your business when used right.

Curious how Buy with Prime can help your brand grow profitably? Sign up for our free audit and let’s uncover the strategies that will take your business to the next level!