Amazon ‘s (AMZN) soon-to-be widely available Buy with Prime service, which allows Prime members to use their Amazon accounts to shop with other online merchants, could be a profitable revenue channel for the ecommerce giant. However, the Club holding’s stock is still too expensive to buy on the news. Amazon Tuesday said its making Buy with Prime, which launched as an invite-only program last year, available to all U.S. online retailers by the end of January. The service allows Amazon Prime members the ability to shop directly on other retailers’ websites , in turn helping those outlets to tap into Prime’s roughly 200 million members. The service also guarantees free, 2-day delivery. The company said it expects Buy with Prime to increase shopper conversion from browsing to buying by around 25%. Buy with Prime “allows merchants to build customer relationships and brand loyalty while offering conversion driving benefits,” Amazon said in a statement. Shares of Amazon, which closed out 2022 down more than 50%, have rebounded somewhat at the start of this year. The stock was trading up roughly 2.7% midday Tuesday, at $89.69 a share. The news comes as Amazon faces slowing sales growth and gathering macroeconomic headwinds. At the same time, the company has been plagued by ballooning expenses and a bloated workforce, in part the result of over-hiring at the height of the Covid-19 pandemic when ecommerce demand was more robust. CEO Andy Jassy last week announced plans to cut 18,000 jobs at the company — a move that likely does not go far enough. But Buy With Prime should help Amazon make use of some of the excess warehouse capacity it invested in earlier in the pandemic and rein in associated costs, analysts said. “By reselling part of their logistics/distribution/fulfilment capacity, they are generating incremental revenue and better optimizing their cost structure,” Mark Mahaney, head of Evercore ISI’s internet research team, told CNBC in an email Tuesday. “I would also think that given AMZN’s logistics excellence that this would be a service received well by both merchants and consumers,” he added. Aaron Kessler, managing director for internet sector coverage at Raymond James, said in an email to CNBC Tuesday that Buy with Prime “will help on the margin improve utilization of [Amazon’s] fulfillment network.” The new service offers familiar Prime benefits to members like quick purchases and fast delivery. Moreover, Amazon will handle the lifecycle of purchases, including the processing of orders, packing of goods and delivery. The Club take Amazon’s Buy with Prime offering is positive for its potential to fill out excess capacity, allow merchants to maintain consumer relationships and provide another avenue to sell to customers not starting their search on the Amazon website. While this is a move in the right direction, it’s not enough to make Amazon stock look cheaper. And we’re not buying more shares on Tuesday’s news. We continue to look for…
Read More: Amazon’s Buy with Prime a positive step, but stock remains overvalued