What happened
Shares of BigCommerce Holdings (BIGC) were up 19.4% for the week as of 12:45 p.m ET on Friday, according to data provided by S&P Global Market Intelligence. While many stocks were performing well this week, BigCommerce's outperformance wasn't merely the result of market enthusiasm. Rather, the company scored a big partnership that puts it in a competitive position going forward.
So what
While Shopify is often used by small businesses, BigCommerce helps larger businesses build e-commerce capabilities. On Jan. 10, BigCommerce announced that its software is now enabling Amazon's Buy with Prime product.
Prime is a subscription service from Amazon that gives consumers free and fast shipping. When Buy with Prime is used on a website other than Amazon's, it extends these Prime membership benefits to those purchases.
To give the fast shipping, products need to be stored at Amazon's warehouses, which costs money. Therefore, it's not all upside for businesses using Buy with Prime. However, BigCommerce believes this is nonetheless a product its customers want because it can increase sales conversions, perhaps by up to 25%.
Now what
Shopify and Amazon appear to be in an intense battle for e-commerce territory, with Shopify investing in logistics more and more and with Amazon moving toward third-party merchants. These are certainly two giants in the space. And given their competitiveness, it's smart for BigCommerce to hitch its wagon to one of the two, in my opinion.
BigCommerce is trying to get to profitability after registering a net loss of $106 million in the first three quarters of 2022. On top of large losses, the company's revenue growth has slowed -- third-quarter revenue was only up 22% year over year.
For BigCommerce, aligning itself with Amazon can hopefully help it stay competitive and grow even while it's cutting costs to get to breakeven. In my opinion, it's the right move. But only time will tell if this new deal plays a role in driving improvements to its financial condition.
