What happened
Shares of e-commerce platform provider Shopify (SHOP -0.41%) jumped this week, rising 20% through Thursday trading. That's as compared to 2.3% rally in the wider market, according to data provided by S&P Global Market Intelligence. The spike added to an excellent year so far for Shopify owners as the stock has gained 90% in 2023 while the S&P 500 is up 18%.
This week's increase came in response to news that Shopify is collaborating more closely with one of the biggest e-commerce giants on the market.
So what
Amazon (AMZN 0.78%) said in a late Wednesday press release that it is integrating its Prime services with Shopify's checkout technology. Prime subscribers, which are estimated to number over 160 million in the U.S., will be able to seamlessly use Amazon's fast, free shipping network simply by selecting the "Buy with Prime" option when checking out with participating Shopify merchants.
The shift appears to be a win-win for the two e-commerce competitors as it will likely drive more usage of Amazon's fulfillment services while boosting sales for Shopify's customers. Amazon estimates that the "Buy with Prime" option increases conversion rates by 25% on average.
"We're excited to help merchants not only grow their businesses, but also save time and resources -- all while giving Prime members more places to enjoy their shopping benefits," Peter Larsen, Amazon vice president of Buy with Prime, said in a joint statement. Shopify's management echoed those remarks. "We're excited to collaborate with Amazon on the Buy with Prime app," Vice President of Product Partnerships Daniel Debow said.
Now what
The app integration rollout will be small at first, arriving as an invite-only option to a select group of Shopify merchants in late August. But all U.S. merchants will have access to the service by the end of September, according to the press release.
The move is great news for Shopify in that it adds value for merchants while boosting convenience for many shoppers using its platform. Investors are also understandably thrilled to see the company collaborate with the industry leader. It's little surprise that the growth stock rose in response to this week's news.
