What Amazon’s Unbundling of Itself May Mean for the World

In the words of Marc Andreesen, there are only two businesses: bundling and unbundling. A decade of SaaS tech innovation in the e-commerce space has seen thousands of startups “unbundle” Amazon.com's feature set. Now, Amazon is unbundling itself, and if you’re in the e-commerce, digital ad tech or privacy spaces, those four words should scare you.

Let’s start with Amazon’s Buy with Prime feature, which the company announced in April. In its press release Amazon promised to “expand the benefits of Prime shopping beyond Amazon.com.” Here’s how it works: by installing the Buy with Prime widget, e-commerce merchants can sell their products to Amazon Prime subscribers directly from Fulfillment by Amazon (FBA) on their sites (read: away from their competitors in Amazon search results) and offer the convenience of one-click shopping. The order is processed using the shipping and credit card info Amazon has on file for the subscriber.

At first blush, it sounds like a win-win for everyone. The merchant gets sales from consumers who can’t be bothered to enter their shipping and credit card information, but with the speed, convenience and dependability of Amazon’s logistics. Be honest, how many times have you seen something you wanted on a site somewhere, but went to Amazon to buy it because it was just easier? But what does Amazon get?

For starters, it gets a boatload of first-party data from every site that implements Buy with Prime. Because it’s first-party data, Amazon is free to use it for a variety of targeting and advertising initiatives. GDPR won’t save you from passive surveillance, either. A growing number of users blanketly opt in to “all cookies” on a site experience (up from 34 percent to 50 percent in less than a year), which opens them up to a larger and larger data footprint of a consumer’s travels around the web.

The Unbundlers of Old

It used to be that the people who unbundled Amazon developed plug-ins for a Shopify or Magento site that mimicked Amazon’s functionality. Take Repeat, a software company known for its “buy again” plug-in for Shopify storefronts. The button reminds visitors of the last item they purchased just in case they wanted to buy it again. It’s a strategy Amazon deployed successfully; Repeat offers that same functionality to any Shopify e-commerce site that wants it.

In fact, there’s an entire ecosystem of software shops that unbundle one feature or another of Amazon, package it up into plug-ins so that any site can deploy it. This kind of unbundling is quaint compared to what Amazon may be up to.

Amazon rarely does anything unless it has a purposeful and data-driven reason behind it. Therefore, I don’t think I’m being overly suspicious when I wonder if there's an ulterior motive behind Buy with Prime. It seems to me that placing a one-click checkout button on thousands of sites other than Amazon.com will give the company an insurmountable advantage in the e-commerce space.

It reminds me of Facebook in 2007 and 2008, when the company found a way to worm its way onto every website that existed. It’s method of worming? The Like button. Publishers and brands were happy to let their visitors like an article or item. After all, it drove brand engagement within a Facebook community. Wasn’t that a good thing?

Facebook used the opportunity to build a robust knowledge graph based on the traffic, cookies and patterns of consumers who clicked from site to site. The social network succeeded in getting a pixel on every website that existed in the span of two years, enabling it to broaden engagement beyond its site and to create a knowledge graph that was a marketer’s dream. Facebook that knowledge graph into a very successful tool for advertising (in 2021, Meta earned $114 billion in ad sales). Surely Amazon noted that success. Is Buy with Prime Amazon’s attempt to do the same with its pixel?

Granted I’m speculating here, but it’s worth exploring where this speculation can lead.

Deciphering Amazon’s Intentions

Everyone knows that Amazon sits on one of the world’s largest troves of consumer data, an asset it uses to sell advertising (last year the company raked in $31 billion in advertising sales, an impressive figure, but still way less than Meta). Can Amazon catch up? It can if tens of thousands of sites implement Buy it Now. In a very short time frame Amazon can exponentially increase the amount of data it collects. What will Amazon do with it?

Will Amazon, for instance, use it to compete against those Buy with Prime sites for their customers? Will its top-notch data scientists deploy all that first-party data in ways that redirect sales away from all those partners to Amazon.com?

Will Amazon expand its advertising technology and prowess to the greater web, offering marketers the opportunity to use the first-party data it collected from thousands of sites across the globe to reach and engage consumers wherever they are in the digital universe? Will Amazon become the mother of all ad networks, challenging the first-party ad networks like Criteo?

Realistically, I don’t think Amazon is that different from most other companies in that it’s filled with internal departments, each maneuvering to get their projects greenlighted and prioritized. But it is interesting to me that of all the initiatives flowing through Amazon’s brain trust, this is the project that got launched and publicized. Clearly the company sees a strategic value in it. My fear is that a slew of brands will jump on the Buy with Prime bandwagon hoping to get incremental sales, but it may come at the expense of their independence.

As chief commerce officer at Rightpoint, Phillip Jackson acts as head of commerce strategy, partnerships and evangelism.