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Amazon quietly signed an agreement to acquire a tiny Australian e-commerce platform, Selz, last month. It confirmed this week that the deal is complete.
When the news broke earlier this week, the acquisition wasn't so tiny. Shopify's stock dropped 7% before rebounding somewhat. Experts attributed the drop partly to indications that 2021 revenue growth may slow compared to 2020, as shoppers return to stores, but say Amazon's e-commerce acquisition played a role.
Amazon said "nothing will change" for Selz merchants or customers at this time. Other details of -- and motivations behind -- the Amazon e-commerce acquisition were not disclosed.
Amazon Webstore, its prefab online storefronts for small businesses that competed with Shopify and BigCommerce, shut down in 2016. Many merchants moved their stores to Shopify and continued to sell on Amazon as they do with BigCommerce as well.
Over the years, Shopify and BigCommerce added many features to their platforms, including analytics and hooks into small-business-friendly services such as accounting software, financial services and live chat. The platforms also integrate with leading content management systems, including Acquia.
Despite starting out way behind its competitors, the next iteration of the Amazon e-commerce retailer storefront platform could pose a threat to Shopify in particular because of one key technology component in Selz: Liquid, an open source templating language developed in 2006 by Shopify cofounder Tobias Lütke. Liquid enables store themes and simplifies the connection to back-end product data.
Liquid compatibility would likely make migrations from Shopify into a new Amazon e-commerce environment straightforward without a change in look and feel for the merchant's customers, said Dennis Consorte, small business and startup marketing consultant at Digital.com.
"That's just cut and paste," Consorte theorized. "You have a Shopify store, you connect through an API with Selz, pull all of your Liquid themes into the platform, and boom, you're suddenly up."
Good news, bad news
Amazon remains mum about why it chose to acquire Selz instead of another e-commerce technology, or to build one itself, as it did with the Amazon Connect contact center platform. Liquid compatibility, an inexpensive acquisition cost and a potential jump ahead of its competitors with relatively newer tech all likely figured into the choice, said IDC analyst Jordan Jewell. Selz is a younger company than its bigger competitors; it launched in 2013, compared to 2006 for Shopify and 2009 for BigCommerce.
More than that, Jewell said, small businesses that sell on Amazon but don't have their own dedicated web storefront need to get one immediately. Having control over an item with their own branded site pages makes it a more trustworthy "gold standard," Jewell said, with more complete and more credible product information. Amazon product pages are sometimes incomplete and typically come with content noise and recommendations for competing products.
Jordan JewellAnalyst, IDC
Amazon's acquisition of Selz shows that the e-commerce giant plans to follow through on promises to help small and medium-sized businesses, Jewell said. He believes Selz technology will eventually enable small businesses to expand beyond the Amazon.com site and sell elsewhere, such as on eBay and in person. Digital.com's Consorte points out that Selz also has plug-ins to expand sales to social media and WordPress sites as well.
"If you're an SMB, you can list on Amazon. That's great, they give you tools to be relatively successful on Amazon.com," Jewell said. "It's potentially the most important channel -- but it's just one channel. You need to sell on multiple, different channels to be successful. In the past, Amazon wasn't really able to offer that."
Consorte isn't as sanguine about Amazon's motivations. He sees the Selz e-commerce expansion as a means for Amazon to get control of more sales trend data. Amazon, he predicts, will incentivize retailers to move on to its new platform. It will be profitable -- at first.
There's a risk that once Amazon sees what successful retailers sell, it will use that data to create competing products. Consorte cited the example of batteries: Amazon Basics batteries are listed ahead of Duracells and Energizers in product search pages.
He advises small businesses to closely examine the pros and cons before entering into an agreement with Amazon once the fruits of the Selz acquisition turn into a web store product offering.
"In the short term it looks good, but in the long term they become dependent on Amazon," Consorte said. "If I had a choice between a Shopify, BigCommerce and a Selz, I would hold off on Selz for the moment."