Amazon (AMZN) Likely Building an Omni-channel POS, Seen as a Response to Shopify (SHOP)

September 13, 2021 9:27 AM EDT
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Reports emerged last week that Amazon (NASDAQ: AMZN) is likely developing its own point-of-sale (POS) system.

Business Insider reported that AMZN is working on its own solution to compete with Shopify (NYSE: SHOP) and PayPal (NYSE: PYPL).

“This will allow our small business (SMB) customers to unify their online and offline channel management including inventory, offer Amazon One for contactless recognition and payment, and offer a customisable loyalty program that can utilise Prime benefits,” according to an internal report seen by BI.

“We believe this offering lets Amazon to do the heavy lifting of order placement and fulfilment at a rate that is more affordable than other competitors, thus allowing SMBs to focus on their product development and growth.”

BofA analyst Justin Post has weighed in on reports to say that the latest product that AMZN is developing is a response to pandemic and Shopify.

“While Amazon already uses a custom-built POS system at its own physical locations (including its bookstores and Fresh grocery stores), it is not available to external small and midsize businesses (SMBs). The new POS system is expected to: a) handle both in-store and online transactions, b) add Amazon check-out options, and c) provide inventory and business analytics (including customer data management for SMBs). It may even allow customers to pay with their Amazon accounts at retail locations, and enable "Buy Online Pickup In Store (BOPIS)" services. This will allow SMBs to unify their online and offline channel management including inventory, offer Amazon One for contactless recognition and payment, and offer Prime benefits. For the new POS system, the Amazon’s team is believed to be working in conjunction with the group in charge of the

Amazon One palm-scanning payment technology and Amazon's physical stores unit, which is also building out the Amazon Go cashierless stores. So Amazon may be able to incorporate added contactless checkout functionality in its new POS systems,” Post said in a client note.

The pandemic, in particular, has pushed SMBs to add more multi-channel sales capabilities. As a result, Shopify and Google have benefited from these trends as they help merchants sell directly to consumers.

“The ability for SMB merchants to capture direct Online sales, off of marketplaces, is a long-term potential threat to Amazon, so we expect Amazon to offer a feature rich product with deep integration with Amazon’s marketplace, fulfilment, checkout, and payments processing capabilities (with a possible discount on payments processing). We expect some entrenched resistance to Amazon services due to competitive concerns, but the opportunity is big and Amazon’s existing customer relationships provide a foundation to help build adoption,” Post adds.

The analyst reaffirmed a Buy rating on Amazon.

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