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Amazon plans offensive against Shopify with point-of-sale solution

The news: Amazon is reportedly working on a point-of-sale (POS) offering aimed at non-Amazon sellers that’ll have integrations with Amazon-branded services, according to documents reviewed by Insider. The solution is spearheaded by Amazon’s Project Santos, a task force launched last year to brainstorm innovations to compete with Shopify.

Here’s how it’ll work: The POS system can process transactions online and offline. It can integrate with Amazon One—the etailer’s hand-scanning biometric payment solution—and the Flex delivery network. Merchants can also use it to create customizable loyalty programs that use Prime benefits and access other features like business analytics and inventory management.

Amazon’s opportunities: The etailer is eyeing growth outside of its ecommerce marketplace.

The etailer has a growing network of brick-and-mortar locations, but the recent expansion of retail innovations—like its checkout-free Just Walk Out technology, which will soon land in some Whole Foods locations—suggest a broader push in-store. Amazon already has a substantial online presence, but it may try to build out its in-store presence and prop up in-store volume with its forthcoming solution.

It's no surprise that the etailer is pushing more into the lucrative brick and mortar space: US non-ecommerce retail sales are expected to hit a whopping $5.149 trillion this year, per our forecasts.

The offering can also help Amazon capture more small and medium-sized (SMB) sellers:

  • An estimated 29% of small businesses operate entirely in-person, and Amazon might be trying to attract these sellers with its POS solution. It might also be looking to grab a larger piece of the overall SMB market, which accounts for the overwhelming majority of all US businesses.
  • In 2018, the etailer had about 1 million SMB sellers on its US marketplace—a sliver of the 31.7 million SMBs in the country—so it has a large addressable market to work with. Grabbing more of these sellers can help drive sales volume and broaden Amazon’s arsenal of merchant solutions.

The bigger picture: Growing competitive forces from players like Shopify and PayPal might be pushing the etailer to ramp up merchant solutions.

As Shopify beefs up its own solutions, Amazon may be trying to maintain its appeal to sellers through new innovative offerings. And payments processors like PayPal and Square have also been expanding their in-store pushes, underscoring the growth opportunity that Amazon sees in brick-and-mortar retail.

Related content: If you want to dig deeper into SMB opportunities and what Amazon is up against, check out the Small-Business Payment Disruptors report.