NEW YORK - Whether Amazon.com can cash in on its delivery heft by boosting fee revenue from its "Buy With Prime" service after a 2022 overhaul of its logistics network will be a big focus for investors when the e-commerce giant reports fourth-quarter results on Thursday.

Amazon's 200 million Prime members pay $14.99 per month or $139 annually for free shipping in a day or two, and with Buy With Prime, launched in April 2022, merchants can extend the shipping offer to those Prime customers.

The strategy is simple: use its existing infrastructure to handle packages and orders that aren't placed on Amazon itself in order to generate additional fee revenue for its seller services, which is a high-margin business.

Amazon collects 3% service fees on each Buy With Prime order, with additional payments for fulfillment and payment processing.

Amazon is expected to report a fourth-quarter profit of $29.3 billion, an increase of 34.41% from $21.79 billion in last year's quarter, according to estimates from LSEG.

The Seattle-based e-commerce giant's margins are expected to be 17.62% compared to last year's 14.60%, according to estimates from LSEG.

Amazon hasn't disclosed how many merchants are using Buy With Prime, and the company declined to comment on the number of those vendors.

Since its roll-out, Amazon has partnered with Shopify and Salesforce, both of which enable sellers to set up e-stores, to offer Buy With Prime to more than 2 million merchants while giving online sellers access to the 200 million Prime subscribers.

Buy With Prime's business model is a "win win" for Amazon, outside merchants and Prime members, said Arun Sundaram, vice president of equity research at CFRA Research.

"Customers get fast delivery, Amazon gets these high-margin fees from the merchants and merchants get more traction onto their websites," Sundaram said.

Jim Tierney, chief investment officer of Concentrated U.S. Growth at AllianceBernstein, said that a "huge discovery" for his firm was the potential for Amazon to lower its costs and boost fee revenues after restructuring its fulfillment network to increase delivery speeds. AllianceBerstein currently holds 0.48% of Amazon's outstanding shares.

Tierney said he expects Buy With Prime to "further improve network utilization, thereby providing a boost to margins."

"It also gets a broader group of merchants inside the Amazon ecosystem, which likely expands the moat around Amazon’s business," Tierney said.

  - Reuters