April 29, 2015
Amazon sets sights on conquering the B2B market
There are a number of retail businesses that owe at least a portion of their success to the sales generated through business customers, including Grainger, Home Depot, Sam’s Club and Staples. We can also add Amazon.com to that list with the formal launch of its Amazon Business (www.amazon.com/business) marketplace.
The new site provides access to "hundreds of millions of products," including IT and lab equipment as well as education and food service supplies. The site has features and benefits specifically designed for businesses, such as free two-day shipping on eligible items, tax exemptions and dedicated customer support.
"We’ve heard from business customers that they love the convenience of shopping online, and want an experience at work that is similar to how they shop at home," said Prentis Wilson, vice president of Amazon Business, in a statement. "Amazon Business delivers a new and expanded marketplace that brings the selection, convenience and value of Amazon to business customers, manufacturers and sellers with the additional selection, features and back-end integration businesses need to save time and money."
Source: Source: Amazon Business
According to a Wall Street Journal report, Amazon Business customers are also eligible for special pricing. Amazon Business customers can purchase a Belkin iPad air case for $23.81 compared with $29.81 on Amazon.com
"We think this is an experience that businesses will love and a great opportunity for manufacturers and sellers to reach registered business customers," said Mr. Wilson. "It’s only the beginning for this new marketplace — we will continue to build out features in areas like product support, payments, shipping and pricing."
BrainTrust
Lee Peterson
EVP Thought Leadership, Marketing, WD Partners
Kai Clarke
CEO, President- American Retail Consultants
Recent Discussions
Discussion Questions
How big an opportunity does B2B sales represent for Amazon? What are the keys to succeeding in this marketplace versus the B2C space?
Poll
Very interesting market to pursue. Forrester estimates that B2B e-commerce will be a $1 trillion market in the U.S. alone by 2020.
Amazon’s core growth model focusing on price/value, selection and convenience has wide applicability and could disrupt the B2B market. But I do think that Amazon will need to adapt its traditional approach considerably to meet the B2B buyer where they are.
With Amazon Supply, my sense was that Amazon didn’t do enough to support some of the unique requirements of procurement departments and B2B buyers.
Amazon Business seems poised to go beyond their previous efforts with integration into procurement systems, exclusive pricing and offers for qualifying B2B buyers and enhanced product content.
This is a big opportunity for Amazon. If it is able to replicate its consumer model: customer intimacy, value pricing, on-time delivery and exceptional customer service, it will be successful in this space.
In addition to the noted competitors, e.g., Sam’s, Staples, etc., I see a tremendous potential upside in the foodservice market where there are over 630,000 restaurants in the U.S. Many are single restaurant operators who cannot always command the attention of Sysco and the larger foodservice distributors. In addition, Amazon B2B will represent new competition for Restaurant Depot, an excellent wholesale cash-and-carry foodservice supplier.
This is a huge opportunity and a no-brainer. Other than the product base, there will be nothing unique about B2B versus B2C.
That doesn’t even take into consideration Amazon’s ability to accumulate data for companies that want to control spending. I see almost no limitations to what comes out of a company budget, from paperclips to energy.
I swear, Amazon has the best PR firm in the world. Every week they’re coming out with something to keep themselves in the press and top-of-mind. Drones, Dash, Home Service, packages in the trunk of your car (!) and now this.
OK, who can predict what the Amazon PR piece will be next week? Five-minute delivery? Click-and-collect stores by the thousands? Space travel?
Business-to-business sales are much about specified term contract bidding, quantity extra scheduling pricing, payment methods and terms and logistics. To be successful one must have the flexibility to set up self-governing accounts for each business using real time software. Conglomerates may have subsidiaries with unique needs in the previously described sales needs that must be collectively managed for single billing locations. While PayPal and bank cards are often available for quick reaction needs, the regularly scheduled supply orders are not going to be awarded from or through those accounts. B2B sales are a never ending learning experience. Amazon will need to change their business outlook and plan to comply and gain access to this multi-trillion dollar highly-specialized market. I am not so sure they are up to the supplier challenges.
I think this is a great opportunity for Amazon. They have plenty of data to leverage from AmazonSupply in order to make this a success.
I agree with Richard in that the things that Amazon is already known for will help it break into the B2B space: very competitive prices, fast delivery, and stellar customer service. I think the delivery side of things will be one of the most important because businesses are buying supplies they need quickly, not luxury goods that they can wait for.
Most people think of Amazon as a retailer, which is primarily B2C. A push to B2B will only be about more awareness. They already have the system in place to take care of virtually any type of customer. And, there are already many businesses are already using their services, both as sellers and buyers.
They have been in B2B sales business for a while with their data center business, so extending that payment infrastructure to B2B isn’t hard. There are enough B2B businesses, from small to medium, that could take advantage of the Amazon pricing. Amazon can use their availability and B2C Delivery infrastructure to deliver the last mile. Maybe not a killer business, but decent incremental without increasing too much cost.
This is a difficult opportunity for Amazon, since walking the pricing tightrope can mean alienating one of their customers…either the business one or the consumer, while improving their B2B or B2C sales. Only time will tell.
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Very interesting market to pursue. Forrester estimates that B2B e-commerce will be a $1 trillion market in the U.S. alone by 2020.
Amazon’s core growth model focusing on price/value, selection and convenience has wide applicability and could disrupt the B2B market. But I do think that Amazon will need to adapt its traditional approach considerably to meet the B2B buyer where they are.
With Amazon Supply, my sense was that Amazon didn’t do enough to support some of the unique requirements of procurement departments and B2B buyers.
Amazon Business seems poised to go beyond their previous efforts with integration into procurement systems, exclusive pricing and offers for qualifying B2B buyers and enhanced product content.
This is a big opportunity for Amazon. If it is able to replicate its consumer model: customer intimacy, value pricing, on-time delivery and exceptional customer service, it will be successful in this space.
In addition to the noted competitors, e.g., Sam’s, Staples, etc., I see a tremendous potential upside in the foodservice market where there are over 630,000 restaurants in the U.S. Many are single restaurant operators who cannot always command the attention of Sysco and the larger foodservice distributors. In addition, Amazon B2B will represent new competition for Restaurant Depot, an excellent wholesale cash-and-carry foodservice supplier.
This is a huge opportunity and a no-brainer. Other than the product base, there will be nothing unique about B2B versus B2C.
That doesn’t even take into consideration Amazon’s ability to accumulate data for companies that want to control spending. I see almost no limitations to what comes out of a company budget, from paperclips to energy.
I swear, Amazon has the best PR firm in the world. Every week they’re coming out with something to keep themselves in the press and top-of-mind. Drones, Dash, Home Service, packages in the trunk of your car (!) and now this.
OK, who can predict what the Amazon PR piece will be next week? Five-minute delivery? Click-and-collect stores by the thousands? Space travel?
Business-to-business sales are much about specified term contract bidding, quantity extra scheduling pricing, payment methods and terms and logistics. To be successful one must have the flexibility to set up self-governing accounts for each business using real time software. Conglomerates may have subsidiaries with unique needs in the previously described sales needs that must be collectively managed for single billing locations. While PayPal and bank cards are often available for quick reaction needs, the regularly scheduled supply orders are not going to be awarded from or through those accounts. B2B sales are a never ending learning experience. Amazon will need to change their business outlook and plan to comply and gain access to this multi-trillion dollar highly-specialized market. I am not so sure they are up to the supplier challenges.
I think this is a great opportunity for Amazon. They have plenty of data to leverage from AmazonSupply in order to make this a success.
I agree with Richard in that the things that Amazon is already known for will help it break into the B2B space: very competitive prices, fast delivery, and stellar customer service. I think the delivery side of things will be one of the most important because businesses are buying supplies they need quickly, not luxury goods that they can wait for.
Most people think of Amazon as a retailer, which is primarily B2C. A push to B2B will only be about more awareness. They already have the system in place to take care of virtually any type of customer. And, there are already many businesses are already using their services, both as sellers and buyers.
They have been in B2B sales business for a while with their data center business, so extending that payment infrastructure to B2B isn’t hard. There are enough B2B businesses, from small to medium, that could take advantage of the Amazon pricing. Amazon can use their availability and B2C Delivery infrastructure to deliver the last mile. Maybe not a killer business, but decent incremental without increasing too much cost.
This is a difficult opportunity for Amazon, since walking the pricing tightrope can mean alienating one of their customers…either the business one or the consumer, while improving their B2B or B2C sales. Only time will tell.