Amazon continues to make significant strides in the procurement space, giving B2B companies more reasons to keep their eyes peeled. In just over three years, the company’s marketplace that sells business supplies to corporate buyers is well on its way to generating more than $10 billion in annualized sales.
What does that mean for you?
If you’re in business to sell supplies to companies, that means you ought to be taking notes from the digital giant as Amazon Business is setting the tone for companies in the procurement space.
That said, here’s what you can learn and how Amazon may be impacting your business:
Removing the clunkiness of it all
Amazon Business really does a remarkable job of removing all the friction from the business purchasing process.
From providing features that help business customers, including pay by invoice, multi-user accounts, and approval workflows to facilitating punchout integrations for seamless purchasing, Amazon Business lets buyers do their job more effectively and efficiently.
Amazon supports more than 60 different procurement integrations, including:
and Oracle Supplier Network.
Amazon Business also allows companies to enable various permission levels to people they add to their account, giving administrators the full access they need and buyers the ability to submit orders for approval.
And when buyers shop, they can expect discounted pricing on orders with higher quantities, the ability to set up recurring deliveries on office supplies and other consumable items and can create:
reorder lists: items remain on the list after you buy them so you can repurchase
shopping lists: once items are purchased they are removed from the list
Creating value and desirability
Last October, Amazon launched Business Prime.
Just like Amazon Prime, Business Prime offers various subscription types that are associated with a yearly fee. And while all subscription types include fast and free shipping, which is a must nowadays, higher levels include spending visibility and guided buying, which prompts companies to question is the most standard subscription will suffice.
Features like guided buying and spending visibility allow companies to control spend while also giving employees what they need to succeed by offering employees preferred products to purchase from and restrict customers from buying products that fail to meet a seller’s procurement policies.
The lowest level, Essentials, starts at $179 per year for up to three users.
Always look to improve
Employees at Amazon are always expected to keep the customer at the top of mind. That said, Amazon Business continually tests, measures, learns, and improves — all to deliver a better experience for its customers. Amazon reportedly deploys a code release once every 11.7 seconds.
With the already made success of Amazon Business, this digital disruption is more than likely to have taken from your market share and reduced your profits.
Amazon says that “hundreds of thousands” of business sellers are currently on the business marketplace, with third party merchants accounting for more than half of the $10 billion in sales. But with the aggressive expansion, not all sellers are happy as Amazon has forced them to accept longer payment cycles recently.
If you sell through Amazon, tread carefully, and do not make it your only channel.
Instead, grow your own channel because selling on Amazon comes at a cost.
Amazon seller fees include account fees and product fees with account fees ranging from $0 - $39.99 per month, and product fees range from 6% - 20% of the product’s selling price. The average seller can expect to pay around 15%.
And of course, you will need to fulfill and ship your orders.
But there’s more.
In addition to that, when suppliers sell through the Amazon platform, it’s Amazon — not the suppliers — that have a direct relationship with consumers because they’re the ones selling the products.
What does that mean?
That means Amazon owns the customer data and knows what sells well on its site — and if needed, it can go make those products themselves at a lower cost, supplanting the larger brand almost immediately. For example, Amazon-branded batteries now outsell the once top-selling Duracell batteries on Amazon.
Making your moves strategic
As long as you continually learn from them and create a digital experience that offers superior customer service and expertise for both the buyer and seller, you, the independent B2B company, can compete with digital giants like Amazon.
But you can’t stop there.
All your moves need to be strategic and you need to constantly test, tweak, and improve. Remember, Amazon reportedly deploys a code release once every 11.7 seconds.