As the lead analyst for Amazon Business at MDM, I try to discern the company’s intentions and market performance. That can be challenging for its B2B division as the company doesn’t say much about performance – especially the results.
That began to change last week when Prentis Wilson, the Vice President & General Manager of Amazon Business, agreed to an interview with Tom Gale, MDM’s CEO. Wilson discussed the company’s intentions in some detail, but we did not learn anything about the division’s performance beyond a press release issued in July, 2017.
Wilson wants “suppliers to realize that we view them very much as our customer, and work hard to improve the experience for them.” But as discussed in the interview, there’s polarized and conflicting feedback from executives at some distribution companies selling on the company’s third-party marketplace. Some leaders even say the cost and hassles of selling through Amazon Business are increasing, with reports of a lengthy
Wilson also suggests that companies that provide information to these distributors and suppliers “don’t understand what’s happening and aren’t providing accurate insights to readers.” As the lead writer on Amazon, I take his feedback seriously. So, working with our research partner Real Results Marketing, we are conducting a survey of distributors that sell on the Amazon portal. We will report these results so that we can deliver broader and balanced coverage based on available data.
I believe Wilson means it when he says Amazon will help distributors thrive by supporting them for many years. My concern is that when companies face recessions or other financial challenges, they look for opportunities to squeeze profits out of their supply chains. It’s only logical that Amazon Business will one day “go direct” on many items it currently sources through its third-party marketplace. Corporations maximize profits by their nature; the unique condition of this specific buyer-seller relationship is that Amazon will have the transaction data to effectively disintermediate distributors.
I acknowledge that Amazon Business is good for some distributors today – for example, minority and women-owned companies. Amazon relies on qualified partners to meet the needs of customers (particularly in government agencies) who have purchasing requirements for these types of suppliers. But that does not mean Amazon Business is a positive development for the entire spectrum of wholesale distributors – in the long run.
Amazon Business’ unique value proposition, made up of a breathtaking assortment, cutting-edge technology and terrific supply chain capabilities is unprecedented – and delivers real value to customers. I think it’s a relentless and principled competitor and predict continued success for the company.
But with some exceptions, I believe the short-term sales gains distributors get from selling through Amazon Business are not worth exposing precious transaction data to this competitor. Would you give it to anyone else?
I need much more information before I can agree that Amazon Business is a positive for most distributors. I suggest that companies considering selling through any third-party marketplace proceed with great caution. And we’ll do our best to provide as much information as is available to help you make informed decisions.
As always, I welcome your input. You can reach me at firstname.lastname@example.org.