Amazon Business has replaced AmazonSupply as the Internet retailer’s B2B website, which hopes to bring businesses a B2C shopping experience to B2B.
Just three years after its launch, the sun has set on AmazonSupply. Last month, Amazon unveiled Amazon Business, the B2B marketplace that not only replaces AmazonSupply, but also reduces the competitive threat to distributors – including apparent targets such as Grainger, Fastenal and MSC Industrial – according to analysis from investment banking firm Robert W. Baird & Co.
“Amazon is a behemoth company with a lot of resources, and anytime they’re trying to get into your market you need to be concerned,” says David Manthey, Baird’s senior research analyst, Industrial Distribution Services. “It’s our view, though, that by broadening AmazonSupply and making it a part of Amazon Business with a much wider scope seems less threatening relative to the specific industrial supply space, which felt targeted.”
The broadened scope of Amazon Business centers on bringing the Amazon B2C shopping experience to B2B, an “everything to everyone” strategy, as Baird calls it. The new service allows companies to sell their products on the site to other businesses, something they can do already for consumers, along with free two-day shipping on orders of $49 or more, business-specific pricing, purchasing approval and order tracking, among other features.
“(Customers) want the Amazon shopping experience when they’re buying for work,” says Prentis Wilson, the Amazon Business vice president who formerly led AmazonSupply. “That’s what we’ve provided them. Now they have it. Amazon Business is a marketplace that’s dedicated to serving the needs of business customers of all sizes. It’s also a marketplace that serves the needs of both sellers and manufacturers that sell to those business customers.”
Not only has the threat of AmazonSupply disappeared, but the Amazon Business model potentially gives distributors e-commerce opportunities that might not otherwise exist. Wilson said the biggest difference from AmazonSupply is that Amazon Business’ model of third-party selling to other businesses gives companies an online channel, something many distributors have been slow to adopt despite more sales moving to e-commerce.
“(Amazon Business) is an e-commerce channel that’s designed to support the needs of businesses, the way that they purchase,” Wilson says. “And it’s also designed to enable them to get access to a broad range of sellers and products, all in one location. It’s something that our customers have been asking for for a long time,”
The marketplace model has worked well on Amazon’s B2C side, with more than 2 million sellers shipping more than 2 billion units on the site, says Petra Schindler-Carter, director and general manager for Amazon Business Marketplace. That’s what Amazon hopes to recreate with this reimagined B2B site, as it tries to capture the growing number of millennial buyers who look online first when buying for their companies.
“It is a great opportunity for sellers of all sizes to reach more customers,” she says. “What the launch of Amazon Business really means, for these sellers and for new ones we have not yet worked with, is they can grow their sales and they can reach new types of customers. There’s a new generation of business buyers out there who have grown knowing the ease of buying on Amazon. They want that for their business buying as well.”
Manthey says Amazon Business’ third-party marketplace could give specialty distributors and smaller companies access to new customers, but the website might not be for everyone.
“Looking at the referral fees or how much it’s going to cost or what the pricing is going to look like, plus you’re competing with all the other distributors out there, I’m not sure it’s going to be a great value proposition for the distributor; that remains to be seen,” he says. “It will certainly give you a presence, but I’m not sure it’s necessarily a presence that distributors are going to want based on the value they’ll be able to generate from that presence.”
As for the reduced threat that Baird highlighted in its analysis, Manthey says the Amazon Business model won’t diminish the value proposition of distributors – specifically their technical savvy and product knowledge – because it won’t have a dedicated sales force ensuring a buyer doesn’t wind up, for example, with a pizza cutter when it wants a cutting tool.
“When you talk to them, you’re not talking to an order taker, you’re talking to an expert in metalworking or in safety products or in abrasives,” Manthey says. “That’s the one piece that Amazon is missing, just having a website with a lot of stuff is good but most customers are looking for a deeper level of understanding of those products and how they relate to their business.”