Amazon’s rise to power is no secret – but recently, Amazon has proven that its influence goes beyond just the B2C world. Through Amazon Business, the company has successfully entered the B2B marketplace. This move is having a profound impact on manufacturers, distributors and retailers alike.
In a recent webinar “From B2B to B2C: Amazon’s Entry into the B2B World,” NetSuite hosted Colin Puckett, Amazon Business’s Head of Seller Marketing, along with distribution industry leader Scott Costa, publisher of tED Magazine and ecommerce expert Brian Beck, SVP, Ecommerce and Omnichannel Strategy at Guidance, a retail services business for a discussion on Amazon Business. Here are the key takeaways.
Three Approaches to Amazon Business
The panelists categorized manufacturers, distributors and retailers into three groups as it relates to Amazon Business:
- Those who are willing to partner with Amazon Business to expand their reach into new markets or acquire new customers using Amazon’s established channels.
- Those who view Amazon Business as a direct competitor – this group tends to lag behind when it comes to an ecommerce strategy – either they do not have their own website, or their online experience is difficult to navigate.
- Those who recognize the impact of Amazon Business and are choosing to compete by establishing their own website and competitive online buying experience.
Rather than taking a hard stance on whether to partner with Amazon Business, Scott and Brian agreed that Amazon Business’ biggest impact is in driving the need for an ecommerce strategy. The rise of Amazon in both the B2C and B2B space shows that buyer preferences and habits have shifted. Consider the startling stat Beck shared - 50 percent of product searches now start on Amazon. Now more than ever it is important to recognize the importance of establishing and executing on an ecommerce strategy. Refusing to do so means falling behind in a dynamic world.
Strategically Partner with Amazon Based on Your Business Model
For those who are considering, or choose to partner with Amazon Business, it is important to recognize the differences in partnership options available.
Vendor Central/ 1st Party/ 1P: Amazon sells your products on a wholesale relationship. You send your inventory to Amazon, they control your pricing and your listing displays as "Ships from and sold by Amazon.com".
Seller Central/ 3rd Party/ 3P: You sell your products on Amazon's marketplace.
- With this, you either have Amazon fulfill your orders from their fulfillment centers (Fulfillment by Amazon, FBA) or you can fulfill orders from your own warehouse or 3rd party warehouses (Fulfillment by Merchant, FBM).
Each option comes with pros and cons and will ultimately depend on the level of control and responsibility management is looking for. Many companies choose to partner with an agency to help them identify the best Amazon strategy, as well as to directly manage their Amazon partnership.
Amazon has shown that it is not shying away from competing in the B2B marketplace. As a business, it is up to you to determine whether partnering with Amazon Business is the right strategy for your organization. No matter your decision, it is important to recognize the influence Amazon Business is having on the B2B industry – and make the necessary adjustments to your business model now.
Access the “From B2C to B2B: Amazon’s Entry into the B2B World” webinar recording here.