Amazon’s domination of the retail industry is well known. Its superiority in customer experience has shaped the day-to-day expectations of today’s consumer when shopping online: next day delivery, same day delivery, one-click to purchase and a never-ending stream of products to choose from. It continues to innovate and drive next-generation services for today’s consumer, including its recent launch of ‘try before you buy’ fashion in the UK, a feature that allows subscription members to try up to eight items before they commit to the purchase, once again changing the game for online B2C shopping.
It’s advances like this that have been forcing retail and ecommerce companies to re-evaluate their business operations in order to deliver on the consumer expectations Amazon has created for years.
But what about the business-to-business world? Perhaps less well known, but equally as prevailing, is Amazon’s recent move to B2B with the launch of the Amazon Business platform, a B2B marketplace where “more than half of Britain’s biggest listed companies” are buying their every day office supplies according to a recent article in The Telegraph, and it is expanding rapidly across key territories in Europe. This evolution in Amazon’s portfolio is putting the same pressure on wholesale distribution and manufacturing businesses that retailers are now well accustomed to.
Launched in 2015, Amazon Business is already generating over $10bn in annual revenue. It hit $1bn in its first year alone in the US, and within its first year in the UK it had more than 100,000 customers. In 2017, Amazon Business in Germany was reported to have more than 50,000 business customers and 10,000 sellers, just one year after launch. It is undoubtedly a platform to be reckoned with. Wholesale distributors and manufacturers must pay attention if they are to effectively compete in this new age of B2B selling, or risk losing customers to Amazon.
Rapid Global Growth and the Rising Threat
Amazon Business is relatively new in comparison to its consumer counterpart, but its impact is already being felt across the B2B market. Without the fundamental facts, distributors and manufacturers cannot be prepared to compete. Here are some of the key details you need to know about the rapid growth of Amazon Business.
- Amazon Business has now launched in a total of eight countries. It’s easy to assume this is merely a problem for the US market, particularly given the infancy of the platform. But those companies who are dismissing the problem are putting their business at risk. Although Amazon Business is thriving in the US, it is also rapidly expanding across Europe and the rest of the world. In 2018 alone, it launched in France, Italy and Spain. 2017 saw it launch in the UK, India, and Japan. And back in 2016, just one year after launch, the business began operating in Germany. The launch of each dedicated country website increases the potential for businesses to expand their own operations globally with ease, and offers users a localised experience, including local language, local delivery options and local tax regulations.
- 82 percent of B2B buyers have made a purchase on Amazon for their business. Although the Amazon Business platform is reasonably new, its influence over the B2B market has been a long time coming. B2B buyers were already using Amazon.com to make purchases for their business. It’s therefore a natural progression for them to gravitate toward the Amazon Business platform to make business purchases. This influence is creating rapid growth of the Amazon Business platform, which already supports over a million B2B customers.
- 70 percent of distributors view Amazon as a threat. Despite its young age, the wholesale distribution market is already acknowledging the threat of Amazon Business to the industry. With its rapid global expansion, growing customer base, and Amazon’s strong reputation in customer experience it is showing no signs of slowing down, and has the potential to dominate the B2B market in EMEA. Wholesale distributors and manufacturers must act now to build a strategy that protects the business against Amazon.
What can wholesale and manufacturing companies do to compete?
Amazon attributes the success of Amazon Business to “the way it responds to customer needs” according to the UK Head of Amazon Business, in a recent article on The Telegraph. It is this sentiment that wholesale and manufacturing businesses must adopt if they are to compete in this new era. The customer is, and always has been, at the core of everything Amazon delivers. Using data to deliver a personalised experience, reacting to changing customer demands, influencing customer behaviour, and putting the customer experience first is what has propelled Amazon to the top of the retail world. And there is no doubt this ethos will be carried through to its B2B business.
If wholesale and manufacturing companies are going to stay in the race, they must give their customer base the same treatment, enabling the business to deliver on the needs of today’s B2B buyer. Techonlogy is at the very foundation of this. Without the right systems in place, wholesalers and manufacturers will struggle to deliver the same level of service that Amazon Business can offer, and will expose themselves to a potential migration of customers to Amazon. To deliver the Amazon experience and respond positively to the Amazon Effect, manufacturers and wholesale distributors need improved business visibility of both customer behaviour and the business operations, strong inventory and order management and the ability to deliver personalised marketing campaigns. This should all be tied together with one integrated system that allows real-time visibility and enhanced business intelligence that will support continuous growth and enable them to deliver on the expectations of the B2B buyer.
To learn more about what you need to do to enable your business to compete with Amazon Business, download our insightful guide, “Surviving the Amazon Effect: Differentiating and Optimising to Thrive in the Age of Amazon”.
For more need to know facts about Amazon Business, view our helpful infographic.