While we haven’t talked too much about Amazon Business over the years, it’s been a quiet giant that launched in 2015 and already generates over $35 billion in global sales. That would make it the 300th largest company in the world and more than 10% of Amazon’s online retail business. It’s one of the “fastest growing ventures in Amazon’s history” and its size nearly doubles the company’s physical store business. When we think about the next phase of Amazon retail, it’s really B2B.
The company’s recent Reshape event in Dallas for users and partners answered a lot about this large and fast-growing part of the company. Following is what I learned about this formidable part of Amazon.
What is Amazon Business – really?
It’s easy to think of Amazon Business as a better version of an office supply store like Staples, but that would be selling it short. Yes, it does sell a lot of pens and office supplies (Bic and Uniball were two of Reshape’s biggest sponsors). But just as Amazon.com is way more than books, Amazon Business is much more than a single category. It serves 6 million business accounts around the world with everything imaginable, from medical devices for hospitals and doctor’s offices, to packaging and paper supplies for restaurant groups and toner cartridges for schools.
The Amazon Business superpower: physically and financially large shipments of supplies that ride Amazon’s fulfillment network to commercial addresses
Amazon Business is the polar opposite of Amazon.com, which was built on small one-off transactions to consumers everywhere in the US and much of the world, in turn helping to ingrain the brand in the minds of shoppers everywhere.
By contrast, Amazon Business leverages:
Large shipments: Amazon is often delivering pallets to enterprise customers like Aramark.
Amazon’s fulfillment network: Amazon already has a dense warehouse footprint, predictive shipping capabilities, and an offering to provide those services to marketplace sellers.
Commercial addresses: Amazon is able to use large trucks that pull into loading docks, drop off those pallets, and get the “delivery density” critical for carrier efficiency. This is the dream of any carrier. It even restocks vending machines which I would bet – with Amazon’s creativity – the company may make even more efficient with Flex drivers.
And that was the key message of the Reshape event: Amazon Business is targeting large enterprises and embedding itself in major procurement systems like Coupa to bring its commerce flywheel to B2B purchases. As Amazon Business encroaches on enterprise customers with more business purchases, it will invariably need the sales leads and contacts from its AWS business, possibly selling overlapping products and services in the future. Internal channel conflict is a feature – not a bug – of Amazon’s org structure as it empowers small teams to move fast to build new businesses.
Where to next for Amazon Business – and B2B e-commerce?
Given the still-behind state of most other B2B e-commerce sites, Amazon Business may not even need enterprise companies for a while. Today, Amazon Business stands out as a juggernaut with an inherent competitive advantage just with small and medium enterprises. It reminds me of its position in the online advertising world with Amazon Ads. It wouldn’t be surprising if the attention it gets in the future is just as great.
Going forward, brands selling to procurement leaders will have no choice but to develop their Amazon Business strategy. Other companies should think of the lessons of Amazon Business: how to leverage existing assets to effectively extend to new categories rapidly.
To discuss Amazon Business and what it could mean for your business, please schedule time with Joe Cicman, Christina Schmitt, or me.
