Amazon is currently challenging important online business providers in office products (Staples) and industrial goods (Grainger). It has over nine million items for sale and all products available on the Amazon.com marketplace are also available on the Amazon Business site.
In its first year, Amazon Business had earnings of over $1 billion. It is currently adding about 100,000 new accounts per quarter. Prentis Wilson, vice president of Amazon Business, stated earlier this year that the market appreciates a 20 percent month-over-month sales growth rate. At the conclusion of the 2016 second quarter — June 2016 — Amazon Business had 400,000 registered client accounts.
Amazon Business now offers quantity discounts on over five million items. It gives business accounts that enable individual buyers or departments in a company to make purchases under the same account.
To further streamline the purchase process, Amazon Business delivers digital invoicing that combines orders from many sellers in 1 announcement from Amazon Business. Clients make payments to Amazon Business, which then pays each supplier.
Furthermore, it provides vendors access to Fulfillment from Amazon, which lets customers receive products ordered from several providers in 1 shipment. Clients receive free shipping for orders over $49. Amazon Business plans to include over 80 new features to streamline and increase the selling and buying process.
Amazon Business empowers buyers to pick unique attributes available to them and others who purchase on behalf of a small company.
Prentis Wilson, who testified in March 2016 in the U.S. Federal Trade Commission’s court challenge to the proposed Staples/Office Depot merger (now abandoned), stated that Amazon Business viewpoints Staples and Grainger since its principal competition and Amazon Business is a top priority of the company.
What is more, the company, which originally focused on selling to small and midsize businesses, was”pleasantly surprised” that large firms were interested in buying from Amazon Business. Nevertheless, Wilson testified that Amazon Business had no huge corporate customers, and unlike Staples, did not bidding for customers’ business or negotiate contracts with big businesses. However Wilson left open the possibility that eventually Amazon Business could do those things.
Staples, which derives about 50 percent of its earnings on the world wide web, stated that the merger was necessary to combat Amazon Business’s takeover of the online space. Wilson countered that Amazon Business was still in a nascent stage and it would take years before it may challenge Staples, which had $21 billion in revenue in the fiscal year that ended January 2016.
Grainger, that specializes in maintenance, repair and operating products (MRO), reported 2015 earnings of $10 billion, with 41 percent of sales online. To obtain customers from Grainger, Amazon Business is expanding its MRO products, particularly in the life sciences industry.
Furthermore, it deploys custom pricing as a key differentiator. Vendors that sell on the Amazon Business marketplace can place negotiated prices with customers. However customers see what other Amazon Business vendors are charging for that product. If a different market price is lower than the negotiated price, the customer can buy from another seller. Grainger does not have that choice.
Amazon presumably wants to dominate the B2B side of ecommerce since it will B2C. Amazon has moved the choices and expertise from the B2C side to Amazon Business. With the technology and tools that it is growing to serve the needs of organizations, Amazon Business will likely offer you a ominous challenge to both Staples and Grainger.
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