Amazon B2B No Big Game Changer

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Apr 25, 2013 3:30:00 PM

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Briteskies' Bill Onion Shares his Expert Opinion with MultiChannel Merchant

Amazon.com's launch of its business-to-business marketplace has the potential to alter the landscape for b-to-b merchants.

But while some industry experts see the launch of AmazonSupply.com as an all-out game-changer for b-to-b merchants, others see Amazon's entry as an added plus for b-to-b sellers.

And it appears Amazon will be a big winner as a result of the b-to-b launch. In addition to offering free shipping on certain products, AmazonSupply is offering a corporate credit line with extended payment terms of net 45+ days for qualified customers, and that credit can also be used at Amazon.com.

"Amazon has realized that there is significant transaction volume and customer retention in b-to-b," said Terry Jukes, president of the consultancy B2B Direct Marketing Intelligence. "They also realize that specialty, hard to find b-to-b items are high margin. By bringing their highly successful marketplace business model to b-to-b that is so familiar to many b-to-b buyers, they can create a nearly 'perfect market' and offer significant savings."But Terry Flynn, president of b-to-b-consultancy Market Chord Direct Group, thinks AmazonSupply has the potential to devastate some traditional catalog and multichannel b-to-b suppliers.

Flynn said cash flow is a critical factor for much of the b-to-b market, and Amazon is offering a pretty powerful incentive of low upfront cost combined with better cash management and lower inventory risk through returns.

"Their ability to leverage low threshold free shipping and extended return policies is going to be painful enough in the market, but I expect it is the 45+ day terms they are offering that will allow them to steal even more business from entrenched competition," Flynn said.

"Combine that with their related b-to-b services and a flat cost shipping option like Amazon Prime and it is an unbeatable offer," Jukes added. "This breaks the traditional b-to-b catalog business model and b-to-b multichannel marketers must now figure out how to adjust in this new world. It is a seismic shift, no doubt."

William Onion, managing director of b-to-b ecommerce solutions provider Briteskies, does not think AmazonSupply.com will be a sweeping game-changer. But Onion does think the marketplace will change how some companies conduct business online, and will give other companies another channel to sell their products.

"Just as Amazon.com was not the death of all other b-to-c ecommerce sites, I don’t see this eliminating other b-to-b sites," Onion said. "It will, however, be a component of every b-to-b strategy conversation from here on out."

Onion said it's up to sales and marketing teams whether they want to participate in the AmazonSupply.com marketplace, and to what extent they want to play. Onion said he does not see many b-to-b merchants putting their entire product assortment on AmazonSupply, but does think they would want to use it to sell stock items and discounted items.

Mary Ann Kleinfelter, president of b-to-b consultancy Marketing Solutions Today, said she doesn’t think AmazonSupply will shake up b-to-b marketing as we now know it. But it will put continued pressure on pricing and ROI, much in the same way Walmart does to other consumer merchants.

Kleinfelter said while anyone can read a website and place an order, a b-to-b sales person often acts as a consultant to a customer making a large and technical purchase as an investment. AmazonSupply will have to prove it can offer customers that kind of assistance in an ongoing, consistent fashion.

"Some b-to-b products are commodities, but some are extremely technical, even customized," Kleinfelter said. "Often they are very expensive and perform critical functions. That is one reason a sales force is often used in b-to-b marketing."

One of the biggest challenges for b-to-b sellers will be AmazonSupply's bells and whistles. Merchants with older and less-functional b-to-b ecommerce sites are going to have to step up their games to compete with AmazonSupply's modern, feature-rich site. "There are still a ton of old and clunky b-to-b sites out there, yet we see all the time that customers are demanding modern, sleek, and functional b-to-b sites," Onion said. "With the launch of AmazonSupply, all underperforming b-to-b sites are at a huge disadvantage. These older sites will need to upgrade to compete, or they will lose revenue to AmazonSupply."

Topics: eCommerce

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