How will Amazon’s new B2B e-commerce platform affect B2Bs?
Amazon transformed B2C commerce — and now it’s trying to do the same thing in B2B. With the recent launch of Amazon Supply, the e-commerce powerhouse now sells everything from air cylinders to wheels & tires — and they’re just getting started.
Many of our B2B clients are asking questions:
- Should we be worried about Amazon Supply?
- Should we start selling on Amazon Supply?
- How will Amazon Supply change the game?
My answers to these questions are: yes, maybe, and a lot.
Why Amazon Supply is cause for concern.
- Price pressure. Whether Amazon Supply moves a handful of pressure gauges or billions, every buyer of pressure gauges will be able to see Amazon’s price. If Amazon wants to sell aggressively — and it has very deep pockets — it has the abiility to take the market lower.
- Service pressure. Some observers have dismissed Amazon Supply as a threat, because B2B purchasing decisions are made based on many considerations over and above price. Unfortunately, I think it would be naive to underestimate Amazon’s ability to offer value-added services. For example, Amazon is already offering free shipping and a 365-day return policy. Does your B2B offer both of these? If not, expect buyers to start asking for these things … in addition to low prices.
- Efficient fulfillment infrastructure. Don’t forget that Amazon has built a solid warehousing and distribution infrastructure. It not only has the ability to sell at a low cost, it can fill orders with tremendous efficiency, giving Amazon another very large competitive advantage, particularly over B2Bs operating locally or regionally.
- Track record. Let’s not forget that Amazon was met with skepticism when it entered the book market. This is a company that wins, that knows how to pick its spots and pursue its goals with ruthless efficiency.
Why Amazon Supply is not the end of the world.
- Relationships matter. Customers will be hesitant to cast aside strong business relationships that have been cultivated over years or even generations. Incumbent B2B suppliers are likely to get a “last look” before a switch to Amazon Supply would be made.
- Time. Because Amazon Supply is new and has barely been tested, B2Bs have time to fill in competitive gaps, make adjustments, and prepare for competitive pressures that are likely to come. I’ll offer a few ideas about how to prepare in a minute.
- Possible opportunity. Many prestigious retailers have embraced Amazon, and B2Bs that become Professional Sellers stand to broaden their market reach and reel in new business.
The pros and cons of selling on Amazon Supply.
As I just said, there would seem to be advantages in joining Amazon Supply. Amazon has high credibility, enormous traffic, and (if not now, soon) a very easy-to-use shopping site. A firm could easily think, what have we got to lose? There are, however, lots of ways that becoming a Professional Seller could backfire:
- Complacency. If a B2B looks at Amazon Supply as a magic bullet, it could become lazy in keeping its traditional sales and marketing act together.
- Loss of control. If your Amazon Supply program becomes too successful, Amazon might start to control you. B2Bs that are dominated by one or two customers are at their mercy; this can work, but can also end very badly. If Amazon decides to reduce commissions or re-sources your products, the results could be devastating, all the more so because a strong reliance on Amazon will have led your own brand to grow weak.
- Culture clash. B2Bs that are sales driven and built on a philosophy of personal relationships may be very uncomfortable supporting an unbranded, commodity-oriented, e-commerce based marketing initiative. Amazon makes it look easy, but the fact is, succeeding with Amazon Supply will take just as much effort, discipline and creativity as any other marketing endeavor. If the team goes into the game with a long face, you’ve already lost.
- Lack of expertise. Firms that have never sold online, that don’t have strong in-house IT and marketing functions, will be scrambling like crazy to take care of crucially important things like backend integration, reporting, image creation and content updates.
The long term response to Amazon Supply.
Whether a B2B decides to join them or try to beat them, Amazon Supply will change the standards for B2B marketing. How can B2Bs prepare?
- Package up services in a compelling way. A lot of firms provide outstanding service but don’t market it effectively. Saying we do whatever it takes sounds good, but a 365-day return policy is real. It’s powerful. Here is an area where B2Bs can learn from Amazon in a big way.
- Make e-commerce hum. For firms already doing e-commerce, the last thing you’ll want to hear is, “I’d rather buy from you, but Amazon’s site is so easy to use, I had to switch.” Enough said.
- Strengthen product branding. Creating sought-after brands is hard work, but well worth the effort if it inspires large numbers of people to search for them on Amazon Supply, or anywhere else on the web for that matter. Internet marketing is an efficient way to increase brand awareness and build brand loyalty. Many B2Bs are sales driven, but thanks to Amazon and many other factors, the B2B world is becoming marketing driven.
OVER TO YOU
How do you see Amazon Supply affecting your B2B?