Amazon Business launched in 2015, trying to extend the company’s brilliant B2C success to the lucrative but increasingly crowded B2B space. Is Amazon Business successful? And how can B2B businesses navigate this ecommerce jungle to find the best way forward to digital transformation?
Lesson One: Never Underestimate Amazon
It’s never a good idea to underestimate Jeff Bezos and Amazon. Any one-time scoffers have now been silenced by the unprecedented success of the company, by far the largest digital retailer with nearly $250 billion in revenue and a growth rate of more than 30% annually. Amazon Business, a business-only marketplace, launched in 2015 and expanded the types of businesses that Amazon serves. Their value-prop? Allow B2B businesses to quickly digitize with a seamless new revenue channel. The catch? You’re feeding the beast.
Unlike past proactive moves from Amazon, which all seemed to anticipate market needs before they were voiced by consumers, Amazon Business is a purely reactive move. Luckily, Amazon’s muscles gave AB a fast start.
Amazon was responding to the huge market opportunity for B2B digital commerce, which is expected to reach $1.8 trillion and account for 17% of all B2B sales in the US by 2023, according to Forrester. Today, the vast majority of B2B manufacturers, wholesalers, and distributors still operate on legacy technology and must digitally transform to stay relevant and competitive. Many major ecommerce players ran to capitalize on that urgent need. Amazon took its time arriving. Although quite late to the party, AB made a splash.
Amazon Business recorded a billion dollars in sales in its first year. Volume has continued to soar and stood at a sales run rate of $10 billion annually, according to the company’s Q3 2018 report. It claims to have hundreds of thousands of business customers in the US, including 55 of the Fortune 100, 50% of hospitals, and 40% of local governments.
Anytime Amazon comes on the scene, it is instantly the 800-pound gorilla that makes its presence felt without saying a word. But I would like to succinctly look at where Amazon Business succeeds, where it does not, and which other options and factors should guide B2B digital transformation.
Lesson Two: What Amazon Business Does Right
Amazon Business is not right for every B2B enterprise – it doesn’t work at all for highly complex business models and products, where specific ecommerce platform customizations and a level of hand-holding customer service are required.
But here is where they win: Amazon Business is tuned to broad, yet basic, B2B sales. Channeling what works and applies with their B2C marketplace, the Amazon Business platform serves the commodity space well and is ideal for B2B businesses that sell equipment, devices, supplies for restaurants or offices, etc.
Amazon Business recognized that in many cases, commoditized B2B businesses need Amazon in order to survive – even if it means kowtowing to the platform’s strict terms and conditions. Their technology is easy to use: it can integrate with existing seller accounts and gives access to a huge and growing market of business buyers. And, Amazon has the resources to quickly learn from the platform’s shortcomings, then innovate, iterate and improve.
The question is: if we’re to expect over a trillion dollars in B2B sales in the coming years, how much of this is will be made up of complex B2B transactions, where Amazon Business doesn’t fit?
Lesson Three: Where Amazon Business Competitors Lead
Amazon Business was late to the game, and competition in the B2B space is fierce. There are plenty of great marketplaces and digital commerce platforms that are better architected to meet real-world B2B business challenges.
For many B2B businesses, ecommerce cannot just be an “Amazon-like” consumer experience. The B2B landscape has complex configurations of highly specialized products, pricing, quotation, negotiation, and deal-closing processes, and far more complicated delivery, customs, and regulatory requirements. Amazon Business platform features might get a complex B2B business halfway there – but that won’t cut it. These organizations need advanced B2B pricing strategy features, and even the option to sell services.
There are strong, digital commerce and marketplace platforms available to B2B organizations – ones that can be customized and ones that don’t require the business to surrender its brand. These technology providers were there first, and provide the flexibility, features, and customizations that B2B businesses need to digitally transform.
Lesson Four: Get Advice from B2B Insiders
The complexity of our space is why I won’t namedrop technology providers and vendors that I’m inclined to recommend. All that I can say is this: don’t be shy about seeking recommendations from industry insiders and experts. Those who have led successful digital transformations often go on to run digital advisories and consulting firms, which spare B2B businesses the need to reinvent wheels and repeat mistakes.
These specialized advisories guide B2B organizations through transformative digital restructuring via road mapping, the voice of customer research, and technology audits. After assessing the current state, an advisory firm will typically offer technology recommendations and implement, integrate and operationalize the selected information and transactional systems.
The Bottom Line
B2B businesses need to digitally transform, and there are no easy shortcuts. Amazon Business is hardly a failure – but it’s not really the best option available for B2B digital transformation. Like that 800-pound gorilla, you can’t ignore it, you don’t want to anger it, but you can go about your business without dancing to its tune. It should, however, be part of your strategy.
Players active in the B2B technology space have created impressive digital platforms and solutions that are not run by Jeff Bezos. They may not have all the power of Amazon, but many arrived first to the scene and are completely designed for real-world B2B transactional needs, in all of its complexities. So – why join Amazon Business if you can beat them?