Will Amazon Disrupt B2B?

Amazon certainly has juice as a B2C (business-to-consumer) company, bringing about doomsday for Borders and others made irrelevant by best-in-class logistics. So what happens if Amazon goes B2B (business-to-business)? Watch out.

Amazon is quietly testing (in beta) a B2B site known as Amazon Supply, selling everything from drill bits to automatic hand dryers for commercial and industrial applications.  Some experts are dismissing Amazon, noting that competitors will counter with personalized service. But haven’t we been down this road before? Didn’t the pundits discount people buying books online, and digital downloads to Kindle, etc., etc.?

One might think the Amazon Supply is just a commercial version of an e-Commerce solution, but suppliers of like products should take pause. Amazon is offering a 365 day return policy, lines of credit and free shipping for orders over $50[i]. If Amazon can reach economies of scale, they could be a force to be reckoned with. Out of the gate, Amazon is offering a mind-boggling 500,000 items, and they are just getting started.

Of course the flip side is that Amazon could be a boon for manufacturers, offering a new channel for online distribution, replacing the need for e-Commerce sites. In many industries, distributors are struggling to provide value, and their manufacturing partners complain that they have become order takers. Amazon Supply offers the potential to completely disrupt how commercial products are distributed, just-in-time, at ultra low cost.

The shift occurring before our eyes is that Amazon has moved from a seller of products to a logistics company, proving an engine that is formidable and can compete with other channels on price and speed.  Organizations with marginal buying power (and who are seeking cost savings) will certainly be intrigued.

The offering (of Amazon Supply) is not limited to tangible products; fleet maintenance and other business services are offered at a discounted rate.  Amazon Supply comes on the heels of Amazon Web Services (AWS) where Amazon is offering developer tools, databases, and operating systems.[ii] Customers can even use popular features such as “one click” to complete transactions, much like they do on the B2C site.

B2B suppliers in categories offered by Amazon will have to do some soul searching on whether they want to try to compete with the behemoth or partner with them.

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