Can Amazon Start to Support The P2P Process in B2B? What Will it Take?

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Part 1

In our previous story on Amazon’s grand new entrance into B2B through e-procurement integration with ERP business applications, we touched upon Amazon’s initial foray into the procure-to-pay (P2P) process via a simple “punch-out” integration via cXML coming [ironically] from an Oracle cloud e-procurement application. The scenario Amazon and Oracle are enabling is a spot-buy requirement not met by traditional corporate e-procurement shopping and search options (built on internal catalogs and supplier-specific punch-out catalogs). Under this scenario, the user “punches out” to Amazon and then merrily shops around the consumer-oriented mega-bazaar before having to get approvals back in the e-procurement application.

FREE Research: A Foundational Look at P2P Technologies

Then, the PO is placed and the supplier gets paid (by Amazon – less its 10-15% “referral fee” and item/subscription/other fees). In a “fulfillment by Amazon” model where inventory is stored and fulfilled at Amazon distribution centers, the merchant (aka supplier) also pays picks/pack/ship/storage fees (pricing is here). The bottom line is that this process where Amazon is financially intermediated into every transaction can be very efficient and user-friendly from a requisitioner perspective, but it’s not very effective from a spend management standpoint in a real B2B context, even given the fact most companies end up over paying for tail spend SKUs regardless of specific merchant or distributor.

To really support B2B properly from a P2P and broader F2F (forecast-to-fulfill) standpoint, Amazon, or any other B2B focused e-marketplace must be able to support the requirements (even for mid-market companies) that buyers want from not just a punch-out supplier like Amazon, the e-tailer, but also a buy-side supplier network.

This requires a philosophical focus on buyer requirements (way beyond price) rather than merchant requirements. In our upcoming Spend Matters PRO analysis, we’ll dive into the details surrounding:

  • Market opportunity
  • Personalization
  • Controls
  • Pricing
  • Privatization
  • Selective self-disintermediation
  • Platform: web services and business services
  • Search and supplier discovery
  • Workflow
  • Settlement and financing
  • Direct/supply chain
  • Omni-channel demand from the buy side
  • Global trade
  • Co-opetition and ecosystems

As you might be able to glean from the list, this isn’t just about Amazon, but more about the future of B2B e-commerce and its relation to e-procurement and supply chain.

Worlds are about to collide. Stay tuned!

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