Fast and Included: Amazon Business Launches Business Prime Shipping

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Amazon Business customers in the U.S. can now access unlimited, free two-day shipping on eligible items through a paid annual membership for multiple business users, the company announced Tuesday.

Called Business Prime Shipping, the program brings the Amazon Prime shipping benefits consumers are already familiar with to Amazon’s B2B offering. Membership fees are tiered based on the numbers of users on the business account: $499 for up to 10 users, $1,299 for up to 100 users and $10,099 for more than 100 users.

“Business Prime Shipping enables businesses with multiple users to further simplify their procurement procedures and increasingly rely on Amazon Business to deliver,” Prentis Wilson, vice president of Amazon Business, said in a press release. “Customers can now get unlimited fast delivery across their organization on a vast selection of products while maintaining increased visibility on their business purchases.”

That combination of speed and visibility will be a key selling point for Amazon Business as it pushes deeper into the procurement technology space. Whether the new commercial model will make sense for a particular procurement group, however, will likely depend on the size and maturity of the organization.      

Amazon touts Amazon Prime as “fast and free,” but every procurement professional knows that nothing is really free — and that “free” is different from “included.” The same is true for the subscription-based, prepaid shipping model of Amazon Prime. But this isn’t necessarily a bad thing, especially for large enterprise buyers. For mom and pop buyers, however, the story is more nuanced.

Business Prime Shipping will not necessarily appeal to small businesses that try to save every single penny. Why? Because they can already sign up for an individual Amazon Business account with Prime membership for just $99 per year and route all purchases through that buyer’s account. Or, they could skip the membership altogether if they simply aggregate everyone’s orders until they hit the $49 threshold for free two-day shipping.

Of course, that means the rest of the employees can’t directly buy on Amazon Business — unless they use a corporate p-card combined with their personal Amazon accounts, which would hurt spend visibility efforts. Still, one could argue that such an approach also reduces the likelihood of unnecessary spending, since fewer people have access to purchasing options (People do like to shop, especially if they have unused budgets to burn.)

At the same time, using this model of a designated buyer also introduces complexity and process handoffs. For larger firms, the processing of multiple user purchases on multiple individual Amazon Prime accounts doesn’t make sense, especially if the users are then trying to get reimbursed for these one-off subscriptions. Case in point: larger buyers have been vocal with Amazon Business executives about how they would prefer to pay for their Prime memberships via an annual enterprise-level subscription fee. There’s a clear incentive for large enterprises to choose the all-in option at $10,000 and give all employees access to get the benefits of tail spend management.

The new offering stands to benefit Amazon’s objectives, too, as the company wants to properly establish itself as a key supplier in the buyers’ supplier master file, which can make it easier to consume subsequent services that Amazon could serve up in the future. The move will also likely be a financial winner for Amazon Business. By moving buyers to a “set and forget” subscription, the solution should extend its reach to a greater number of users, who will undoubtedly buy more stuff.

What’s more, as an increasing number of buyers begin to habitually use Amazon Prime, suppliers and third-party sellers will have a new incentive to move onto Prime and gain exposure. And this means moving away from doing their own non-intermediated fulfillment. Whether Amazon sells the item itself or via the Fulfillment by Amazon (FBA) model, the bottom line is that Amazon wins.

Still, mid-market businesses and large enterprises interested in using Amazon Business for managing tail spend are also winners in this scenario. The net-net for us is that this new Amazon Prime commercial model merits serious consideration and should make sense for the lion’s share of prospective customers, but we’d love to hear your thoughts in the comments section if you’d like to chime in.

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First Voice

  1. Amp Authority:

    It will be very interesting to see how this impacts the big industrial suppliers like Grainger and Fastenal. Depends on whether top tier brands will join the program.

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