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Gary Hare Talks Amazon Business and Turning the Internet into the ‘World’s Largest Supplier Network’ (Part 2)

11/27/2018 By

“I think the market is going to move from being buyer-centric … to supplier-centric. [Suppliers] need help going digital,” says procurement veteran Gary Hare. “We really have no choice if we want to get this right.”

Hare’s assessment came during a discussion about Coupa’s purchase of Aquiire and the future of e-procurement shopping, which he says involves a way of outworking Amazon Business and turning the internet into “the world’s largest supplier network.” He knows the issues because until 2009 he led Vinimaya before it rebranded as Aquiire.

Hare, now the CEO of Vurbis USA, talks about the future of e-procurement in Part 2 of this Q&A, which has been edited. Part 1 ran Monday.

Spend Matters: What’s your general opinion of how the Coupa-Aquiire combination will fare in the market? How do you think it compares with what’s generally going on from the big competition like in Oracle or Ariba or even the group of smaller competitors that Aquiire was once a part of?

Gary Hare: In the enterprise market, I see little impact, if any at all. That market is mature. The consolidation has happened, and it’s now the domain of the consolidators themselves — SAP Ariba, Oracle, SciQuest / Jaggaer and now Coupa, and their ecosystems. They all now pretty much offer the same functionality. The all have consumer-like UI’s and Amazon-like search. They all do services. They all have supplier networks. The differentiators to a prospective customer are more nuanced than in the past. As far as the smaller competitors go, to have any chance of surviving, they either have to be really innovative and well-funded, like Tradeshift, or find a niche or vertical market they can survive in. Or be bought, like Aquiire.

But if Coupa’s is really planning to go after the mid-market, or the tail spend market, or both, this acquisition could have a huge impact because the functionality is a fit, they have the brand, and other than Amazon Business, nobody else really has a viable offering for mid-market buyers or suppliers.

SM: That’s interesting given how Amazon is continually updating its business prime offering. Do you see that as a point of contention that Coupa needs to figure out its mid-market play, in a world where Amazon is as big a competitor?

GH: Absolutely. While Amazon Business started as a solution for mid-market buyers, but their recent hyper growth was not driven by the mid-market, but by providing tail spend solutions to the enterprise market. When they slapped a punch-out interface on the site a few years ago, suddenly every e-procurement system in the world could connect to it. So instead of spending their time trying to convince the 80% of suppliers from whom they buy 20% of their good and services — aka the tail spend suppliers — to do punch-out, or maintain a catalog, or use the tools in their vendor’s supplier network, the buyers plugged into Amazon. One-stop shopping. And don’t forget. It’s free to buyers, the suppliers pay. And going back to the mid-market buyers, they’ve added some e-procurement functionality like approval workflow to the site as well, so yes, there is no doubt Coupa, and anyone else, is going to have to figure out how to beat, or at least, slow down Amazon Business to win in the mid-market.

SM: As someone who has led numerous companies from new idea to commercial to success, what do you think the next “big thing” is in the e-procurement/P2P space? Where should vendors and procurement organizations be looking?

GH: They should be looking right at the suppliers. They’ve been holding the market back since day one. Their inability to on-board themselves has forced buyers to spend money helping them, and now driven them to Amazon Business, vendor operated marketplaces, and other tail spend solutions. The suppliers have had no choice but to go along, sometimes kicking and screaming, to keep their business, but they are getting squeezed. If you follow the distribution industry, which I do, you’ll see they’ve designated Amazon public enemy No. 1!

The best way for suppliers to get back in the game is to embrace e-commerce as a business strategy, not as an incremental IT expense, and start investing, just like the buyers have invested in e-procurement over the last 20 years. Easier said than done when your margins are slim and getting slimmer — it’s going to take some creativity — and some help from the vendors.

SM: Any final thoughts on the next big move in this space for solution providers?

GH: I think the market is going to move from being buyer-centric, which it has been for the last 20 years, to supplier-centric. They need help going digital. We really have no choice if we want to get this right. The good news is things are starting to happen.

Let me share some data with you. The top 15 e-commerce platform vendors — Magento, Shopify, Woo, IBM, Big Commerce among them — represent 2.5 million domains today; and according to Frost & Sullivan, market sales will reach 6.6 trillion by 2020.

So, sellers are buying e-commerce platforms. A lot of them. Could this new commitment to e-commerce by suppliers drive a new level of benefits to the enterprise procurement market? It absolutely could. Could it help mid-market e-procurement get some traction? Again, absolutely. Does it ultimately turn the internet into the world’s largest supplier network? Maybe. Does everybody, buyers and suppliers, win? I hope so.

So, assuming we’re guessing correctly, Coupa deserves a bunch of credit for making this move, looking into the future, and stepping up to the plate on behalf of mid-market e-procurement for both buyers and suppliers. I wish them the best.