Amazon Business – Insight from the Spend Matters Tech Summit

It is fair to say that one of the most eagerly anticipated sessions of last week’s Spend Matters / ISM Procurement Tech summit was from Prentis Wilson, VP at Amazon Business, which went live last April. Many people on both the buy-side and sell-side of the procurement world are wondering exactly what the giant firm’s plans are in the B2B market, having established a dominant position in B2C.

As Wilson pointed out, many procurement people know that their colleagues are buying from Amazon already for business. And, he said, if you don’t think they are, you’re probably wrong. There are 183 million users per month on Amazon, and 90% of “Millennials” shop for work online. Employees are looking for better ways of doing business-related buying – they expect the customer experience they get in B2C. They want the “Amazon-like experience”, with speed of purchase and spend visibility. At a more corporate – or procurement – level, supplier rationalisation is another goal.

Amazon Business links buyers and sellers, with many millions of different products, from lab equipment to snow ploughs, toys to components. 47% of orders on Amazon go to third-party sellers, which, in the business context, means the ability to compare different providers.  That goes along with tools to make the business buying process easy, and backed by Amazon’s fulfilment capabilities such as fast shipping.

The business-focused technology to support this new target market includes: approval workflows; business-only selection and pricing on certain products; business sellers (some unique to Amazon Business); tax-exempt purchasing where appropriate; eProcurement integration. Of course, we need to see all of these, but given Amazon’s resources, it is hard to think that they won’t be effective.

Other features include users being able to get supplier information, such as minority-owned status. There is also the "customer who bought this item also bought ... " prompt, and machine learning is increasingly coming into play here.

So Amazon will look at what you have bought and predict your next requirements. It’s a bit spooky in some ways; so if you buy maternity clothes, in six months you will get equipment for new-born babies suggested, and maybe 3 years later, suitable books or a first bicycle!  That’s a B2C example but you can see how the principle might apply in the B2B world too. There is also a “LiveExpert” feature where you can directly contact the manufacturer if you have questions.

Wilson described Amazon Business as a tool to “drive supplier rationalisation”, so organisations can have one supplier to replace many – managing the “long tail” as we might say. Amazon Business can integrate with Coupa or other eProcurement systems, and “we see ourselves as enablers of merchants” – a true marketplace.

So, a very interesting an open presentation, and we can certainly see the positives here. However, Amazon Business could well change the whole nature of some business supply chains, just as their consumer operations have done in some industries such as book publishing. Procurement professionals may need to think hard about issues such as the balance of power –  we would love to see (Professor) Andrew Cox’s take on this. If Amazon were the only game in town in some categories, do we think that would be a good thing? So some challenges here, and whilst for many organisations Amazon Business will be a valuable tool, some caution is also needed we’d suggest.

First Voice

  1. David Lawson:

    Ten years ago we had to first train staff how to switch on the computer before training them on how to order on-line. A decade later most staff regularly order over Internet through Amazon, Argos, Tesco etc at home on a smart phone.
    Systems developed for Retail provide a great opportunity for Procurement to escape the limitations of “clunky” finance systems and help design out hidden costs/ inefficiencies for both the buying organisation and its supply base.
    Would we adopt Amazon as our ordering platform? No, we would want to retain control over contract pricing. However, there is huge potential to copy key features developed for Retail such as track-and-trace, full visibility of supply options/ availability, “nudge” principles, automated processing. Time to put our heads in the cloud.

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