Further thoughts on Procserve – Amazon link-up

Last week Procserve, the London-based eProcurement firm, announced its new link up with commerce giant Amazon (see here for our initial coverage). Users of the Procserve electronic marketplaces will be able to access the Amazon catalogue directly via those platforms, which means organisations can use their own workflow to manage those purchases from Amazon, and obtain detailed management information about the purchases. Meanwhile, users will be able to take advantage of the Amazon shopping experience for some of their business purchases.

The beauty of this is that it responds to what procurement people have been hearing from users for some years now - "why can't my buying experience at work be as easy as it is at home?” This move is responding to that cry, and as such, should be positively received.

The development was announced publicly at last week’s CPO Event and it is fair to say that it got a less ‘immediately positive’ reaction from the 60 or so senior procurement leaders present, compared with the workshop a week earlier where the development was discussed with a small group under NDA.

There seemed a little nervousness at the CPO Event about giving users such 'power,' and we might also wonder (slightly mischievously) whether some CPOs were wondering whether the Amazon pricing might show its own corporate deals to be not as good as they might be! Is there also some fear that if you give users access to such a cornucopia of buying options, this might be the beginning of the end for the whole procurement function? Probably not, but that's a topic we will come back to -- the function will need to change or procurement runs the risk of being ‘dis-intermediated,’ that much is becoming clearer.

Nigel Clifford of Procserve told me that the one-to-one conversations he had at the CPO Event were more positive. Certainly, our view is that this is a neat and innovative offering. We've seen the question of 'managing the long tail' (how procurement can address the last 20 percent or so of spend that is highly devolved, dispersed and disparate) move up the agenda recently. Existing solutions such as Purchasing Cards have their positives but also drawbacks - in the case of Cards, limited control over which actual suppliers are used, for instance. Outsourcing tail spend is becoming another option we hear discussed more often.

But the Procserve /Amazon option has some real advantages in terms of ease of use, data capture, process control, and compliance. As such, it deserves to do well.

I also spoke briefly to Olaf Schmitz of Amazon, who was at the CPO Event. He explained that most of the technical work had to be done by Procserve - "we have a very stable platform" so integration had to be done on the Procserve side. Not unreasonable I guess if you're Amazon!  We touched on the Amazon merchants - access is not included currently but it could be technically. However, there are potential issues for corporate if merchants were to be included, around VAT and other tax issues, payment and so on - so probably buyers will want to steer clear of that.

I asked Schmitz whether Amazon would be open to partnering with other firms in a similar way. He wouldn't rule it out, but said they were in no hurry. "Amazon likes to test and make sure things work before we move to the next step - we see no rush for other partners." That is not ruling the idea out altogether though.

That current exclusivity is of course key for Procserve. It may have a year or so without direct competition in terms of the Amazon tie-up, we suspect. That's a critical time for it if it wants to move from being seen as a capable but fairly niche (mainly UK government) player to a broader, bigger P2P player.

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Voices (3)

  1. John James:

    Most Amazon products should have a GTIN/EAN number – I don’t think you can add a product to the marketplace without – this could then be mapped to the chosen commodity code.

  2. Phoenix:

    How receptive will government procurers be to the link-up with Amazon given their legal but eyebrow-raising UK Corporation Tax strategy, and allegations of poor conditions for workers in South Wales, Germany and elsewhere?

  3. Mark Lainchbury:

    Anyone have a little more detail on how Amazon purchases can produce budgeted information ?
    For example, does Procserve link its Commodity Codes to Amazon’s Tags (which seem a bit freeform) for this purpose.

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