I don’t know about you, but it’s getting to the point where almost everything I buy online, is through Amazon. It’s getting even worse now that I’ve purchased an Alexa during Prime Day. Did you know that the same thing is true with companies buying industrial products? Amazon is aggressively pursuing B2B sales- and it’s working. Soon procurement departments might ask Alexa to ship them 10,000 units of threaded widgets instead of the sales rep at their local distributor.
Amazon offers the following data to support their case:
- Amazon hit $1 Billion in sales within it’s first year of selling B2B products. That was a year ago. I’m sure it’s more, now, because…
- Amazon sees 20% month-to-month growth in sales of B2B products.
- Amazon serves over 1 million B2B customers.
Now, that’s data straight from Amazon. These might be understated, according to Jon Payne, a third party Amazon seller consultant.
“We believe the sales volume that Amazon shows to third-party sellers as B2B sales to be much lower than actual business transactions. You see, many businesses buy B2B products through a personal Amazon account, and then pay with the business’s credit card. Those are hard for Amazon to categorize as either business or personal transactions.”
To get an another picture, I turned to another source, to confirm this trend. Here’s what I found.
What does this graph represent?
- Each graph represents Google searches, over the last 5 years. This data is limited to the United States.
- These searches are limited to the “Business & Industrial” topic.
- The red line shows people searching for “Google” over that time. Yes, it’s weird that people are searching for Google on Google, but there are clearly a lot of people doing this.
- The blue line represents people searching Google for Amazon (the company). Remember, this is limited to the “Business & Industrial” topic within the U.S.
According to Google’s own data, Amazon is catching up to them in searches for “Business & Industrial” topics. Let that sink in, for a moment.
Let’s compare this with the top distributors of Industrial products, in the United States:
There are a lot of people looking for Ferguson and Grainger. These are a mere shadow to people looking for Amazon. Again, this graph is limited to searches from the Business & Industrial topic
If you’re a manufacturer, distributor, or anyone selling B2B products, you need to be on Amazon.
Why Amazon is Entering the B2B Space
You know the adage: if you’re not growing, you’re shrinking. Amazon is already dominating the commercial space. “If Amazon wants to continue to grow at the pace they have been, they absolutely must make a strong play in the B2B space,” says Payne. “The penetration of Prime accounts in the U.S. is already so high that there’s just not room to triple the business with domestic B2C sales.” Some estimates put the penetration of Amazon Prime accounts at over 50% of U.S. households. “They already have such a large slice of the online B2C pie in the U.S. But with B2B, the growth opportunity is tremendous.”
How has Amazon been so successful in the B2B space?
There are several advantages of using Amazon (over your own website) to sell B2B:
- Amazon handles the payments for you. You don’t have to manage credit card information or transactions. They have several payment options. This includes invoicing and connection with several procurement software systems.
- They handle the shipping with their FBA program. Send your products to Amazon and they can fulfill your orders for you. They can handle almost any size of product- from tiny widgets to pallets.
- People are already trained to go to Amazon first to buy something. Eventually Amazon will “train” your B2B customers to do this too. There are already a million people doing this, after all. Amazon is pushing hard to grow those numbers. Many buyers also prefer the “one stop shop” of Amazon rather than placing several different orders through various other websites.
Does this mean your website is useless?
I wouldn’t go that-far. Remember, for all these convinces to you, Amazon takes a cut of your sales. This percent varies on several factors, but could be as much as 15%.
On Amazon your products are commodities within their marketplace. I know that your widgets are better than your competitors. I understand there are several advantages if someone buys your widgets, over your competitors. It’s hard to show this on Amazon.
You can’t use Amazon to build a loyal customer base. Your products are only products to Amazon customers. You know the old truth- about how much easier it is to keep a customer than get a new one. Amazon makes it difficult to build this kind of loyalty to your company.
When you make a sale on your own website, you are able to collect their email address. This allows you to continue to market to that customer, for other products and services. This increases your customer’s lifetime value. Amazon doesn’t provide you with the email address of each customer.
It’s still important to market your company through your own website. At the same time, don’t overlook the opportunity Amazon might provide your company to grow B2B sales.