Amazon Business comes to Germany
Amazon’s basic idea is absolute customer focus – Amazon has always been committed to providing the best service to its customers from the very beginning. Now this idea is being extended to the digital B2B market. Here too, the motto is that the customer’s interests are always at the centre of attention. Although general common ground between Amazon B2B customers and Amazon B2C customers is held, in that they share similar service and usage requirements, these customers differed considerably in their respective needs in the past. Today the successful concept for private customers is being transferred to business customers.
Amazon introduces Business Platform
Following the initiative autonomous platform “amazon supply” (2012), on which only B2B products from wholesalers and manufacturers could be offered, Amazon US introduced the integrative “Amazon business” in May 2015.
Within the first “proof-of-concept” phase in 2015, Amazon Business achieved sales of approximately $1 billion in the US, with monthly growth of approximately 20%. Following its successful entry in the US, the Amazon Business division will now also be available in Germany starting in December 2016. The online shop allows you to purchase any quantity of goods in larger packaging units.
Extended functions include, for example, the creation of purchasing groups that match the organisational structure of the respective company. This function provides a comprehensive overview of the company’s expenses. It is also possible to customize order approvals and set payment limits. For improved billing and account reconciliation, it is possible to use order numbers (POs) and reference texts. In this way, deliveries can be tracked and the estimated delivery times for your orders can be viewed.
Customers vs. Business
It should be noted that the B2B market in Germany also generates a significantly higher sales volume through e-commerce than the B2C market. For example, 28% of B2B e-commerce managers already generate more than 50% of their sales online. On the other hand, 31% of those responsible see direct sales as the most relevant source of revenue for their companies, but not without registering the increasing importance of online channels. As a result, online channels are of great importance for B2B business.
Looking at the current landscape of B2B and B2C online marketplaces, a strict horizontal separation can be observed with regard to target group processing – a standardized product portfolio with relatively low margins (B2C) and a complex product portfolio with relatively high margins (B2B).
In summary, it can be said that the B2B market is considerably larger than the B2C market and that B2B business is also showing a sustained shift from the offline channel to the online channel. The current online share in the B2B market sits at 2-3% and thus significantly less than the online share in the B2C market (12-15%).
Opportunities and challenges
Opportunities in the B2B market include higher profit margins, especially for individualised and complex B2B products, which so far have had to do without European players. A certain challenge is the wide range of different B2B products, for which it is important to find and display suppliers as quickly as possible. In addition, B2B buyers demand sophisticated product search engines and a link to the internal systems.
The aim is therefore to gain access to a significant customer and supplier base as well as to well-known brands and thus reduce the barriers to market entry.
In addition to the requirements and expectations that are constantly increasing on the B2B supplier side (sell-side) as well as on the B2B buyer side, the growing desire for a personalised and comfortable shopping experience is one of the challenges facing buyers. On the supplier side, these include topics such as the complexity of online marketing expenditure, new sales channels and the general introduction to B2B e-commerce.
Offer and requierements
Amazon Business combines search engines and provider websites with live expert communication between sellers and buyers. Trading takes place via the already known Amazon surfaces – Amazon Vendor Central and Amazon Seller Central. The target group is commercial B2B customers. The integration of Amazon Business into the existing vendor portals is done by activation. Discounts for business customers have already been integrated. Prerequisite for participation is a vendor contractual relationship with Amazon. In addition to the standard requirements, the prerequisites for opening a customer account on the buyer’s side are, for example, certifications for the purchase of certain products or a tax exemption certificate for tax-free purchases.
Amazon Business is consistently focused on the needs of its business customers. With separate B2B prices, volume discounts, as well as reliable delivery times and product availability, Amazon Business has strategic advantages for commercial customers. The B2B supply chain also offers free two-day shipping and Amazon Business Prime, Amazon Fulfillment and pallet delivery. In addition, there is exclusive access for business customers, filter functions based on quality criteria and the display of net prices. B2B account management includes multi-user accounts, including linking shipping addresses, setting up approval workflows, connecting to a procurement systems and customising reports. The B2B payment manager integrates the provision of a credit line, a shopping card, the individual or joint use of payment methods and a 30-day payment window. With LiveExpert, Amazon offers its customers anonymous technical customer service within the respective business hours, which immediately connects buyers to the provider’s contact persons via chat, e-mail or telephone to clarify technical or product-related questions about the product.
This customer service is provided by the vendors, not Amazon itself. This promotes customer loyalty on the part of the manufacturers and strengthens customer confidence in the respective product. Amazon disclaims any responsibility for the advice or content of the Service. All B2C products are also available to B2B customers. In contrast, access to the B2B range is reserved exclusively for Amazon Business customers.