top of page

Are B2B Sales on Amazon Incremental or Cannibalistic?



One of the most common questions we hear is: “Are Amazon sales new revenue or are they simply moving sales from one channel to another?” 


With decades of experience helping many mid-market and enterprise B2B manufacturers achieve profitable Amazon presences, we can say that a substantial percentage of B2B Amazon sales are indeed incremental revenue. But, as always, defining this for your business requires a more nuanced understanding of your industry sector on Amazon and the products offered to determine whether this will be the case for you. 


This requires taking a step back and looking at the role Amazon plays in today’s B2B buyer journey. 


First, it is crucial to recognize that B2B buyers have evolved over the years. The majority of B2B buyers today are Millennials and GenZ, born between 1980 and 2012, and are expected to make up about 70 percent of all B2B buyers by the end of 2024. According to a Forrester survey, these younger buyers tend to start their purchasing journey with sources that are not “vendor controlled,” and this includes Amazon Business. They prefer convenience and seamless buying experiences where they can get the product information they need, make a purchasing decision, and complete the transaction quickly. 

And, wouldn’t you know it? Amazon provides that exact type of B2B buying experience. 


It should be no surprise that Amazon is perfectly suited for today’s B2B buyers. Its assortment is unparalleled, with more than 3 billion products available. Amazon’s fulfillment capabilities are not only best-in-class, but have grown to become the largest delivery service in the U.S. It should be no surprise, then, that Amazon Business does over $40 billion in B2B transactions annually, a figure that continues to grow every year. B2B buyers clearly are using Amazon, particularly for small quantity items that they need to get fast. 


While Amazon thrives in transactions requiring speed, ease, and small quantities, the one area it falls short on is consultative services and solutioning. For complex purchases involving compatibility or technical installations, B2B buyers typically turn to manufacturers, distributors, or resellers. This distinction highlights that Amazon's use case is about efficiency, whereas other channels offer value through expertise and tailored solutions. In other words, they’re not about the transaction but about finding a solution. 


So why do buyers choose one channel over another? Ultimately, it comes down to the value they’re getting out of any given channel. Buyers shift their presence to a new channel when they feel they’re getting something of value out of it. Manufacturers cannot control the value a channel offers to end buyers, whether it's transactional speed, consultative solutions, or something else altogether. Each channel serves a unique purpose, and manufacturers need to understand the specific value each channel offers to the end user.


Thus, the question of incremental revenue vs. channel cannibalization is the wrong question. The right question should be: “Do I understand where and why my buyers make their purchases in different channels?” 


Incremental Revenue vs Cannibalization 

The truth is that some cannibalization of sales when expanding to Amazon is inevitable. B2B buyers have better ways to spend their time waiting for a sales rep to take a relatively small, mundane order. 

However, the reality is that not being present on Amazon could result in losing sales to competitors who have embraced the platform. Today’s buyers are more loyal to channels than to brands, with only 34 percent of B2B buyers being repeat customers of brands they’ve previously purchased. 


The bottom line is that it’s essential to be where the end buyer makes purchases if you want to continue winning business from your buyers. Buyers will naturally gravitate towards the channel that offers the least friction, particularly for orders that do not require expertise or a high degree of consultation. Amazon's ability to provide quick, hassle-free transactions makes it an attractive option for buyers seeking efficiency in small-quantity orders. 


That’s why Enceiba can take a company from zero sales to $1.5 million per month in less than a year on the Amazon channel. These companies have recognized that smaller quantity purchases are well suited for Ecommerce and that buyers don’t need to go through a salesperson for these types of transactions. They know what they’re getting and when they’re getting it when they order on Amazon. 


While some B2B manufacturers still have concerns about cannibalization, the greatest threat they’re overlooking is the potential loss of relevance if a business neglects to embrace the channels where its customers are active. The more they focus on why buyers choose a given channel—be it Amazon or their top distributor—the better they’ll be able to deliver products that meet their customers’ needs. B2B Manufacturers who grasp this and adapt to their buyers’ preferences will maintain a competitive edge today and for years to come. 


Still not sure that B2B Amazon sales won’t cannibalize your other channels? We can show you that it won’t. We can also show you how much more revenue you can earn. Reach out to us to discuss developing a thriving B2B Amazon presence.

13 views0 comments

Comentarios


bottom of page