How Amazon Is Investing in Building B2B Demand
There’s no question about it: Amazon Business, the B2B buying and selling arm of the world’s largest Ecommerce store, is big business. By 2025, Amazon Business is projected to hit $83 billion in gross merchandise volume. By then, Amazon could capture as much as 10 percent of all U.S. B2B Ecommerce sales. The company is already larger than most of the biggest B2B distributors.
When we think about what makes selling on Amazon successful, we tend to focus on things like the familiar design, the advertising tools, and fulfillment capabilities. But one element that is often overlooked is how the company’s B2B unit, Amazon Business, is investing in building strategic tools and channels for buyers to purchase in greater bulk, drive repeat purchases, and encourage increased B2B spend in strategic ways.
In recent years, Amazon has significantly invested in the buy side of Amazon Business, hiring people and building teams to build the buyer base. In fact, Amazon is actively recruits buyers significantly more than they recruit sellers. Their goal is to show B2B buyers that they can have their needs met on Amazon.
To help with this, Amazon has also invested in developing workflows to accommodate these buyers. For example, Amazon has built buying groups in education, government, and hospitality in order to make buying easier and products more accessible. Amazon also strategically matches buyers to sellers who can fulfill specific niche needs or when a buyer has a bulk request over a certain size.
The company is also building tools to accommodate traditional purchase paths for these groups. To date, Amazon has integrated with over 100 of the top procurement systems, which enables products offered on Amazon to be listed on e-procurement platforms used by thousands of B2B buyers. This enables buyers to access a broader assortment though their traditional buying platforms while also allowing sellers to access a new audience, providing an opportunity to capture incremental revenue.
Further deepening its B2B capabilities, Amazon has built tools for buyers to make requests for specific products by introducing a Request for Quote (RFQ) system. Once a request is placed by a buyer, it is entered into a system that alerts buy side team. This creates a more bespoke sales experience that allows more flexibility and engagement on a platform that is typically more known for its uniform, hands-off shopping experience.
A good example of how these features to come together is in the medical supply industry. Amazon offers the ability for buyers in medical field to submit their licensure to Amazon. Once approved, these buyers can then access product assortment specifically for their specialty, including class 2 and 3 FDA regulated items in the United States. These are products that cannot be found or purchased simply putting the product name into Amazon’s general search engine.
Another example: Amazon is the operator of the Abilityone.gov marketplace, which is designed to satisfy disability spending requirements at government agencies and other organizations. It does this by qualifying sellers’ businesses as disabled-owned, and then provides a platform for other businesses to access them directly.
With these efforts, it is clear that Amazon is after not just the long tail spend, but the more strategic spend of larger institutions and government agencies within specific verticals. The company has developed specific pages for new buyers in specific verticals, such as dedicated site pages for educational buyers with back-to-school specials. In fact, Amazon has created an entire program (currently in beta) for distributor pricing targeted at the educational market, where school districts, universities, and others in the industry can see special pricing and buying terms.
These investments by Amazon have paid off and will continue to yield benefits to both Amazon and sellers on the platform. Amazon will continue to invest in finding buyers who need to place strategic, larger spends. And they’re clearly succeeding, with nothing but growth in the near future.