Amazon Just Introduced Business Prime—Here’s Why that Matters for Every B2B Company
Last week, Amazon launched Business Prime, giving customers of its industrial supply division access to the free two-day shipping benefit that has garnered regular (consumer) Amazon Prime more than 80 million members.
Amazon Business offers a full range of B2B supplies, from hydraulic valves to lab equipment. Launched just two years ago, the B2B e-commerce vertical has grown rapidly: It’s now available in five countries (the U.S., Germany, the UK, Japan, and India), and over the summer, it surpassed the 1 million customer milestone in the U.S.
Why are B2B shoppers flocking to Amazon Business? Because today’s B2B buyer is behaving much more like B2C consumers, transferring all their everyday online shopping customer experience expectations to their workplace requirements.
“I don’t see the same ceiling in business-to-business sales as I do in retail," says Andy Hoar, an analyst at Forrester Research. "In retail, people want to go to the store to see and touch things. For business sales, people don’t want to have to go to the store." This seems especially true of commodity products, like steel or rubber. Hoar estimates the online B2B market in the US will reach $1.2 trillion by 2021.
In response to the news, shares of W.W. Grainger and Fastenal, two large industrial suppliers, fell by more than 4% each. This is only the latest in a series of signals that Amazon poses a real threat to traditional B2B suppliers: Over the summer, Grainger cut its prices by up to 25% to compete with cheaper online sellers. Goldman Sachs recently told clients, “The value proposition of the industrial distributor is not keeping pace as new entrants like Amazon are disrupting traditional models. As a result, we see $130bn of industrial distributor TAM [total addressable market] on the line."
But this activity speaks to something much larger than Amazon disrupting yet another industry. It’s an example of how expectations in the consumer world have now been transferred to the business world. This is true of B2B suppliers and B2B manufacturers. Buyers expect mobile friendly websites, pricing comparisons, customer reviews, videos, infographics, case studies, and yes, lower prices and free shipping when shopping online in the consumer world. Today, they expect the same at work. (Amazon Business’s tagline? “Everything you love about Amazon. For Work.”)