Amazon may sit comfortably as the world’s largest eCommerce marketplace. But there’s one online platform that dwarfs them in comparison. It’s themselves. More specifically, their Business segment.
While $25 Billion in annualized sales may seem miniscule in comparison to Amazon’s overall $386.1 Billion revenue for 2020, Amazon’s Business marketplace actually increased 2019’s gross sales by 60 percent. In comparison, Amazon’s overall growth rate for 2020 was only 20.5 percent. Even Amazon Web Services only saw a 37 percent growth rate between 2019 and 2020. But what does this mean for B2B eCommerce?
Understanding the B2B eCommerce Marketplace
B2B eCommerce is a notoriously fragmented segment, encompassing everything from cloud and network services to office supplies to industrial machinery. It’s precisely this cross-industry fragmentation which can make analysis relatively complicated. Traditionally, one of the chief benefits of B2B has been the reduction of overhead costs. Subsequently, the general public association of B2B has been one of wholesale, manufacturers and resellers; not traditional retail marketplaces.
To further complicate this fragmentation, the global B2B eCommerce market size was reportedly valued at $5.7 Trillion in 2019—which would make the likes of Amazon Business relatively small fish in a big pond. Yet that market size can also include all aspects of B2B, including companies not traditionally thought of as a B2B service. Verizon’s Business Group’s segment, for example, totalled $31 Billion in revenue in 2020 for both physical and digital solutions.
Yet there’s one key player in the workforce in 2021: millennials. They’re not just the largest generation in the labor force in 2021. They also have significant buying power—an estimated $1.4 Trillion in 2020 alone. And as the first generation raised digitally, is there any wonder the first name they’d associate with eCommerce would be Amazon?
Why Amazon’s Dive Into B2B Paid Off
The Amazon name alone has power. It’s not just synonymous with digital commerce, but with the whole of retail itself. Except B2B sales and retail were two entirely different beasts until Amazon entered the room.
Most B2B buyers want the same flexibility and ease in their purchases as consumers, regardless of the volume and rate they’re buying at. Just like consumers, they want a fast checkout, automatic repeat orders and efficiency in tracking. Actually, they demand it. Their business counts on it.
But when Amazon Business launched in 2015, it was still considered a risky venture—largely because B2B commerce is such a highly nuanced and difficult segment to define. Amazon changed that. By redefining what a business product actually is, they quickly became known as a leading one stop procurement hub for businesses sourcing bulk and wholesale items, restaurant and industrial supplies, office products… and just about everything but cloud and network services (yes, Amazon Web Services revolutionized that as well.)
They not only helped redefine the B2B segment, but helped integrate one of their own strong points into the process: more than half of their annual sales comes from third-party sellers.
In just six years, Amazon Business has grown to serve over five million businesses, including 80 Fortune 100 entities. With a global presence in eight countries, the marketplace currently serves over 90 of the 100 largest hospital systems, 45 of the 50 US state governments and 80 percent of the 100 largest educational institutions. And it’s still a burgeoning entity. Recent estimates predict that Amazon Business sales could reach over $80 Billion by 2025.
In 2019, Amazon Business introduced Business Prime; a subscription only service providing free, unlimited shipping, discount pricing and tax invoicing to eligible customers in North America, the UK, Germany and Japan. While there’s no way of knowing whether Business Prime will offer annual promotions on par with Amazon’s 48 hour Prime Day, there’s every reason to imagine that Amazon would unify key selling points between their business and retail channels.
Amazon Business: An Untapped Resource for Third Party Sellers
With third-party sales counting for over 50 percent of all gross merchandise sales on Amazon, the need to differentiate product lines has never been more challenging. Competition is fierce—and there’s no guarantee that a best selling niche will remain at a consistent sales volume.
But the B2B marketplace is a vast one. More importantly, it’s one that’s untapped for many traditional marketplace sellers who may not realize just how applicable their product lines are towards business segments. Not every top seller will find a home on Amazon Business, nor should they expect to. But expansion means more than product lines. It means expanding your horizons, as well.
Color More Lines can help you drive more sales on Amazon and beyond. We provide white glove, global account management of your eCommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.
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