{"id":22514,"date":"2024-04-24T10:28:24","date_gmt":"2021-05-18T16:29:00","guid":{"rendered":"https:\/\/www.bloomreach.com\/library\/competing-like-amazon-business-in-a-post-pandemic-world"},"modified":"2024-06-11T18:10:46","modified_gmt":"2024-06-11T18:10:46","slug":"competing-like-amazon-business-in-a-post-pandemic-world","status":"publish","type":"library","link":"https:\/\/www.bloomreach.com\/en\/blog\/competing-like-amazon-business-in-a-post-pandemic-world","title":{"rendered":"Competing Like Amazon Business In a Post-Pandemic World"},"content":{"rendered":"

If you have been trapped in a swamp for several weeks, you may have missed the announcement that Amazon\u2019s B2B segment, Amazon Business, hit the $25 billion mark<\/a> for worldwide revenue in March. This may not surprise you, given how Amazon\u2019s consumer business shaped the buying habits of Millennials and Zoomers who now represent a majority of employees in the workplace. But the announcement is interesting as it provides another data point to track the ecommerce behemoth\u2019s growth, and it illuminates some of Amazon\u2019s recent strategic moves.<\/p>\n

The Growth and Strategy of Amazon Business<\/h3>\n

With three data points, some simple math can highlight the rate of Amazon Business\u2019 growth over time, and how it changed since the first growth period (where global revenue grew from $1B to $10B between May 2016 and September 2018) and the second (where revenue climbed from $10B to $25B between September 2018 and March 2021). In the first period, the growth rate was massive — averaging just under 8.6% every month to achieve $10B in just 28 months. By comparison, to grow an additional $15B to achieve the current $25B milestone, Amazon Business needed to grow an average of just over 3.1% every month in the 30 months since September 2018. Despite slowing down in the growth rate, Amazon Business\u2019 revenue growth is still huge because it is already so large (i.e. a small percentage of a huge number is still a big number).<\/p>\n

<\/p>\n

But Amazon will not be satisfied with accepting these lower growth rates. It is exploring new ways to spur growth by disrupting areas where traditional distributors may think themselves protected by an \u201cAmazon Moat\u201d — an ability to maintain a competitive advantage over Amazon.<\/p>\n

Operational Excellence is Not a Moat Against Amazon   <\/h3>\n

Let\u2019s consider the realm of pricing<\/strong> — an area where traditional disruptors may have felt protected by an \u201cAmazon Moat\u201d. Amazon Business focused much of its initial efforts around tail spend and consolidation of orders where pricing was either fixed or based on easily-calculated volume discounts. This made it easy for it to quickly win over procurement leadership since it provided a single place to buy all long-tail products. This also provided robust reporting capabilities to help it track what was being bought off-contract and look to resurrect that spend when it became significant.<\/p>\n

Yet Amazon Business appears ready to move into more sophisticated pricing arenas. In a recent job advertisement<\/a>, Amazon announced it was hiring a \u201cstrategic leader to develop and build our Enterprise Pricing suite of tools for the long term\u201d. It is clear that this hire would be thinking significantly outside the long-tail spend realm, and be tasked with \u201c… enabl[ing] competitive Enterprise pricing for purchases ranging from a single unit, one time, to tens of thousands of units over a year\u201d. Amazon Business may have been okay with being a secondary source while it was learning the business, but these moves may indicate a shift in that thinking. With enough time, research, and money, Amazon will find a way to address the operational inefficiencies needed to play catch-up with traditional distributors. Distributors that aren’t innovating for their customers, and instead are focusing on what they see as “moats”, will eventually be taken out by Amazon if they continue to think this way. <\/p>\n

How Distributors Can Out Amazon Amazon<\/h3>\n

The first thing that distributors must do is to stop competing with Amazon Business and start competing like Amazon. Competing with Amazon implies a \u201chead-to-head\u201d battle of tactical process excellence — where the way to win is to do what you do better than Amazon does. Some B2B distributors consider things like contract pricing, inventory management, services provided to customers, or product expertise to be \u201cmoats\u201d that will protect their business from Amazon. This is often a losing strategy — Amazon has the money, resources, and capacity to bridge almost any operational moat over time. Like Pepe LePew or The Terminator — it just keeps coming back and pursuing ways to innovate until the operational advantages of the competition are overwhelmed.<\/p>\n

Instead of operational excellence, it\u2019s better to think strategically about customer experience. Most B2B distributors know their customers pretty well but that customer awareness is stored in the minds of salespeople (and occasionally in account notes of a CRM). Digital provides a way to capture and document every step taken by every customer and to aggregate and analyze that information into a 360-degree view of each customer\u2019s commerce experience. That information can be used to optimize and customize the experience of each customer going forward in a way that Amazon will struggle to replicate.<\/p>\n

Why will Amazon struggle with this? Because the experience it provides is not optimized for product discovery. While its selection is vast, it was assembled from a variety of sources including multiple sellers and multiple vendors, and it went through multiple steps to aggregate, assess, and agglomerate the data into a single detail page. This process is remarkable in how it scales, but not so much for experience. Consider the experience when searching for countersinks <\/a>— the buyer arrives at a landing page where the only options to refine results are to filter by generic attributes like \u201cBrand\u201d or \u201cAverage Customer Review\u201d or a non-specific \u201cSize\u201d. There is no way to filter by features like substrate\/material, finish\/coating, shank type, number of flutes, or even compatible materials — all of which are important specs in assessing suitability for a project.<\/p>\n

It is unlikely that Amazon will solve this problem because discovery is not its goal. Amazon wants to own the transaction, not the discovery journey needed to get there. This presents an opportunity for distributors who build a robust, targeted, and highly effective discovery experience to \u201ccut in line\u201d ahead of Amazon and present themselves as the company that knows the product and makes recommendations that are more appropriate than something from a less-refined (and \u201cbought and paid for\u201d) recommendations widget on Amazon.<\/p>\n

For inspiration on how distributors are using technology to scale their discovery-focused commerce experiences for B2B customers, check out HD Supply\u2019s story<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

If you have been trapped in a swamp for several weeks, you may have missed the announcement that Amazon\u2019s B2B segment, Amazon Business, hit the $25 billion mark for worldwide revenue in March. This may not surprise you, given how Amazon\u2019s consumer business shaped the buying habits of Millennials and Zoomers who now represent a […]<\/p>\n","protected":false},"author":202,"featured_media":15612,"template":"","ew-regions":[],"ew-solutions":[],"library_type":[513],"library_blog_tag":[362,366,370,361,371],"industry":[],"channel":[],"topic":[],"class_list":["post-22514","library","type-library","status-publish","has-post-thumbnail","hentry","library_type-blog","library_blog_tag-ai-and-innovation","library_blog_tag-ecommerce-search","library_blog_tag-headless-commerce","library_blog_tag-industry-trends","library_blog_tag-product-recommendations"],"acf":{"library_blog_banner_content":"","library_blog_banner_cta1_text":"","library_blog_banner_cta1_href":"","library_blog_banner_cta1_new_tab":false,"library_blog_banner_cta2_text":"","library_blog_banner_cta2_href":"","library_blog_banner_cta2_new_tab":false,"library_blog_banner_bg_color":"#EAF7FE","library_blog_banner_cta_text_color":"#FFF","library_blog_banner_cta_bg_color":"#019ACE","library_blog_banner_cta2_text_color":"#000","library_blog_banner_cta2_bg_color":"#FFF","library_blog_chatgpt_content":"","library_blog_chatgpt_cta_href":"","library_blog_chatgpt_cta_text":"Ask ChatGPT"},"_links":{"self":[{"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/library\/22514","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/library"}],"about":[{"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/types\/library"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/users\/202"}],"version-history":[{"count":0,"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/library\/22514\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/media\/15612"}],"wp:attachment":[{"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/media?parent=22514"}],"wp:term":[{"taxonomy":"ew_regions","embeddable":true,"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/ew-regions?post=22514"},{"taxonomy":"ew_solutions","embeddable":true,"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/ew-solutions?post=22514"},{"taxonomy":"library_type","embeddable":true,"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/library_type?post=22514"},{"taxonomy":"library_blog_tag","embeddable":true,"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/library_blog_tag?post=22514"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/industry?post=22514"},{"taxonomy":"channel","embeddable":true,"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/channel?post=22514"},{"taxonomy":"topic","embeddable":true,"href":"https:\/\/www.bloomreach.com\/en\/wp-json\/wp\/v2\/topic?post=22514"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}