Amazon wants to make it easier for businesses to shop online
AMAZON continues to push to become the Everything Store for Everyone with its latest addition: businesses and offices can now get access to a Prime membership service tailored specifically to make it the go-to on-demand delivery service for enterprise.
The announcement has many investors and established retailers concerned that Amazon is going after yet another segment in the e-commerce industry with its lethal combination of convenience and low prices. The technology giant has already put hundreds of retailers out of business, ranging book stores, electronics sellers, garment shops, while eating into the bottom lines of huge chains such as Wal-Mart and Best Buy.
There is the potential for Amazon to jeopardize the futures of the middleman suppliers by directly hooking up wholesale manufacturers and distributors with customers, seducing the latter with cheap products. The package could be a win for office supply stores such as Staples Inc. and Office Depot Inc., who would ostensibly join in on the fun in partnership with Amazon.
According to data from Bloomberg, in response to Amazon’s announcement, the value of businesses such as industrial supply leaders Grainger and Fastenal dropped.
Amazon said to Bloomberg that the new Business Prime Shipping package would offer two-day delivery services to enterprises, with packages ranging from around US$499 to US$10,099 a year. Costs depend on how big and complex a firm is, but essentially businesses will be able to do things like bulk-order office supplies, stock up shared pantries or potentially even get specialized machinery ordered in.
The industry of business-to-business retail – which includes sales of everything from stationary, to parts of big, industrial machinery in factories – didn’t experience the same disruptions as other industries did when Amazon muscled into the market. That’s partly because for businesses it made more sense to buy stationary and office resources in bulk through legacy systems, while specialized parts only really came through certain channels.
However, the move could prove especially lucrative for Amazon, as the market is estimated to reach up to US$1.2 trillion by 2021, up from this year’s US$889 billion.
Amazon would also be capitalizing on the busy-ness of office admins to really make its built-in convenience schtick work.
“I don’t see the same ceiling in business-to-business sales as I do in retail,” said Andy Hoar, an analyst with Forrest Research Inc. to Bloomberg.
“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.”
Business Prime Shipping is currently only available in Germany and the US.
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