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Amazon Business hits billion-dollar milestone in its first year

Amazon Business hits billion-dollar milestone in its first year

Amazon Business, the tech and retail giant’s answer to the run to Staples or Office Depot, has broken the $1 billion sales barrier in the year since it started, and is deploying new tricks as it chases large customers, according to a top Amazon executive.

Prestin Wilson, vice president of Amazon Business, said in an interview that the service, which replaced previous business-to-business initiatives such as Amazon Supply, has grown at a rate of nearly 20 percent every month. Purchases run the gamut from printer toner to categories well beyond the office-supply universe, from snow plows to lab equipment.

“We have pediatricians who buy toys for the lobby, businesses that buy artwork for the wall,” Wilson said. “Insurance companies will buy random items when customers have claims.”

(The billion-dollar milestone, which Amazon Business met before its anniversary, includes sales made both by Amazon.com and by the thousands of third-party sellers peddling merchandise on the site.)

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Amazon’s disclosure stands in contrast with a picture recently painted by the Federal Trade Commission, which downplayed Amazon’s entry into the business-procurement marketplace as the agency sought to bar the merger of Office Depot and Staples.

In closing arguments presented last month at a D.C. federal court, the FTC, which relied on testimony from Wilson and outside experts, argued that Amazon Business won’t be a force in the market for business-related consumables for a long time to come. (Office Depot and Staples in 2014 had nearly $40 billion in combined revenue.)

The agency highlighted that Amazon still wasn’t the primary provider of office supplies to any company, didn’t give specific discounts and didn’t offer desktop delivery.

Also, it rarely participated in the requests for proposal that are the typical way for procurement contracts to be awarded at large companies.

Wilson, in the interview, said that when Amazon Business launched, it wasn’t focused on becoming the primary office supplier to businesses. Rather, it wanted to help companies manage their sometimes chaotic purchasing processes into one marketplace that offered a similar experience to what many employees were familiar with while shopping at home. The service allows businesses to open an account that gives free shipping privileges in orders exceeding $49, can be accessed by many employees and can incorporate approval processes.

More recently, however, Amazon has been participating in more requests for proposal from business customers, albeit in a limited way, as well as offering prices specific to customers — business practices that large enterprises are used to.

Amazon Business also now offers invoice billing, allowing companies to purchase with a line of credit while paying later. It is also equipped to handle tax exemptions for schools, nonprofits and other institutions that have them.

At the same time, while competing against Office Depot and Staples in some areas, Amazon Business is playing well beyond the office-consumables space. Recent expansions include categories such as medical supplies, laboratory equipment and life-sciences materials, Wilson said.

Its customers span “the full range,” from small corner shops to large universities and companies with thousands of users, Wilson added.

Merchants that are minority-owned can easily display their diversity credentials on the site, which are a requirement for some purchases by government agencies or those private companies doing government contract work, according to Wilson.

The service also helps small third-party sellers overcome the complexity of traditional procurement requests when selling to big businesses.

“We’re helping them reach customers in many cases they can never get on their own,” Wilson said.

Courtesy : seattletimes.com



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