Amazon Business: A New Way to Procure

Categories : Procurement Goals | Set Strategy | Save Money Published on : Jan 30 2018

By: ProcurementIQ Staff Writer, Mara Michael

Unless you’re completely detached from modern-day technology, you know that Amazon seems to be taking over the world. As the fourth largest company in the U.S., Amazon has proven to be successful in its expansions thus far. Currently, the three main pillars of this leading company are Amazon Marketplace (an e-commerce platform), Prime (a $99-per-year membership) and Web Services (which offers cloud computing services). However, the fourth (but unlikely final) pillar is gaining speed.

Amazon Business, a B2B procurement platform that launched in 2015, reached its millionth-customer mark in July, 2017. Within its first operative year, though, it signed more than 400,000 businesses and 45,000 sellers, generating more than $1 billion in revenue. Now, Amazon claims the company will be investing more into this venture. “We’re working hard to continually introduce improvements that provide even greater selection, value and convenience to business customers looking to streamline their procurement,” said Bill Burkland, Head of Amazon Business.

By making it easier for businesses to purchase products from one another, Amazon Business hopes to correct some of the current inefficiencies within the B2B procurement space. Before a business makes a purchase, there are many assessments, checklists and approvals that must be finalized. Even then, the work isn’t over; once a supplier is chosen, negotiations take place. This process can often be long and tedious, forestalling the contract’s completion and order fulfillment.

To simplify the purchasing process, Amazon Business currently offers a suite of procurement services to every type of business and organization. They also offer business-only price savings, fast and easy shipping, multiuser accounts, flexible payment options and a breadth of product options. Newer features include paying by invoice, catalogue curation and Coupa Open Buy, a tool that streamlines Amazon Business purchases for companies that use a Coupa procurement system. Moreover, accounts are free. In a world that prioritizes speed, efficiency and cost savings, Amazon may be onto something.

With such a comprehensive, useful and efficient tool, Amazon seems to be the new, ahead-of-the-curve purchasing solution. Currently, the reigning purchasing solution among businesses has been procurement software, and while it has risen in popularity in the last few decades, it is typically expensive. In fact, ProcurementIQ estimates that the average price of procurement software is $375 per user in 2018, and is expected to continue rising in the three years to 2021. Moreover, because it must be updated regularly, procurement software may be hard to maintain for some businesses.

Still, other large companies have tried to compete with Amazon on other planes. For example, in response to Amazon’s creation of the Alexa-powered Echo device, Google and Walmart teamed up last year to challenge Amazon in the online shopping marketplace. Amazon’s Echo device could be considered revolutionary, as it offers consumers a completely new way to purchase goods. “It signals an acceleration in the shift from store-based retail supply chains to a hyper-personalized, smart consumer supply chain,” states Forbes analyst Kevin O’Marah. By partnering with Google, Walmart hopes to integrate its large network of stores with a new digital interface in order to challenge Amazon’s innovation.

Nonetheless, we haven’t seen the last of Amazon. In the three years to 2021, B2B e-commerce is expected to reach $1 trillion, according to Forrester Research. Given its earlier successes and pioneering nature, Amazon Business is sure to be responsible for a large portion of those sales, especially as the procurement role continues to grow in importance.

Key Takeaways:

  • Amazon Business is a tool that helps businesses streamline their procurement processes.

  • Amazon Business offers the platform for absolutely free.

  • Users of Amazon Business can take advantage of the platform’s tools, including price savings, fast and easy shipping, multiuser accounts and flexible payment options.

To read more on Amazon Business, click here.

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