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Is Amazon Business a threat to Staples/Office Depot?


A ruling in the dispute between the Federal Trade Commission and Staples could hinge on whether the judge in the case is an Amazon Prime member who appreciates the online giant’s disruptive business model and potential to impact the business-to-business marketplace.

If so, Staples will likely prevail in its effort to acquire Office Depot and better position itself for a long-term battle with Amazon Business, which observes its one-year anniversary April 28. The FTC has minimized Amazon’s impact on the market and sought to block the Staples/Office Depot deal on grounds that it will reduce choice for large corporate clients.

While a federal judge ponders the merits of the FTC’s view of the competitive landscape, Amazon is actively recruiting sellers and buyers to its rapidly growing B-to-B platform. Rob Green, director and general manager of Amazon Business, said there are, “hundreds of thousands of new registered accounts and one account can have multiple buyers. We are relatively encouraged, but it’s early. It is very much day one for Amazon business.”

Green made those comments in front of roughly 1,000 potential sellers who attended an annual conference called Catalyst that is put on by cloud-based e-commerce solution provider Channel Advisor. ChannelAdvisor’s software helps retailers, known as sellers in Amazon parlance, and increasingly brands manage their business across a range of Web sites, third party marketplaces and social media sites. Consequently, ChannelAdvisor secures high level executive participation from companies such as Ebay, Walmart, Newegg, Google, Facebook and other who are eager to update Catalyst attendees on new initiatives and tout the benefits of their respective platforms.

In the case of Amazon Business, savvy event organizers featured Green as the last speaker on the agenda to ensure attendees stuck around to hear about what is arguably one of the biggest opportunities in e-commerce. According to Green, Amazon wants to bring the same customer obsession philosophy that led to the creation of Amazon Prime, Amazon Web Services and Amazon Marketplace to reinvent the world of B-to-B commerce.

“We obsess over how to improve on behalf of customers,” Green said, noting that when he first started at Amazon several year ago the company’s commitment to 14 leadership principles prompted him to tell his wife, “I think I’ve joined a cult.”

Green said the company realized that many of its more than 300 million worldwide customers were likely buying products for business purposes so it wanted to offer customers everything they love about Amazon – for business. That meant creating functionality like purchase order capabilities, multiple authorized users on accounts and free shipping on orders of more than $49 because. Amazon Business is separate from the Amazon Prime program which requires a $99 annual membership fee.

“There are a lot of customers on Amazon who are buying on behalf of their businesses and we are focused on innovating on their behalf,” Green said.

By looking at customers’ purchase history, Amazon Business identified five top business buyer customer types that include industrial manufacturing, technology, education, business services and healthcare services.

“Customers in these segments say they want an Amazon like experience along with spend visibility into who is spending and how much,” Green said. “One of the objectives we have is to provide supplier rationalization so business customers can see where their money is going by product and category.”

Green told attendees at Catalyst that Amazon Business also offers bulk shipping, palletized deliveries and recurring deliveries similar to a subscription model. There even an Amazon Dash Wand, an elegant little device that can be used to scan items for re-order. A variety of payment methods are available including pay-in-full or revolving credit lines along with reporting and reconciliation capabilities important to organizations that need to track spending and analytics capabilities. Lastly, Green said Amazon Business integrate with the top 20 procurement systems from companies such as Oracle, Sap or Netsuite, so that purchases can be integrated into workflows.

“We also set up business specific customer support, live experts to deal with highly specific products and serve as enterprise account advisors,” Green said.

In providing specifics about Amazon Business, what Green described as a “purpose built marketplace for business merchants,” Amazon is looking to get a new flywheel spinning. By recruiting more sellers, Amazon attracts more buyers which in turn attracts more sellers and so on.

“Tens of thousands of seller have now accessed the amazon business seller feature set, but it is a program you have to opt into,” Green said.

Doing so means adhering to specific Amazon Business criteria so that purchasers know they are dealing with specially credentialed sellers able to meet certain performance criteria regarding delivery reliability.

“We expect the credential to become more meaningful over time. It’s really a trust issue with business buyers who want to know they can rely on sellers,” Green said.

From a sellers standpoint, Green touted benefits such as an ability to grow revenues by offering volume based pricing discounts, augmented product listings that feature technical specifications or users guides, and a feature called “profile editor” that allows sellers the ability to tell a story about their company.

If Amazon Business isn’t already a major competitive threat to companies like Staples and Office Depot it will be soon, but Amazon is thinking bigger than providing office products to large corporate clients. It has identified the entire B-to-B marketplace as a green field opportunity that could serve as the fourth growth pillar Amazon founder and CEO Jeff Bezos referred to in his recent annual letter to shareholders.

“(Amazon Web Services), Marketplace and Prime are all examples of bold bets at Amazon that worked, and we’re fortunate to have those three big pillars,” Bezos said. Those three pillars helped Amazon exceed annual sales of $100 billion last year, faster than any company ever. “Used well, our scale enables us to build services for customers that we could otherwise never even contemplate.”

He didn’t mention Amazon Business specifically, but after referencing the company’s three big pillars, Bezos added, “I assure you that we also remain hard at work on finding a fourth.”

It may have already done so with Amazon Business, even if the federal regulators seeking to block Staples acquisition of Office Depot don’t see it that way.
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