When people think of Amazon, they largely think of the consumer site that provides goods. Although Amazon is one of the biggest consumer retailers in the world, it also has a large and growing B2B (business to business) business that many sellers are unaware of. The B2B market is actually much larger than the B2C (business to consumer) market.
The global ecommerce B2B market was valued at over $12 trillion in 2019 and it has grown much more since. This is more than six times the size of the consumer market. With Amazon just entering the B2B market in 2015, the opportunities for sellers to be a part of their growth is monumental.
In less than six years, Amazon’s B2B market (Amazon Business) has generated over $10 billion in 2020. Existing and new sellers on Amazon can join the Amazon Business seller program and start selling to corporate customers. In this blog, we will explore what Amazon B2B is and why it is a huge opportunity for sellers over the next few years.
What is Amazon B2B?
Amazon B2B is also known as Amazon Business. It brings the world-renowned Amazon customer experience to businesses. Many businesses rely on old sourcing methods for their inventory and other business needs. This can include old accounting, product discovery and shipping methods. Amazon provides businesses with business prime, free two-day shipping on many products. Businesses that use business prime have reportedly saved $1.2 million annually.
Amazon B2B is a business to business marketplace. Both Amazon and third-party sellers sell directly to businesses instead of consumers. This means that the offerings and other values are slightly different from the consumer marketplace. Sellers are able to offer businesses discounts, business pricing, tax exemption and more.
Amazon tailors the business marketplace to meeting business needs. Businesses that use Amazon business can set spending limits for users, get analytics on spending and purchases and get pallet-delivering for products. Since businesses already have a list of preferred suppliers for their operations, Amazon enables businesses to select sellers that business have already purchased from as preferred suppliers. This is a huge opportunity for sellers to get a lot of repeat business.
Amazon Business Ecosystem
The Amazon Business ecosystem is made of two primary programs: the Amazon Business buyer program and the Amazon Business seller program. The Amazon Business buyer program is for enterprises and institutions that are looking to purchase their business needs on Amazon.
Many enterprise clients have transitioned to Amazon Business for their business inventory needs because Amazon digitizes the process, helps them make smarter buying decisions and provides free two-day shipping for products. This is disrupting the global B2B sector and Amazon is using the help of sellers to provide a vast catalogue of products for enterprise clients.
The second part of the ecosystem is the Amazon Business seller program. Amazon is attracting existing and new sellers onto their business platform and enabling them with technology and their fulfillment infrastructure. Sellers that join Amazon Business can expand their sales channels to businesses while still being able to sell to retail customers on Amazon.com.
This ecosystem is a net benefit to both buyers and sellers because they can expand their businesses significantly. Since Amazon business launched, it has been growing extremely rapidly and it has a very bright future over the next decade.
Why sell B2B instead of selling to normal Amazon consumers?
Access to large enterprise customers
One of the biggest advantages of selling directly to businesses on Amazon is you will have access to large enterprise clients. It’s not everyday you have BP and Mayo Clinic buying from your small seller store on Amazon.
This is the type of opportunity Amazon B2B provides for sellers on the business platform. 3rd party sellers sold more than $5 billion just on Amazon business last year. This number will continue to rise as Amazon brings more enterprise clients onto Amazon Business and this makes it even more lucrative for sellers. Since these huge clients are already spending millions of dollars for their business, sellers can get a slice of that budget by offering products directly to them.
Amazon released some of the statistics for their enterprise clients. 55 of the Fortune 100 companies use Amazon Business, more than 50% of all large hospital organizations use Amazon Business and over 40% of the most populated local governments use Amazon Business. These statistics highlight just how important Amazon Business is to the overall success of Amazon.
The B2B market is larger than the B2C market globally and this can be a very lucrative opportunity for sellers to reach B2B customers. Amazon Business generates less than 5% of Amazon’s total revenue; it has the potential to rival Amazon’s consumer ecommerce operations.
Significant demand for enterprise clients
Amazon Business is still a relatively new business for Amazon. It was launched in 2015 and it had $1 billion in revenue in the first year. In 2019, it had just over $10 billion in revenue and it’s anticipated that Amazon Business will generate over $50 billion in revenue by 2023.
Amazon alone cannot service all of these enterprise clients, it will require many sellers to join to help meet demand. Amazon has already launched two features for Amazon B2B sellers to help with demand: Recommended for you and Products yet on Amazon.
Recommended for you enables sellers to find high selling products in the categories they already sell in. By doing this, Amazon is helping sellers find new products to sell to meet demand from enterprise clients. This feature alone can help sellers add four to five figures to their bottom line.
Products not yet on Amazon
Amazon prides itself on having the largest selection of all ecommerce providers in the world. On the consumer platform, Amazon has hundreds of millions of listings. Amazon Business doesn’t have the vast selection that Amazon does, so both Amazon and sellers need to add a ton of products onto Amazon Business.
This feature allows sellers to see high demand items that are not yet on Amazon. This can be significantly beneficial because if a seller gets that product, there’s not much competition. The seller can carve out a niche of products not yet on Amazon where they are the only supplier for.
No restrictions to only business customers
When you decide to sell on Amazon Business, Amazon still allows you to sell to your regular retail customers on Amazon.com. This is huge for sellers because many sellers already have a viable business on Amazon.com and don’t want to risk losing that. Amazon enables you to sell on Amazon Business and continue your normal operations whether it’s Amazon FBA, FBM, etc.
You can take a small portion of your time and resources and invest in Amazon Business to see if there’s potential for your business. There’s little to no risk especially if you can continue selling regularly on Amazon.com. The systems on Amazon Business are exactly the same as normal selling on Amazon, you can fulfill via FBA, by yourself as a merchant or use a mixed approach.
Amazon already has over 1 million enterprise customers on Amazon Business. Sellers are able to reach this vast number of business clients when they use Amazon’s FBA network. Once a seller joins the seller program for Amazon Business, they can start selling globally.
Amazon Business already has operations in many parts of Europe and Asia. After sellers familiarize themselves with the North American operations for Amazon Business, they can expand their business significantly by selling internationally.
Many business clients internationally have just as much demand if not more than North American businesses. By going global, sellers can expand their business exponentially and build a brand.
One of the most enticing parts of selling B2B is the increase in purchase orders for sellers. Many sellers that currently sell on Amazon.com know a lot of products are priced between $10-$50.
Most customers on Amazon order just one quantity of a product and they may come back to purchase another one if they really liked it. What would happen if the quantity of orders per customer doubled or tripled? Sellers’ revenue and profit would increase by a similar factor.
This is the key selling point that B2B, businesses are likely to order many quantities of a certain product. Instead of focusing on selling tons of unrelated items, sellers can sell 5-10 products that can generate hundreds of thousands of dollars in revenue. This changes the entire business strategy for many sellers and they can build a strong viable business on Amazon Business in addition to their Amazon.com operations.
Establish a real B2B supplier/vendor business
Many sellers on Amazon do a combination of retail and online arbitrage. If something were to happen to Amazon, their livelihoods would be in jeopardy. Unless you build a sustainable brand, your business is directly attached to Amazon.
Amazon Business gives sellers the experience of working with real business clients. By succeeding on Amazon Business, you can start to become a real B2B supplier in a niche. Most vendors and suppliers that are successful run 7 or 8 figure operations. If you can scale your business to that level, you can easily start building your own clientele outside of Amazon.
If you do some market research, you can start cold calling or cold emailing businesses near you that you can serve. This will help you diversify your business and you can start building a brand around your supplier business.
Added opportunity for minority owned/veteran businesses
Many large businesses take supplier diversity very seriously. Since a lot of enterprises make commitments to their customers and investors that they will add diversity in their business, supplier relations is a big opportunity for businesses run by minorities, women, veterans and more.
Amazon enables sellers to highlight any certifications and credentials they may have. When an Amazon Business buyer is browsing a product, they will be able to see which sellers have quality and diversity certifications.
An example of quality certification would be ISO 9001; this is a certification used by manufacturers to show that a certain quality has been met by a product. An example of a diversity certification would be service-disabled veteran-owned small business (SDVOSB). This lets enterprises know that the product they are purchasing will help support a business that is largely or fully owned by one or more service-disabled veterans.
Many corporations have to report these kinds of quality and diversity metrics to shareholders and customers. By buying from these kinds of sellers, they can prove they’ve met certain standards that were set by their management.
The ecommerce B2B market is one of the largest business sectors globally. With Amazon doing a ton of heavy lifting to bring vast selection and fast shipping to corporate clients, sellers have a huge opportunity to gain significant sales.
Since Amazon Business is not as well known yet as Amazon.com, it’s a huge opportunity for sellers to avoid competition and build successful supplier and vendor businesses. It’s very low risk for existing and new sellers, so the least sellers can do is to give it a try. This can eventually lead to great opportunities in the future to expand your seller business and attract contracts and similar business deals. To learn more about selling on Amazon B2B , check out the application here.