Launched in 2015, Amazon Business is the B2B version of the familiar online consumer marketplace and now boasts over a million customer accounts, more than 45,000 active sellers, and over 10 million products for sale. This rapid growth proves that Amazon Business is satisfying the needs of business procurement teams, but many companies are still unsure whether they’re better off focusing their sales efforts on their own eCommerce websites. If you’re thinking about buying or selling through Amazon Business, here are a few of the upsides and downsides to consider.
Let’s start with some of the positives. Research shows that 44% of shoppers start their search for products on Amazon, and business buyers operate in the same way. Business-to-business sellers therefore benefit from huge visibility through Amazon’s high online traffic and quickly have access to a massive base of potential customers. By registering a seller’s account on Amazon, you can launch your B2B eCommerce business in just a few hours. At the same time, Amazon is a trusted eCommerce provider and buyers will feel more confident purchasing from a new vendor because of the site’s reputation.
Then there’s the user experience. Amazon spends billions of dollars every year on research and development, and Amazon Business is continually fine-tuned to deliver the best possible customer experience, with features such as volume discounts, business account payment options, tax-exempt purchasing and easy integration with procurement software. The marketplace also offers outsourcing fulfilment service for merchants by warehousing products, shipping goods, managing returns and servicing customer issues or complaints.
So what are the downsides? Firstly, although it’s easy enough to set up an account on Amazon Business, getting product data into the site can be a pain as each category has its own specific rules. Setting up product data in the correct way is important because it has a large impact on the visibility of your products. It’s a very competitive environment too. Selling only on Amazon limits your business to product comparisons because all information is confined to individual product pages and there’s no opportunity to differentiate on other areas like customer service or industry experience.
Then there’s the cost – B2B sellers have to surrender margin. You could be paying up to 15% in transaction fees, and that’s excluding the cost of Amazon’s fulfilment services. On top of this, sellers don’t own their customer base – it belongs to Amazon. It’s far more difficult to get hold of insightful customer data, which means it’s much more difficult to analyse your business and market to clients.
There are even rules about what and how you’re allowed to communicate with customers, including information that you can put in the packages you ship to customers. These rules mean that customers are less aware of your brand and they give you very little opportunity to differentiate your business from other sellers, and very little control over the buyer/seller relationship. This can reduce or limit customer loyalty and even commoditise your business if buyers make their purchase decisions purely on the basis of the lowest cost.
These are just some of the pros and cons of selling through Amazon Business. For some businesses, it can play an important supporting role in eCommerce strategy, but without your own B2B eCommerce site, you’ll be forced to sell mainly on price and have little opportunity to develop meaningful customer relationships. In the long run, that’s going to severely hamper your ability to grow the business.