What does Amazon's new venture into B2B supplying mean for traditional B2B distributors? When Amazon launched Amazon Supply — an e-commerce site for B2B supplies — industry experts in 2012 were concerned. Analysts were asking themselves whether they were witnessing the beginning of the end of the industrial distribution industry. Although to date, there are no signs that B2B distribution has changed dramatically, it's clear that long time wholesalers' days of business as usual are over.
Why Is Amazon Aggressively Entering the B2B Distribution Market?
Wholesalers may have been caught off guard, but they shouldn't have been surprised that Amazon entered so aggressively into their domain. A few stats about the B2B market ought to make this clear. First, the B2B distribution industry istwice the size of the B2C market and the margins are significantly larger, making it an attractive industry. Second, industry professionals under the age of 35 are 131 percent more likely to purchase goods online than those from older age groups. Amazon understands where the future of the industry is heading and they intend to be there when that future arrives. Lastly, the industry had already begun a dramatic shift toward doing business online. At the time of Amazon's entry, online B2B purchases had grown to 40 percent of overall purchases. Since then, it's grown to half of industry transactions.
Amazon is Not the Only Big Player to Enter the Yard
In 2013, search giant Google indirectly validated Amazon's move to entry into this market by making a play of their own. They extended their Google shopping brand to B2B buyers, giving them direct access to manufacturers based on a user's search parameters. In some ways, this move could be considered to be more disruptive than Amazon's. Amazon is competing head to head with B2B distributors while Google is eliminating the need for them. The company has their eyes on the 30-year-old demographic who sees Google as a trusted brand. Extending themselves into this burgeoning market was a logical choice.
Why Google and Amazon Are Having Initial Success
Initially, a number of industry professionals felt it was alarmist to think that Amazon could change the industry. They felt that Amazon would never be able to replicate the hands-on customer relationships and technical support offered by long-time industry players. However, bothAmazon and Google have done more than extend their brand into the B2B space. They have extended their understanding of the online buying experience. Surveys indicate that B2B customers learn their expectations from their lives in B2C. Amazon entries such as free two-day shipping on top of Google's innovations like internal website searches makes it easy for customers to use their sites and products. They now want that same level of convenience in every area of their lives and will gravitate towards companies that provide such an experience.
Should Traditional B2B Distribution Industry Players Be Worried?
Traditional B2B distributors operating under the assumption that it's business as usual should be concerned. According to industry experts, today's B2B buyers have no loyalty to any particular company unless it gives them ease of research and purchasing power. Therefore, companies that expect to do business in the space must act to make sure that their processes are as easy to use as any B2C website. Doing anything less will almost certainly lead to a losing customers to Amazon and Google. This could mean taking a page from B2C companies by giving buyers the opportunity to make their purchase without talking to representatives for technical support or customer service. Instead, they can use YouTube, GotoWebinar, and Google Hangouts to provide education on-demand for clients doing research prior their purchasing. Companies will need to take these kinds of innovations seriously if they are to survive Amazon and Google. Doing so will allow them to reapply the skills they've mastered over the years toward marketplaces their customers are using. It also gives them a much-needed proactive stance in rapidly changing marketplace.Photo Credit: Olivier Lacan via Flickr.
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