Giant Internet retailer Amazon.com will fold its three-year-old business-to-business (B2B) venture Amazon Supply into the newly announced Amazon Business site this week in a renewed attempt to extend its online dominance into the B2B marketplace. Industrial, electrical, and electronic products are a part of the Amazon Business offering, making it one of the newest competitors in the electronic components supply chain.
But traditional distributors don’t seem too worried about it yet; and some industry-watchers say its greatest effect may be to boost the channel’s efforts to enhance the online purchasing experience.
For many, Amazon Business poses the most immediate threat to large catalog companies—firms focused on small-quantity orders for engineering customers. They argue that the level of complexity involved in selling to that marketplace will be hard for the retail giant to match, however. Consider the range of services companies such as Digi-Key and Mouser offer their customers, explains Michael Knight, senior vice president, Americas for large electronic components distributor TTI, Inc. (a sister company to Mouser).
“Everything you get beyond parts … it would take [a lot] for Amazon to put that together,” says Knight, pointing to application notes, bill-of-materials loading, product notification, and design resources as examples. “If the argument is ease of doing business—well, if you’re already doing business with a Digi-Key or a Mouser, it’s already pretty easy.”
Serving manufacturing customers with large production runs, as TTI does, is another game entirely, Knight adds—though he’s careful not to count Amazon out too quickly.
“That isn’t to say that at some point in time Amazon couldn’t come up with a system or product that would be more compatible with [those customers],” he says. “This [issue] worries me a lot less than some of the other disrupters in the industry … But it is Amazon, so you’ve got to keep your eye on them.”
Indeed, it may be that Amazon will heighten traditional distributors’ focus on developing a more robust online purchasing experience. There is growing demand for a business-to-consumer (B2C)-like experience in the B2B marketplace, especially as younger generations enter the purchasing profession and move up the ladder. Bob Barr, managing director at digital research firm Acquity Group, part of Accenture Interactive, points to an established trend toward online purchasing in the B2B market and a related need for suppliers to step up their game.
“While having the home advantage of pre-established relationships with buyers, veteran suppliers need to pay close attention to buyers’ needs and address them accordingly,” Barr says. “For example, they need to make an effort to attract prospective buyers like those fresh to the industry from the Millennial generation—who come with existing standards and expectations set by their B2C buying experiences.”
Barr points to Acquity Group’s 2014 study of more than 500 procurement officers, which found that the number of B2B buyers who spent the majority of their budgets online doubled from 2013 to 2014—rising from 9% to 18%. Acquity’s annual study polls procurement officers with annual purchasing budgets of more than $100,000.
“While there’s a clear trending increase in online B2B sales, suppliers need to continuously work to improve their site’s buying experience, making it as smooth as possible; 35% of buyers have abandoned their carts because a website page did not load properly, and 26% because the checkout process took too long, as found in our study,” Barr adds.
Amazon is capitalizing on its expertise in the online buying arena. In announcing Amazon Business in late April, the company pointed to the integration of such service with special business-to-business needs, including business-only pricing and product selection, purchasing approval systems, and integration with third-party procurement solutions. The company also said it offers a range of service options for business buyers, something Amazon Business vice president Prentis Wilson elaborated on in early May.
“We are in the early stages of ramping up a feature called ‘Live Expert,’ which allows customers to get technical or complicated product questions answered in real-time directly from the manufacturer. We’ll continue to add innovations like this over time to better serve business customers,” Wilson said in response to questions from Global Purchasing about the level of service offered for its industrial and electronic supplies in particular. “In addition, we offer dedicated customer support and a wide range of product content—everything from technical specifications, CAD drawings, and high-resolution images of products to manufacturer how-to videos. For manufacturers, this product content, and the ability to consistently communicate to every one of their customers about exactly how each product is intended to be used, adds value.”
How well Amazon Business is able to meet B2B buying needs in the electronics channel may well depend on the nature of the customer, as Knight argues. But it’s clear that the online retail behemoth is taking steps to build both its product and service offering for B2B buyers. And there is no denying that the lure of the B2B market and a growing desire for a more consumer-centric online experience will continue to shape the industry’s competitive landscape.