In its second-largest acquisition, Amazon buys the company for $970 million.
The new AmazonSupply.com offers more than 500,000 items.
Amazon.com Inc., already the largest consumer e-commerce site, is turning its attention to corporations and businesses with the launch today of AmazonSupply.com, a business-to-business e-commerce site.
Products include lab and scientific equipment, janitorial and sanitation supplies, office products, power and hand tools, and materials such as metal wire and sheeting, among others. Amazon says the business-to-business site has more than 500,000 items. Amazon is No. 1 in the Internet Retailer Top 500 Guide.
"We're excited to offer a wide range of items, from basic supplies like drill bits and automatic hand dryers, to hard to find parts like laboratory centrifuges and miniature polyimide tubing, enabling business and industrial customers to streamline their buying processes," says Prentis Wilson, vice president of AmazonSupply. "Low prices combined with fast, free shipping and a vast selection, make shopping on AmazonSupply a great experience for customers."
Just as Amazon has attracted consumers with low prices, the e-retailer appears to be following a similar strategy in targeting business customers. A pack of 3M 3100 Aqua floor burnishing pads that sells for $38.65 on AmazonSupply are marked at $66.85 on W.W. Grainger Inc.’s e-commerce sites. But Buy.com’s price of $19.91 for a Plumb 11443 22-ounce hammer nearly matches AmazonSupply’s $19.85 for the same tool. All of the products on the site are shipped and sold by Amazon.com, Wilson says.
In addition to the types of products, AmazonSupply differs from Amazon’s consumer site by prominently displaying a telephone number for customers to place orders. “We listened to customers that said ordering by phone is a convenient option for them and made sure it’s easy to find on the home page,” Wilson says.
Amazon is entering a fast-growing market. An Internet Retailer analysis of U.S. Commerce Department data suggests that wholesale e-commerce grew at a 34% compound annual rate from 2000 to 2009, reaching $352 billion, more than double the $145 billion in retailers’ online sales to U.S. consumers in 2009.
Other retailers also are investing in their in business-to-business sites. In November, Staples Inc. upgraded its StaplesAdvantage.com site aimed at business customers with consumer-like features. Staples is No. 2 in the Top 500 guide. And in March, Grainger said it budgeted $40 million to build out its online sales channel. Grainger is No. 15.
Amazon’s foray into business-to-business likely is based on data about who shops on Amazon.com, says Scot Wingo, CEO of e-commerce services provider ChannelAdvisor Corp., whose services include helping retailers sell on such online marketplaces as Amazon and eBay.
“There are two sides to this story,” Wingo says. “Demand and supply. On the supply side, Amazon is a very data-driven organization. As they looked at their data, I imagine they are seeing a trend of more and more business buyers at Amazon’s main site.”
On the demand side, many consumers may translate their at-home Amazon shopping habits to work, he says. “We see this at ChannelAdvisor. We were buying some office supplies one day and I asked our office manager to price them at Amazon. We saved over 20% ordering from Amazon and with the Prime, the service level was effectively the same as the local truck service we used before.” Amazon Prime members pay $79 per year for free two-day shipping on Amazon.com.
Consumers can use existing Amazon accounts or create a new one if they don’t have one. AmazonSupply offers free shipping on eligible orders of $50 or more, corporate lines of credit, a dedicated customer service center and accepts returns up to one year from the purchase date.
“AmazonSupply gives Amazon a completely new market to go after, but at very little cost,” Wingo says. Amazon has already built the e-commerce capabilities needed for the effort, such as its payments infrastructure, so AmazonSupply is like adding a new product line or store, he says. Amazon has system in place already to sell these products, he says.