The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
Amazon moves into b2b and adds impulse buys.
Amazon recently added two shopping options to the U.S. market that'll broaden its reach to business buyers and to consumers who want to buy fewer units of products the e-retailer normally only sells in bulk.
In late April, Amazon.com launched AmazonSupply.com, a business-to-business e-commerce site that sells products like lab and scientific equipment, janitorial and sanitation supplies, office products, power and hand tools, and materials such as metal wire and sheeting, among others. The world's largest e-commerce retailer says the business-to-business site includes more than 500,000 items.
"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.
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. All orders over $50 get two-day shipping for free.
Amazon is entering a fast-growing market. An Internet Retailer analysis of U.S. Commerce Department data suggests that wholesale e-commerce sales 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. Wholesalers and distributors that offer many products to many customers are moving more quickly into online selling than manufacturers that often sell fewer products to a limited number of large clients.
"AmazonSupply gives Amazon a completely new market to go after, but at very little cost," 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. Amazon has the required e-commerce capabilities, such as its payments infrastructure, so AmazonSupply is like adding a new product line or store, he says.
Back on its consumer site and at the opposite end of the buyer spectrum, Amazon.com in early May launched what it calls an "Add-on Program" that lets consumers buy single-sized versions of products Amazon normally sells only in larger quantities.
For example, an Amazon.com customer can now add a single 9-ounce tin of Virginia peanuts to her order for $5.24, rather than buy a six-pack that Amazon sells for more than $30.
Amazon describes the program as a way to offer low-priced items for sale that would otherwise cost too much to ship on their own. Amazon says the add-on program includes thousands of low-priced items from across multiple product categories. Featured items at the launch of the add-on program were mostly from the food and personal care categories, and none cost more than $6.
Products that Amazon considers add-ons are marked with a blue label that reads "Add-on Item" in search results. On product pages, the Add to Cart button is shown on a blue background that also says it is an add-on item. Consumers can buy add-on items only when their total order value, including add-ons, is $25 or greater, Amazon says. If a consumer goes to checkout with an order that contains add-on items but is less than $25, Amazon indicates that the consumer can continue to shop to meet the price threshold or check out without the add-on items. Amazon will keep the add-on product in the "saved for later" section of the cart.
The launches of AmazonSupply.com and the add-on program follow another record-breaking quarter for Amazon, which reported it generated $13.19 billion in sales globally during the first quarter, up 33.9% from a year ago. Sales in North America increased year over year 35.8% to $7.43 billion. North America accounted for 56.3% of Amazon's sales in Q1 2012. Since January, the e-retailer also has announced plans to build at least 15 more fulfillment centers, including two in California.