In its second-largest acquisition, Amazon buys the company for $970 million.
The e-retailer is paying close attention to business-to-business e-commerce, offering new sales vehicles for marketplace sellers and considering new product categories, says a top executive. “If there’s something you’ve bought offline that you weren’t able to buy online, we’re probably thinking about that,” says Sebastian Gunningham, senior vice president of seller services.
Amazon.com Inc.’s interest in B2B e-commerce continues to grow.
“I don't think there's a single company that wouldn't like an Amazon-like experience within B2B,” Sebastian Gunningham, Amazon’s senior vice president of seller services, tells Internet Retailer.
AmazonSupply.com, a B2B e-commerce site Amazon launched in 2012 that sells 1.25 million items, such as janitorial and sanitation supplies, office products and power and hand tools, is only the retailer’s first foray into grabbing a piece of the burgeoning B2B e-commerce market.
Diving deeper into B2B e-commerce requires Amazon to understand how business buyers interact with their suppliers online. “But loud and clear we're hearing that buyers and merchants would love a great B2B marketplace—where the prices are competitive and experience is great,” Gunningham says. “We’re listening."
Already AmazonSupply, combined with the features shoppers have come to expect on Amazon.com and other leading consumer-facing retail sites, is driving B2B e-commerce operators to improve their sites, writes Gene Alvarez, vice president at Gartner, in a blog post on InternetRetailer.com.
“Amazon has raised the bar for those B2B suppliers already selling online as it brings its customer expertise to the B2B world, and customers are beginning to expect the same level of customer experience online that they have for B2C purchases in a B2B environment,” he writes.
That push to improve the customer experience is evident across Amazon, says Gunningham.
For instance, Amazon is constantly looking for ways to help shoppers get the items they order online faster. One way is by building up its fulfillment network. Scot Wingo, CEO of e-commerce services provider ChannelAdvisor Corp., speaking today at the annual ChannelAdvisor Catalyst conference in Las Vegas, estimated Amazon has more than 100 fulfillment centers worldwide, and that Amazon plans to continue building more warehouses close to major metropolitan areas. By housing products close to the consumers buying those items, the retailer is lowering the price it pays to fulfill orders.
And most of the packages Amazon delivers are small; 80% of the orders Amazon fulfills are less than five pounds, Gunningham said today during a fireside chat with Wingo.
To get items to shoppers more quickly, Amazon is handling some of its own deliveries, and that may become more common. In China, for example, it owns a fleet of bicycles that it uses for deliveries. In Seattle and Los Angeles, its own fleet of trucks that deliver groceries ordered via Amazon Fresh. While Amazon has “great partnerships” with carriers around the world, it might continue to build its delivery fleet to fill in gaps that aren’t well-served by carriers, Gunningham tells Internet Retailer. “In the end we’ll build what we need and isn’t already out there,” he says.
In addition to developing its own delivery fleet, the retailer is also examining other models, such as crowd-sourced deliveries, he says, referring to using individuals not associated with delivery services to bring products to consumers.
Improving delivery could improve the appeal of Fulfillment by Amazon, a service in which Amazon holds the inventory for online retailers—both those selling on Amazon.com and on their own web sites—and delivers orders on their behalf. The number of marketplace sellers using Fulfillment by Amazon is growing—it grew more than 65% year over year worldwide, Amazon announced in January.
Gunningham also noted during the fireside chat that Amazon is working to give marketplace sellers more ways to sell on its site. For instance, it recently began allowing marketplace sellers to sell via Amazon Fresh. The move enables a restaurant, for example, to sell frozen lasagna to consumers, which is a win for the restaurant in that it gives it a way to sell online, a win for Amazon in that it helps the world’s largest retailer expand its Fresh inventory, and a win for the consumer who can buy lasagna online.
“That’s just one example of how we are always thinking about ways to bring more merchants into our ecosystem,” Gunningham tells Internet Retailer.
After about a year of testing, Amazon also recently began letting marketplace sellers offer goods in its Today’s Deal section, and it similarly plans to let sellers participate in its Subscribe and Save program that gives a consumer a discount when he signs up for regular delivery of a particular product.
New sales and delivery models aren’t all the world’s largest e-retailer has been up to. Last year, Amazon expanded into new categories, including a flower shop, memorabilia and fine art. Many of the categories it has recently added are new to e-commerce, Gunningham told attendees at the ChannelAdvisor event, and Amazon sees more categories that might also sell well online.
“Think about what you’ve bought in the last month,” he says to Internet Retailer. “Have you bought a car online? Bought pharmacy stuff? If there’s something you’ve bought offline that you weren’t able to buy online, we’re probably thinking about that.”
Gunningham also noted during the fireside chat that the relaunch of its payment-processing service, formerly called Checkout by Amazon and now rebranded Amazon Payments, has “seen great results.”
Unlike before, the new service does not require the merchant to disclose information about what the customer ordered; retailers had been hesitant to provide sales data to Amazon, a potential competitor. As in the earlier service, however, an Amazon customer can pay by entering her Amazon credentials, with Amazon charging the purchase to the payment card she has on file. Amazon has payment information for more than 200 million consumers worldwide, Gunningham said.