In some sense, B2B eCommerce offerings have had a customer base for longer than they’ve actually had their own hub on Amazon, Martin Rohde, head of commercial customers for Amazon Business, told Karen Webster in a recent conversation.
First founded about three years ago in 2015, Amazon Business – the firm’s B2B eCommerce marketplace – has grown up quickly. Today, the site boasts over one million business customers, ranging from large, enterprise-scale players all the way down to tiny, single-person proprietorships and every point in between, Rohde said. That seven-digit customer count is served by Amazon itself, as well as about 85,000 sellers that collectively offer consumers access to “hundreds of millions of products.”
And all of this, Rohde told Webster, came about because of a single observation made about four years ago, when a lot of businesses were shopping on Amazon’s B2C marketplace.
“When we took a close look at who was buying on Amazon four years ago, we saw a lot of businesses picking up office supplies, IT equipment and the like," Rohde remarked. "And since we pride ourselves on being pretty customer-obsessed, our question immediately became, 'how can we serve them better?'"
As a solution, he and his team settled on a B2B eCommerce marketplace customized and tailored to their needs, and they’ve been building out Amazon Business as a separate business and area of focus ever since.
“We are about offering different products, different pricing mechanisms and an entirely different selection of [solutions] to meet a wide range of needs for a wide range of customers,” Rohde said, adding that Amazon Business doesn’t target companies according to their size or scope, but instead to the type of spending need they are trying to fulfill.
Which, Rohde said, is quite specific.
Capturing the Tail Spend
Instead of attempting to lay claim to every purchase that a business might need to make, Amazon Business instead decided to pitch its efforts around what is known as corporate tail spend: the 20 percent of business supply spend that is not related to core corporate functions and is not ordered from the same set of suppliers on a regular basis.
“That planned spend is heavily negotiated, very predictable and all by itself represents a series of staggeringly complex efforts in procurement,” Rohde said, “and very much the domain of purchasing teams and specialists.”
Not nearly so specialized, however, is the remaining 20 percent of business supply spend on general office needs, such as printer paper, bottled water, paper towels, break room supplies and IT cables.
These purchases can also include what might be described as “requests from out of left field," Rohde said, describing the case of a large Texas-based industrial firm that needed a small fleet of yellow tricycles so that personnel could more easily move around the plant.
“We can safely say they didn’t know they needed yellow tricycles until they really needed them,” Rohde said, saying these kinds of hard to foresee but necessary to fulfill cases are where Amazon Business can really shine.
“We are building our [B2B] marketplace with breadth and depth and business-only selection and pricing, because we believe that is best way to address that 20 percent of spend.”
The Full Feature Set, for the Full Gamut of Businesses
It’s not enough, Rohde told Webster, to adopt an “if we build it, they will come” mentality when building this type of marketplace, even with a selection of goods that is entirely relevant to the needs of any size business – because the “what” of a B2B customer's shopping experience only tells half the story.
“That solution would not be complete unless you also create features that the business customer wants,” Rohde emphasized. “That means there needs to be invoicing capability, and purchase by invoice, and credit line offerings that we extend to all our customers, or the ability to easily upload things like tax exempt status," Rohde said, dashing off a list of the basic capabilities that need to be in place to make this kind of marketplace work.
But those are just basic offerings, he noted – the secret sauce is actually around customization for the users. As a simple example, he said, B2C customers want all their packages delivered at the same speed: fast. But B2B customers are in a slightly different circumstance – they may not want their package delivered next-day or same-day if that day is a Saturday and the business is closed. Companies may also want to put multiple buyers on a single credit line to avoid purchasing bottlenecks and to get full transparency into how all that tail-end spending is coming together.
“We can give businesses access to a suite of analytics tools so they can identify where the spending is going, and whether they have other choices to control it better.” They can also create a space where large, enterprise-level suppliers and small-scale sellers can functionally transact with each other, Rohde noted.
“We work with enterprise-level, brand name firms that can integrate us directly into their ERP system, or who tie us into their existing procurement platform,” Rohde explained. “That means we are giving SMBs access to these larger customers by doing the integrations for them, so they have a way to transact across the marketplace.”
That gives firms of all sizes a specialized degree of control in managing their supplier base, which can be difficult to find in these kinds of procurements. Large suppliers, Rohde noted, will often have a local supplier base they want to maintain – and they are able to configure the Amazon Business platform to ensure that those relationships remain a priority in procurement, including preferences for using minority-owned businesses.
Though they are three years into the Amazon Business project, Rohde said that in many ways, they consider themselves to be starting at Day 1 every day – because while they can do a lot for their customers today, it’s important to always be thinking about what can come next.
“We still have a lot to do; there are a lot of ways we can innovate on the customer experience. That is just our mission,” Rohde said.