- Deciding Whether To Create An Amazon Web Store
The Debate About Amazon In The B2B Marketplace
- Affects Of The Amazon Business Model
Part two of this three-part article looks at the true place of Amazon in B2B.
Getting customers to distributors’ websites, however, is precisely the problem, says Scott Benfield, president of the Chicago-area B2B consultancy, Benfield Consulting.
According to a recent distributor survey conducted by the company, slightly over 70 percent of distributors operated a functional ecommerce site, with roughly 62 percent selling less than 5 percent of total sales online.
In the jan/san industry, a Sanitary Maintenance and ISSA study shows that less than 20 percent of 2014 sales were purchased online.
The biggest barrier to courting online customers, says Benfield, is that distributors continue to lag in their ecommerce efforts — and that has everything to do with cost.
The average investment in a software bundle that results in a “winning ecommerce program” is around $2 million in the first several years of launching an online initiative.
Still, the impact Amazon has had on the distribution industry remains up for debate.
“What I’m finding is a lot of the things going around are sound bytes,” says Benfield. “We initially thought Amazon was going to take a fair amount of share in the B2B marketplace. Four years later, when we asked manufacturers whether they went through their traditional channels or a second-party, like eBay or Amazon, nearly 71 percent of sales went through their dealers and distributors.”
Additionally, when asked if Amazon, eBay or another second-party company was an increasing part of their online strategies, manufacturers gave a “substantial disagree,” says Benfield.
“They’ll use it, but it’s not taking off,” he adds. “It’s hard for me to say that it’s going to be a massive vehicle for distributors, as well.”
The ‘great Amazon debate’ wages on simply because … well, it’s Amazon.
“There’s a lot of hype around Amazon because they are huge — and when you look at them, you expect them to dominate in a category,” says Benfield. “But, they just don’t do a lot of B2B. I don’t see them taking over the world.”
But, according to Marks and others, there are distributors who are reaping the benefits of AmazonBusiness and its almighty algorithm. These companies include smaller distributors, who use the site to uphold their online presence, and big companies that have the leverage to take a multi-channel approach — and who are willing to bend a little (or a lot) to drive online revenue.
This means paying the fees of doing business with Amazon (roughly 10 percent to 12 percent of sales), and shaving down margins in order to move product. Still, if a distributor is making 10 cents on the dollar, 10 cents is better than nothing, says Marks.
“AmazonBusiness will tell you which products are moving, and which ones that aren’t; which ones will be promoted and which products won’t,” he adds. “But if you drink the Kool-Aid a bit — if they tell you that a price should be lower, because they know the market and the demographic — it’s a good thing. I’m a big believer in sharing profits with somebody who knows how to do something better than you.”
Deciding Whether To Create An Amazon Web Store
Affects Of The Amazon Business Model