In an interview with tEDmag.com, Amazon Business General Manager Martin Rohde discusses the company’s inroads into the B2B sector, talks about the challenges it’s encountered, and explains the value of aligning your company with the e-tailing giant.
As the e-tailing giant known as Amazon continues to make inroads in the B2B selling space, the companies forced to reckon with it are asking themselves how they’ll go up against this seemingly-unconquerable force. Other companies are using Amazon Business as a selling channel and the remaining distributors are still trying to figure it all out.
Regardless of their current stance, the majority of wholesale distributors see Amazon Business as their biggest threat this year, according to a recent Unilog survey, which also found that 52% of those companies lack a strategy for competing with Amazon Business.
To learn more about Amazon Business’s success in the B2B market so far, its intentions, and how it’s working together with industrial distribution, tED magazine talked to Martin Rohde, Amazon Business’s general manager of commercial. He wouldn’t give away the e-tailer’s “secret sauce” or dive too deeply into its intentions in the B2B space, but Rohde did talk about some of the B2B platform’s recent successes, the bumps it’s run into on that path, and how it’s working with distributors to expand its electrical offering.
Amazon’s Customer Obsession
Rohde kicked off the conversation by talking about Amazon Business’s “roughly 4-year-old” status as a startup under the larger Amazon umbrella. “The way we came to be born, so to speak, was that we looked at our existing customers that buy on Amazon.com,” Rohde explains. “We found that there were a lot of folks from corporations that buy on Amazon.com and then we basically asked ourselves, ‘What can we do in order to better serve the customers?’”
Rohde says that obvious question is embedded in the e-tailer’s culture of “working backwards,” and ties into its overall customer obsession. “We’re constantly asking ourselves what we can do to resolve our customers’ pain points,” he says. As part of that mission, he says Amazon started looking at how businesses buy differently than their consumer counterparts, noticing that the former have different needs that range from wanting to pay by invoice or not receive deliveries on the weekends.
According to Rohde, Amazon Business is as much about building certain business-focused capabilities as it is about recognizing that companies have different selection and pricing needs than B2C customers do. For example, Amazon Business allows customers to filter on certain criteria and then direct their spend based on that criteria. “We also offer business-only pricing, meaning that the pricing that suppliers want to extend to businesses is different than it is to consumers,” Rohde says, “For example, [they] might offer volume rebates, which we call ‘quantity discounts.’”
Cultivating the MRO Category
On Amazon Business, the electrical segment is tucked under the maintenance, repairs, and operations (MRO) category. “We’re particularly proud of the selection we have in that category,” says Rohde, who sees electrical distribution as an important part of this category. “We consider ourselves to be a matchmaker between what the customer wants and the ease of how they want to procure. We bring these customers and distributors together.”
As more B2B buyers shift to online purchasing, Rohde says Amazon Business helps to fill the gap between customers and distributors, the latter of which may not have the resources to build out a robust e-commerce selling platform. “By working with Amazon, distributors gain access to a trusted e-commerce service that can expose their full product catalog on an established online store,” Rohde explains.
“They can reach decision makers to grow sales and offer business-only pricing,” he continues, “including quantity discounts, and without necessarily having to get into that e-commerce business themselves.”
Pointing out that 55 of the top Fortune 100 companies are already buying from Amazon Business, Rohde says the smaller electrical distributor can gain access to those larger customers that they “may or may not have had access to otherwise.”
When asked what happens when Amazon Business becomes the customer-facing entity in the relationship, Rohde says “it all depends on how you use Amazon Business.” A company that’s working within a certain geographic region, for example, can use the platform to increase its national or even global exposure.
“You get instant access with your entire catalog to industries that you may or may not serve otherwise,” Rohde says. “If you have a deep service relationship with a customer, I think every distributor would continue to do that. But with Amazon Business, you also get the additional exposure [in terms of] geography and different industries.”
But what happens when the wrong part is delivered? Or, when a distributor gets an order for a part that’s not in stock? According to Rohde, Amazon Business manages all of those communications and works out the solutions.
“We handle the customer service aspect and we would contact the distributor in the background because the customer wants a one-stop-shop,” says Rohde. “It wants to have the ease of doing business, one search experience, and one customer service contact that I can elevate my [issue]. The idea is to make the shopping experience as seamless as possible.”
Knowing that NAED members also worry about the possibility of counterfeit parts and equipment finding their way into the supply chain, we asked Rohde how Amazon Business addresses this issue. Shireen McCleary, a PR representative for the company, pointed us to the “Protecting Customer Trust” and “Amazon Project Zero” for details on how the e-tailer addresses these issues.
Some of its anti-counterfeit initiatives include a global team of investigators that works 24/7, responding to and taking action on notices of potential infringement. “We treat these with urgency, and Amazon investigates and takes action on more than 95% of all notices of potential infringement received from Brand Registry within eight hours,” the company blog states.
“As a result of the proactive and preventative systems we’ve put in place, 99.9% of all Amazon page views by our customers landed on pages that did not receive a notice of potential infringement,” it continues. “We continue to work with government agencies and law enforcement to hold criminals accountable, and we’ve worked with brands to litigate directly against bad actors.”
Rohde also talked about some of the obstacles that Amazon Business has run into while building out its presence in the B2B space. Early on, he says figuring out some of the customer-centric processes like invoicing, reseller certificates, and having the “right specifications on the product detail pages,” took time to develop.
“We come from the B2C world, that sometimes has technically-less-complex products,” Rohde explains. “In the B2B world, you have a different level of complexity at times, and you’ve got to reflect that on the product detail pages.” He says Amazon Business has been working to “beef up” its product detail pages, with a focus on specificity, more detailed specs, and product reviews.
The company has also developed a “guided buying” feature, where customers can select certain brands or sellers that it wants to feature and highlight for its procurement teams. Customers choose the criteria (e.g., safety features) and the selected search results are then elevated on the list, with preferred brands highlighted. The same process also works in reverse. “If there’s a subcategory that a customer doesn’t necessarily want to be bought,” Rohde adds, “then the customer can limit the visibility of that subcategory.”
Drilling down deeper, Amazon Business also helps customers direct their spend to certain vendor categories, including those that are minority-owned, woman-owned, or otherwise considered disadvantaged. “Sellers can upload certificates that prove that they have one of those ‘credentials,’” Rohde says. “We verify those credentials, and then customers can filter based on them.”
A Message to Distributors
Speaking directly to electrical distributors that might be trying to make a decision on whether to align with Amazon Business or not, Rohde says the decision is unique to the specific company. “Every company is on its own path and has its own strategy,” he says. “However, if you’re thinking about expanding your business from a geographically-limited point of view to be more national or global in scope, then Amazon Business should be a very interesting choice for you.”
Rohde shares similar advice with the distributor that wants to branch out into other customer segments or that is trying to build out its e-commerce capabilities with limited resources. Noting that e-commerce capabilities are just one part of the online selling equation, he says electrical distributors “still have to drive traffic and usage to that e-commerce environment that you’ve built.”
Rohde also points out that Amazon Business doesn’t charge listing fees, and that distributors can list as many items as they want to with the charging mechanism applying only when an item actually sells. This helps to minimize upfront risk while allowing companies to sell some or all of their wares via the e-tailer’s platform. “There’s little downside to joining Amazon Business,” he concludes.
Tagged with Amazon, Amazon Business, e-commerce