By Scott Costa, Publisher, tED magazine
Amazon CEO Jeff Bezos is a very smart businessman. If you want to know his future plans, odds are you will get small pieces of information, but most of the strategy is kept private. And, when you think about it, most businesses, including your own, is probably run the same way. That makes it hard to be critical of Bezos.
But, when we learned that the National Association of Wholesaler Distributors invited Amazon Business director and General Manager Rob Green to speak at last week’s Executive Summit, we had to be there. I guess I was thinking that since Amazon Business has such a tremendous e-commerce advantage, Green would at least offer up some strategy to level the playing field.
He didn’t. In fact, he didn’t say much at all about strategy in his presentation called “Amazon Business is here. What does that mean for distribution?”
It started during Green’s introduction, with a question to the audience of executives from NAW Chairman-elect Joe Nettemeyer of the Valin Corporation. Nettemeyer asked if Amazon Business is a friend or a foe? When the room full of executives was asked to raise a hand if they thought Amazon Business was a friend, I didn’t see any hands up. Nettemeyer didn’t bother asking if they thought Amazon Business was a foe.
But Rob Green is a smart businessman. And early in his speech, he asked his own question: “How many people here use Amazon?” Nearly every hand went up. Sure, these executives think Amazon Business is a foe, but they also use that foe’s giant parent company in their personal lives. Keep in mind, there weren’t a lot of millennials in the room. These were baby boomers and Gen Xers. Green pointed out that’s one of the many reasons Amazon Business is so successful.
First, he offered up the Amazon Business slogan. “Everything you love about Amazon. For your business.” And it makes sense. Because Amazon’s research shows you love the price, marketplace and convenience when you are at home. “You already have a reference point,” Green told the executives. “You love Amazon in your personal life. So you transfer it over. We saw a lot of buyers taking their buying habits to work with them, which we learned through analytics. Consumers were leveraging their Amazon account for work.”
Green told the executives that Amazon Business is simply mirroring the Amazon model. When there were early failures for AmazonSupply (which turned into Amazon Business in May of 2015), Bezos told his team that invention and failure are inseparable twins. “We tried to innovate and it didn’t work out,” Green said. “But we did learn from it and then we looked at what worked on the B2C side and mirrored it.”
So far, that’s working. Amazon Business has 400,000 registered buyers. Those are companies that are buying, and Amazon believes many companies have multiple people using the account for business purchases. Sales in the first year of Amazon Business topped $1 billion. As of last week, there were 5 billion products, with all of the necessary data, listed on Amazon Business. The products and data come from about 45,000 sellers. Sales are increasing by about 20 percent every month. And, if you are behind on your e-commerce strategy, Green has one sentence for you. “Customers are going to drive us to change the supply chain to be more digital,” he told the crowd.
It was at that point that Green also encouraged suppliers and distributors to leverage their e-commerce offering by joining Amazon Business. There are standards in place and agreements to be made. Green admits that Amazon keeps a very observant eye on its suppliers and distributors, and makes sure the correct items are delivered within the amount of time specified. But he added that Amazon Business encourages suppliers to come in and compete in the same marketplace because that makes for a better customer experience.
Finally, Green put a slide in his presentation that grabbed most of the attention. It was a quote from Jeff Bezos that read, “Amazon Web Services, Amazon Marketplace, and Amazon Prime are all examples of bold bets at Amazon that worked, and we are fortunate to have those three pillars. They have helped us grow into a large company, and there are certain things that only large companies can do. And while I’ll focus on those three, I assure you that we also remain hard at work on finding a fourth.” Green wants to make Amazon Business that fourth pillar, although right now there is a lot of buzz about Amazon Echo/Alexa. But with Bezos, there is no reason to believe there won’t be a fifth pillar, too.
The distributor executives I spoke with after the event said it felt as though Amazon Business was succeeding, but it was successful without a clear supply chain strategy, other than solid e-commerce offerings that are strongly centered on customer experience. If you were looking for the moment when Rob Green told everyone “this is when and how we are going to steal your suppliers and your customers,” I can tell you that it didn’t happen. This was more about how to work together in an e-commerce platform to make your customers’ buying experiences everything they should be.
Friend or foe? That’s for you to decide.
Tagged with Amazon, Amazon Business, tED