By Scott Costa, Publisher, tED magazine/tedmag.com
E-Commerce has been on a lot of people’s minds these days. It’s really been forced into our strategic planning for the next decade because of one word.
Amazon.
I follow Amazon pretty closely, because I like to keep track of what the competition is doing and pass that information along to you. We also have a few writers for both tedmag.com and tED magazine who are working on Amazon related stories.
Earlier this month, Amazon announced it’s first quarter earnings, and for the first time in recent memory, we have to accept the fact that the online giant did well. OK, it did really, really well. Earnings in 1Q for Amazon reached $29.1 billion, which was more than a billion dollars more than expected. As a result, the stock price jumped more than 12% from below $600 a share to $720 a share. Keep in mind, investors kept pumping money into Amazon while it lost money. Imagine what they are thinking as Amazon starts to turn a profitable corner.
But that’s not all. Amazon said in 2Q, it expects net sales to reach $30.5 billion, and net income to potentially come close to one trillion dollars. That trillion dollar number is interesting because I also follow a man named Chamath Palihaitya. You might not have heard of him, but he is the CEO of a venture capitalist group called Social Capital LP. Other venture capitalists follow him. When the cable financial news shows need an expert, they call Palihaitya. You get the picture, he’s fairly well-respected in the financial industry.
In early May, Palihaitya was speaking at the Ira Sohn Conference, which annually brings together the best investors in the world to talk about the future. Palihaitya wasn’t an attendee. He was a featured speaker. And he told the audience that by 2026, Amazon will be worth 10 times what it is worth today. That would make it a $3 trillion company.
That news may not have a tremendous direct impact on Jeff Bezos’ B2B online offering, Amazon Business. Most of that value will come from Amazon Web Service and Amazon Prime. But, it should lead to further expansion of Amazon Business, which is already starting to grow in popularity.
In January of 2016, Amazon Business had 200,000 customers. Since then, it has grown its customer base by 20% every month, and in the 1Q earnings report, Amazon announced that it now has more than 300,000 customers. Not all of them are in electrical distribution. But, there is also no indication that customer growth will slow in the near future.
Also in that earnings report, Amazon announced that Amazon Business did more than $1 billion in B2B online sales in one year. And it is now offering incentives to customers along with a line of credit for small to medium sized buyers. It is starting to not just build that customer base, but working to maintain it, too.
There is also that long-standing position that no matter what Amazon Business does, it will never have the product or customer knowledge that traditional distribution maintains. That is the huge advantage that our members are using over Amazon Business. So I took a quick visit to the website to see Amazon Business’ response, and I discovered that Amazon Business is hiring. A total of 11,118 open positions. Everything from Principal Product Managers to Positive Customer Conclusions Representatives. And the second line in nearly every job description? “Interested in leveraging technology to disrupt the B2B landscape?” They know we are here, and Amazon Business has a strategy to compete.
Based on all of that, you need to make some B2B e-commerce decisions soon. Because Amazon Business is already making theirs. But that’s where one word that will shape the future of e-commerce comes into play. It’s not Amazon. It’s you. You need to make sure you are meeting the needs of everyone who does business with you. Not today’s needs. Five, ten, and fifteen years from now needs. What do your customers want from you that will prevent them from even thinking about looking at Amazon Business as an alternative? How can you be obsessed with eliminating your customers’ pain points like never before? What is the value you add to not just most sales, but every sale you make?
You still have the opportunity to decide your future. Jeff Bezos and Amazon Business are trying to make those decisions for you. Don’t let that happen, because he is not looking out for your best interest.
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