Here’s your warning: I am about to write a lot of “stuff” about Amazon. But at the end of the day, it’s really not about Amazon.
I don’t know if you have seen the news, so I will give you a few brief recaps, and we can go from there.
First, Amazon Business is doing pretty well these days. In May of 2016, Amazon reported it hit $1 billion in sales for it’s B2B e-commerce offering. Keep in mind, that was not all electrical sales. In fact, even though I do not have the evidence, I would be willing to bet electrical sales did not contribute a lot to that $1 billion sales figure from two years ago. But, on September 11 of this year, Amazon reported its B2B website had reached $10 billion in sales for the year.
I’ll spell that out for you. Ten. Billion. Dollars.
Again, no one is saying a huge percentage of that $10 billion came from the same items you are selling. And no one is saying your customers are racing to Amazon and leaving you behind. But that is an increase in annual sales of $9 billion over a two-year time span. Imagine if your sales team was able to increase sales by 900% over a two year period. That is a lot of revenue that Amazon can sink back into Amazon Business (if it wants to) and continue to grow its B2B offering.
Second, on September 4 of this year, Amazon hit the milestone of having a $1 trillion value, as it’s stock price reached $2,050 a share (it has been trading at below $2,000 a share recently). Only Apple’s value is currently higher than Amazon. But let’s just say Amazon decides to spend one-tenth of one percent of that trillion dollars on electrical distribution. It’s a tiny piece of Amazon’s total value. But it’s also $10 billion (there’s that number again). And if you think that’s impossible, remember that Amazon bought Whole Foods in 2017 for $13.4 billion. Spending 13/100ths of its total value is not impossible, even if it is not probable.
And speaking of Whole Foods and groceries, that leads me to third, which is Amazon is expanding its Amazon Go grocery stores to Chicago, with a goal of opening 3,000 stores by 2021. If you have not heard, Amazon Go allows Amazon members to scan into the store, walk through and pick out the items they want to buy, and walk out. No cashiers. No waiting in line. The customer is billed directly to their Amazon Prime account. Analysts believe the technology used in Amazon Go stores will one day move into its Whole Foods stores, creating a new way to grocery shop.
And now there is this. Fourth, Amazon is teaming up with Snap to create a new way for people to shop. All you have to do is open your Snapchat app, point the camera at an item, and it will automatically take you to that item on Amazon.com. From there, a tap to buy it, and it is on its way to your house. For those of you who do not have teenagers, Snapchat and Instagram are the social media locations of choice for high school aged people to constantly communicate. Again, for those of you who do not have teenagers, trust me when I say “constantly.”
The point of all of this is, it’s not about Amazon. We are not competing with Amazon. They are not currently taking a significant piece of the market from us right now. This is more about “.com” and a world of friction-free shopping and buying. The rules that apply to B2C e-commerce now not only apply to B2B e-commerce, but they also apply to buying everything, whether it is personal or for business. Amazon just happens to be better at reducing the friction than just about anyone else right now.
Can your customers walk into one of your branches, grab some items, walk out, and be billed later? Amazon can do that.
Can your customers point their phone at an item, press it once, and that item will arrive on a job site within hours? Amazon can do that.
The truth is, your customers right now probably don’t want to do that. But we all know there is an aging workforce out there, and a large portion of that workforce is headed into retirement. Who will replace them? Those Snapchatting teenagers who know about friction-less buying, and won’t want to settle for anything less.
This isn’t about “let’s compete with Amazon right now.” And this isn’t about “they are going to take our customers away from us in the next 18 months.” But this is about Amazon taking the hassle out of buying.
And if they invest a little more of that trillion dollars, they are going to keep making it easier on your customers. So think about how you should strategize and own the customer experience before someone else does it first.Tagged with Amazon, Amazon Business