Amazon Business: The Now $1B Supply Chain Disruptor
Courtesy of Amazon
It’s a common refrain sung by investors and operators: Restaurants can’t be disrupted by the internet.
One doesn’t need to look far to see the fallacy there; all the online delivery options from UberEats to GrubHub and Amazon Restaurants are changing the landscape for restaurant operators, shifting and replacing dine-in meals and eating margins. But that’s another story.
For suppliers, they’re already seeing significant disruption in the form of Alibaba and Amazon Business. But there is also some opportunity for restaurateurs and savvy suppliers.
Since its rebranding from AmazonSupply, the shipping giant has generated more than $1 billion in sales through some 400,000 buyers getting everything from office supplies to restaurant equipment—and even equipment installation from more than 30,000 businesses. Those numbers come from Amazon’s most recent earnings report from the end of July.
Lead by Prentis Wilson, a former buyer for Cisco who started with AmazonSupply in 2012 before rebranding the wholesale arm last year, said the segment aims to bring the “Amazon experience” to business.
“Business buyers are increasingly shopping for business supplies online instead of using traditional paper catalogs, and they have told us that they want the 'Amazon experience' for business shopping,” said Lori Richter, an Amazon spokesperson. “We also provide manufacturers and sellers with a trusted e-commerce service so they can better serve their customers who are increasingly moving their research and purchases to online.”
That’s a noted change from handshake deals and analog supply catalogs. And having all the prices, reviews and other Amazon perks that everyone is used to as a consumer makes the service a sticky competitor.
Generally, Amazon Business is a place to get pens and paper, but as it grows 75 percent year-over-year (compared to the paltry 20 percent seen at the standard Amazon) more businesses are relying on Amazon for more specific business needs.
Currently, restaurateurs can find restaurant equipment technicians, installation and POS suppliers and technicians, and HVAC specialists via the site. Essentially, it’s acting as another lead generation service for area professionals already in the industry, but it’s already sending prices lower as Amazon can rank by cost estimate. As for the personal service that was once lacking online, Amazon has an answer.
“We want to deliver a true Amazon solution to business customers rather than a ‘me too’ offering,” said Richter. “For example, we’ve been rolling out ‘Live Expert,' which allows customers to ask technical or complicated product questions and receive answers in real-time from the manufacturer’s product experts.”
That’s a great way for equipment companies to show their expertise and get business via the platform. Other suppliers selling paper goods, dinnerware and all the other odds and ends necessary in a restaurant have some opportunities, too, even if Amazon Business might sound like a competitor.
The old adage, “If you can’t beat them, join them,” rings loudly in this respect. Suppliers might find the fulfillment capabilities of Amazon appealing, where businesses send the product and let the robots and full-time fulfillers do the shipping for them. It could be a welcome alternative to a complete warehouse staff for select suppliers.
Longtime restaurateurs may still get the better deal through their network or a handshake, but suppliers are going to have to think long and hard about getting into the Amazon ecosystem to get the next generation of operators who are happier online than off.