In a move that was widely expected by the business supplies industry, Amazon Business finally arrived in the UK to much fanfare at the beginning of April.
A well-orchestrated media campaign ensured that the mainstream and financial UK press gave the launch plenty of coverage, with the Daily Mail rather dramatically running the headline, “Amazon’s bid to conquer the UK office supplies market”.
Of course, the arrival of Amazon Business does not mark the beginning of an office products strategy from Amazon. “There’s been an office category and focus from Amazon for many years, so this isn’t fundamentally new as an offering,” pointed out EVO Group CEO Steve Haworth.
Plus, office supplies per se is just one of many B2B categories that Amazon Business will sell in an offering it claims exceeds a hundred million products, and also includes areas such as industrial safety, jan/san products, and laboratory supplies.
Amazon Business first launched in the US in April 2015. It generated more than $1 billion in sales in its first year (although Amazon has not provided an update to that figure for some time now) and now serves more than 400,000 businesses. More recently – in December 2016 – the platform started up in Germany. Amazon says that more than 50,000 business customers in the country are using the service, while over 10,000 business sellers have “accessed the Amazon Business Seller feature set to sell their products to business customers”.
They are impressive numbers although we don’t know how much the customers are buying or the sellers selling, but there is no reason to think that Amazon Business won’t have a similar kind of start in the UK.
Alex Dunn, Managing Director of UK dealer group Superstat, believes that Amazon Business could have “a significant impact – especially at the smaller end of the [reseller] market”, but that dealers can lock in customers by offering value-added services not offered by the global e-tail giant.
Julie Hawley, Managing Director of the Office Friendly dealer group, has a similar message. “Dealers need to focus on a ‘solution sell’ basis to their customers,” she told OPI. “Add-on services to support the products they sell and setting themselves up as experts is the way forward.”
Superstat and Office Friendly are both promoting a number of services they offer which will help members counter Amazon Business and enable them to play to their strengths. Indeed, the arrival of Amazon Business may well provide a boost to dealer groups in the UK as a whole, as resellers reassess this new market threat and their strategic options.
Haworth remains bullish on the sustainability of the independent channel. “As a route to market, the traditional business supplies channel should be confident in the value it adds both for end users and manufacturers, and not overreact [to Amazon Business],” he stated.
“The ‘death’ of this channel has long been predicted and, whilst the market is intensely competitive, the challenges of price transparency and new disruptive entrants are not new. I remember similar reactions to those I’m hearing now when Office Depot and Staples aggressively entered the market in the mid-1990s!”
Philip Lawson, CEO of the BOSS trade association, also believes Amazon Business might be a catalyst for a positive evolution of the independent channel. “Amazon will help ensure that the smartest dealers in our industry, of which there are many examples, will survive and prosper,” he noted. “Business buyers [will] continue to realise that the service they get from their expert account manager and customer service team saves them real time and money, whether they order online or not.”
The association has already scheduled a meeting with Amazon Business to discuss the supply to Amazon by manufacturers and other vendors (including wholesalers), and Lawson is looking forward to engaging with Amazon. “It is right that we have as open a dialogue with Amazon as possible, as that should serve the industry as a whole better than just ignoring its presence,” he told OPI.