Editorial
Here we are, over 20 years after the emergence of e-commerce, and while it has captured imaginations and created some over the top retail success stories — the $90 billion revenue behemoth Amazon comes to mind — business to business (B2B) e-commerce remains an enigma.
Who Will Take the Crown?
It's not for lack of revenue. B2B e-commerce revenue reached $692 billion in 2014, which was 125 percent higher than retail's $305 billion for the same period. But in spite of B2B's success in the revenue department, no clear leader (or leaders) have emerged — it's challenging to identify one dominant US company. Alibaba frequently gets mentioned, but probably isn't the best comparison — its business model is different from Amazon’s as it only takes a percentage of the transaction, e-commerce isn’t its only business and it derives the majority of its revenue overseas. And while a Google search for “top US B2B eCommerce companies” will result in many articles detailing the size of the market, good luck finding mention of specific companies.
In the US, Grainger comes up frequently as a leading candidate, and at number 13 on Internet retailer’s Top 500, justifiably so. But its 2014 e-commerce revenues were $3.6 billion, which is approximately 25 times less than Amazon’s. And while Staples isn’t a pure B2B play, its 2014 online revenue came in at $11 billion, which placed them third on Internet Retailer’s Top 500 list. But again, this is well behind Amazon.
As of now it seems like the jockeying for the B2B e-commerce throne is still very much in play, but could it be the company that wins the day is ... gulp ... Amazon itself? Below are several reasons why this is a strong possibility.
A Familiar Face
Amazon entered the B2B fray with the launch of AmazonSupply in April, 2012 with 500,000 stock keeping units (skus). Roughly three years later in April of 2015, Amazon had grown the skus offered to 2.25 million and pivoted by renaming AmazonSupply, Amazon Business. Whereas AmazonSupply was focused on businesses, it didn’t limit anyone from buying who wanted to buy. A company now must register for Amazon Business and go through some initial vetting to gain access to the over 100 million skus. Even if that last figure might be a bit of an exaggeration, anything over 10 million skus is formidable, and we’re potentially talking 10 times that.
Learning Opportunities
Webinar
Apr
30
Supercharge Contact Center Efficiency with Generative AI
Learn practical strategies to reduce post-call documentation time by over 8 minutes.
Register
Conference
May
1
Qualtrics X4 Salt Lake City 2024
Register
Webinar
May
2
Unleash AI for Crisis Management: Transform Threats into Triumphs
Learn how Sprinklr Insights provides real-time insights on current events, trends, and brand crises to empower your team.
Register
Webinar
May
9
Driving Customer-Centricity in the Financial Services Industry
Discover how financial organizations are leveraging generative AI technologies.
Register
Conference
May
9
An Irish Roundtable in the Valley: The Economic Impact of AI on the World of Work Stanford 2024
Exploring the Impact of AI On the World of Work with Irish diaspora leaders and tech business champions from the North of Ireland
Register
Conference
May
13
Gartner Marketing Symposium/Xpo Conference London 2024
Register
This is where the real genius of Amazon lies. It understands better than any other company that the incremental cost of publishing an sku online is minimal, so its catalog is both wide and deep. No other company understands the product catalog as well as Amazon, and now it is turning its sights on the B2B world. Amazon presents an almost overwhelming amount of information on every product page to assist customers with their buying decisions. And e-commerce is a business where presenting information that every prospective customer needs in an easily accessible way is an art form. It's an art form that Amazon has perfected over the last 20 years. With a head start like this, no one should be able to stop it.
On top of all that content is the simple and easy to use interface that Amazon has used to woo consumers. As someone who has been in e-commerce as long as Amazon, the discussion amongst B2B companies is that their world is much more difficult and therefore requires greater skill than B2C. No dice — Amazon has blown that debate out of the water. By masking complexity and simplifying the user experience, Amazon demonstrates that while B2B may be more challenging, customers expect it to be as simple as, well, using Amazon. And very few B2B companies are capable of competing against Amazon there.
One relatively hidden secret Amazon has is a company it purchased in 1999. Only those in the know are aware of Alexa. The average consumer wouldn't likely recignize the name, but it’s one of Amazon’s many diamonds. Alexa's core business is as a web traffic analytics and reporting company, where it measures the popularity of over 30 million sites across the Internet. As a result, Amazon has access to the traffic patterns of much of the Internet and is likely the only one analyzing all of this individually and in aggregate to defend its moat.
And the cherry on top is Amazon’s existing critical mass in e-commerce. At the end of 2014, Amazon had 270 million customers. While only one third of Apple’s 800 million iTunes customers, that’s still likely the second highest total of online customers of any company. And the more Amazon expands into B2B, the greater the likelihood that those who use it as consumers will start to also leverage it for business.
While the B2B crown is still in play, from someone who has been observing this space for almost 20 years, it's looking like a familiar face is well positioned to assert itself here. Time will tell, but the warning shots have been fired. Is anyone listening?
Learn how you can join our contributor community.
