Amazon is building another multibillion dollar business that you probably haven't heard of (AMZN)
On its 20 year journey to becoming the world's largest online retailer, Amazon has focused almost purely on consumers.
But in 2015, Jeff Bezos's Seattle-headquartered tech giant decided that it needed to do a better job of tapping into the online business-to-business (B2B) market, which is worth £96 billion in the UK alone, according to the Office for National Statistics.
It launched a new free-to-use business supplies marketplace called Amazon Business in the US and went on to launch the platform in Germany in December 2016, and the UK this April.
Amazon Business is off to a promising start, according to Bill Burkland, head of Amazon Business in the UK.
"The US acquired over 400,000 businesses and a billion dollars in revenue for Amazon Business in its first year of business," he said during an interview at the company's London office, adding that there were 45,000 sellers on Amazon Business in the US by the end of the first year.
"You can think about Amazon Business being for business customers what Amazon.co.uk is for consumers," Burkland continued. "It's a marketplace where business customers can come and be confident that no matter that they're looking for to operate their business, there's a high probability they'll be able to find it on Amazon."
Amazon wants companies to go to Amazon Business to buy everything from new computers and A4 paper to toilet cleaner and power tools. There are currently over 100 million products listed on the marketplace, which can also be accessed by people outside the US, the UK, and Germany.
"A customer in any EU country can go onto .co.uk, Amazon Business, and buy. Export is a big part of our business that is attractive for the seller community as well," said Burkland.
How Amazon Business is different from Amazon.co.uk
Amazon Business differs from Amazon's consumer website in a number of areas. It offers VAT-free pricing and includes features that are specifically targeted at businesses such as a reporting and analytics suite that helps companies to track and limit spending. The entire Amazon.co.uk product catalogue is available, but there are some extra products too.
Burkland said one county council in the UK recently signed up to Amazon Business to buy books, as you might expect, but it ended up buying everything from wheelbarrows to glitter.
Unlike Amazon.co.uk, Amazon Business offers one day free shipping to customers when they spend over £30. Amazon Prime members who set up a business account can also take advantage of free shipping on Amazon Business.
The Amazon Business platform — yet to get any dedicated integration with Alexa, Amazon's personal assistant — has proved popular with small and medium sized businesses from the get go but Amazon is keen to get larger enterprises with thousands of staff making big, bulk buys on the too as they're the real revenue drivers.
On the size of the overall business market, Burkland said: "It's a big market segment. So we have a long way to go. It's one where we think business customers will find value. And it's one that we're investing in heavily." Burkland and his spokesperson said they were unable to provide any numbers that would illustrate how much Amazon is investing in Amazon Business.
Interestingly, Burkland said it doesn't matter to Amazon whether businesses do their shopping through Amazon.co.uk or Amazon Business."We're agnostic. We want to build a marketplace based upon customer feedback reflects what customers want. If they choose to use that, great. If they choose to use Amazon consumer, that's fine."
Amazon Business could become the next AWS
Amazon has several large businesses beyond its well-known ecommerce platform. It has a video streaming platform, a music streaming platform, a grocery delivery service, and an audiobook service.
Burkland compared Amazon Business to Amazon's enormous cloud company, Amazon Web Services, which hit over $12 billion (£9 billion) in revenue in 2016. "I think that in many ways Amazon Business is kind of following in those footsteps," he said.
Burkland was unable to provide any figures for how Amazon Business is doing in the UK because it's "still early days." He said he expects to release some official numbers later this year and revealed that the company is planning to sponsor some events to help promote the brand. Amazon Business is also being marketed through email display ads but there's no "Tube advertising or TV/radio yet."
All of the engineering efforts for Amazon Business take place outside the UK but Amazon has hired dedicated sales, marketing, procurement and alliance teams for Amazon Business locally.
"Amazon Business is part of the 5,000 job commitment that Amazon has made to new jobs or new hires in the UK this year," said Burkland.
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