Amazon Details Big Growth In its Year-Old Business Marketplace
A year ago, Amazon debuted a new version of its fast growing online marketplace for businesses to buy all their essentials like toilet paper, plastic cups, and electronics. In addition to discounted prices, the e-commerce giant provided free two-day shipping to corporate customers for any order over $49—a perk that Amazon Prime members must otherwise pay $99 annually to get.
Now that a year has passed, Amazon has revealed some rare details about fast growth in its business marketplace. The rise signals catering to businesses could be a big opportunity for the online retailer that pits it against giants like Staples and Office Depot in selling to corporate customers.
Gross sales through Amazon Business have exceeded $1 billion over the past year, according to Amazon. Those sales have grown 20% monthly since the marketplace’s launch, the company added.
Amazon, however, declined to disclose how much revenue it took in from its direct sales and those it handled on behalf of third-party retailers.
Amazon said that 300,000 customers use its business marketplace to buy goods, and that it is adding thousands more each week. They range from small business owners to Fortune 500 companies including the University of Illinois, Dial-soap owner Henkel, and DonorsChoose.org.
Prentis Wilson, the vice president for Amazon Business, said one thing that makes the business marketplace attractive to customers is the ability to take advantage of merchants offering special prices and discounts for buying in bulk. It’s something that is not as practical for merchants to offer to consumers, who typically buy in small quantities.
Janitorial supplies, healthcare products, large industrial equipment, and education and food service supplies are just some of the product categories available in Amazon’s business marketplace. The company is also looking to add more including medical products to cater to the life sciences industry.
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It’s no surprise Amazon is going after the intersection of businesses and e-commerce. Business to business sales of things like electronics and office supplies are an $8.2 trillion market in the U.S., and a natural extension to Amazon’s mostly consumer-focused marketplace.
But the $1 billion in annual business sales still is a fraction of Amazon’s $63 billion in North American marketplace sales last year.
Whatever the case, the competition for businesses’ dollars is fierce. Established retailers like Office Depot and Staples are both huge rivals for selling to corporate customers online.
Nevertheless, some market researchers are upbeat about Amazon’s prospects. Forrester Research predicts that Amazon is likely to account for about 12% of U.S. business-to-business sales by 2020.