Amazon's Business Marketplace Hits $1 Billion Milestoneby
Keeping offices, factories stocked with supplies is big market
Business sales are growing 20 percent each month, Amazon says
Amazon.com Inc. sold $1 billion in goods on its new business-to-business marketplace begun last year, and customer purchases are growing about 20 percent each month, suggesting the company that changed the way people shop for household goods is starting to change the way offices stock up on paperclips.
The Seattle company’s Amazon Business offers tractor parts, latex gloves, file folders and millions of other products needed in factories, hospitals, schools and offices. Businesses are shifting their supply shopping online from less-efficient methods such as browsing print catalogs, faxing orders and telephoning sales representatives, said Andy Hoar, an analyst at Forrester Research Inc.
“Amazon has created a more efficient way for business buyers to get the lowest prices on what they need and find willing and able distributors,” Hoar said.
It highlights the latest way Amazon converts existing investments into new lines of business, similar to how its cloud-computing division Amazon Web Services was born out of Amazon’s own data centers. Amazon Business inventory largely overlaps with what is sold to consumers, and orders are packed and shipped from its network of warehouses built to serve the consumer market.
Amazon’s foray into the business-to-business market challenges Staples Inc. and Costco Wholesale Corp., as well as smaller specialty distributors. Online business-to-business spending is expected to reach $855 billion this year, or 9.9 percent of the $8.6 trillion market, Forrester estimates. By 2020, 12.1 percent of the $9.39 trillion business-to-business market will be online, according to the research company.
More than 300,000 businesses have registered accounts in the first year of the Amazon program and thousands more are added each week, said Prentis Wilson, a vice president who oversees Amazon Business. Business accounts get bulk discounts on more than 5 million items.
The marketplace appeals to businesses that want a streamlined place for supplies rather than dealing with orders and bills from multiple vendors, Wilson said.
“We manage the complexity for them,” he said.