Is Amazon a Friend or Foe to the UK Wholesale Distribution Sector?

Few businesses have been as ruthlessly successful as Amazon, which has developed from a small online bookstore to become one of the largest, most diverse online businesses in the world. The springboard for this success came in 1997, in what can probably be described as Amazon’s ‘pivotal’ year.

Profits jumped by a staggering 841% to $147.8 million as the customer base swelled from 180,000 to 1.5 million. The company’s 1997 annual report, stated that Amazon was committed to “obsessing over customers”, with founder Jeff Bezos commenting at the time: “why wouldn’t a customer want a better price, more choice and better delivery options.”

In its letter to shareholders the company said that it was “planning to add Music to our product offering” and that “other products MAY BE a prudent investment” as “online commerce in general SHOULD prove to be a very large market”. This foresight was understated, as 19 years later, Amazon is the ‘everything store’ with 485 million products, 300 million customers and a turnover of $100 billion.

Amazon has grown into a retail behemoth by continually adding products and services to its offering, often after having observed different market sectors to see how they worked and establish how they could be done better. It now offers a marketplace, a wide variety of delivery options, a cloud service for businesses, its own technology products and a TV subscription service. And, with the ongoing roll-out of Amazon Business, it has the wholesale and distribution market firmly in its cross-hairs.

 

Amazon Business: Where Things Stand

Amazon Business, launched in the US 2015, offering 20 million items, with Amazon itself selling nearly two million products directly, cementing its status as a genuine wholesaler rather than simply a B2B marketplace for manufacturers. In the 12 months since it launched it has already recorded $1 billion in sales.  

Amazon Business, much like its consumer arm in its formative years, is focusing much of its innovation on streamlining buying processes for customers, and adapting its consumer business model to work seamlessly for organisations that may incorporate dozens or even hundreds of different buyers.

But as it prepares to enter the UK market, with an offering currently in BETA, should the behemoth be seen as a competitor, partner or both? Maginus’ Marketing Director, Mark Thornton, looks at this in our latest video:

 

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