A recent article in the Wall Street Journal captured the dilemma faced by every retailer these days: Do I list my products on Amazon (thereby giving up some brand control and margin) or do I just stick with my own website/keyword program and compete with them?
It is a tough question. After all, Amazon accounts for more e-commerce than the next twelve largest e-retailers combined, including Staples.com and Walmart.com, according to Internet Retailer. And it is not easy to compete with a company that grows more than 20% a year for 12 years in a row and has investors which do not require a profit, as the post below from Benedict Evans indicates.
Amazon is now offering a program to large retailers that it previously offered only to smaller ones. Participating retailers list their items on Amazon and the item links take consumers to the retailers’ site for payment and fulfillment. In this program, Amazon gains:
- more complete listings for its site,
- earns a commission from these retailers, and
- receives data on the customers who bought from them.
In return, the retailers get valuable eyeballs and additional sales. Amazon and the participating retailers can also agree to add the displayed items to Amazon Prime for even more traffic. Some day, a retailer could also use Amazon’s payment and fulfillment mechanisms as well for an additional fee, of course. As the article points out, it’s a deal with the “devil”.
I normally do not write about B2C businesses, but I’m writing about this because it will become an issue in B2B as well. When Amazon fully turns its attention to B2B, through Amazon Supply, many B2B manufacturers, wholesalers, and distributors are going to face the exact same dilemma.
Some observers will argue that the Amazon brand is not strong among B2B buyers, but don’t forget that B2B buyers are consumers who go home and purchase from Amazon in droves. It may be possible to leverage this recognition to extend the brand to
B2B! Amazon also has the potential to help manufacturers bypass distributors/wholesalers and provide similar brand support and fulfillment. Staples is already preparing for this “warfare” by closing stores, re-branding to be more than office supplies, and investing in carrying more items.
If Amazon sets its sights on B2B–among all the other priorities they are working on–there will be some fascinating battles to come. Look for even more coopetition than in the B2C world!
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