Amazon Continues to Dominate B2B While Shopify Plays Catch-Up

Seven years after its launch in 2015, Amazon Business has grown to be the leading B2B online marketplace for business buyers. 🚀

In its first year, the eComm giant made $1B from selling office supplies. In year three, the annual sales reached $10B, which drew the attention of Bank of America securities analyst Justin Post.

“While Amazon Business is just beginning to establish itself, Bank of America projects there is a total addressable market for e-commerce B2B of $1.4 trillion by 2021, which is nearly double the firm’s estimated $761 billion market for consumer e-commerce. Essentially, the market potential for Amazon Business is about twice the potential for its core retail business,” Post said in a statement to CNBC in 2019.

This massive growth estimate represents a great opportunity for Amazon. Bank of America projects that the company will hit $41.B in 2022 and potentially double that with around $83.1B by 2025. 🤯

If Amazon stays on track, it would singlehandedly account for the rapid growth of online B2B marketplace sales, essentially cementing its claim to be the go-to B2B channel for corporate buyers, resellers, schools, hospitals, governments, and institutional markets (e.g., non-profit organizations).

Amazon’s Plans for B2B eCommerce Success

In a blog post published by the US Chamber, Rob Green, Director and GM for AMZ Business, shares how Amazon plans to dominate the US B2B procurement market:

• Take the fundamentals of the customer experience – pricing, selection, convenience, and bring this to business procurement.
• Provide a wider selection of B2B goods by introducing new product research tools to help selling partners to find high-demand products that businesses look for but are currently not available on Amazon.
• Simplify the buying process by introducing a variety of payment options, B2B pricing optimization, supplier consolidation tools, and exclusive business pricing and discounts on 5 million products.
• Offer Business Prime and free one- or two-day shipping.
• Provide access to advanced analytics and purchasing policy control tools.

Recent Efforts to Attract More Business Buyers

On July 18, Amazon launched a marketing campaign “Buy smarter. Dream bigger.” demonstrating its capabilities to track essential business items for corporate buyers who rely on these goods to keep their businesses (and workforce) up and running, whether it’s paper products, pens, printers, ink cartridges, face masks, disinfecting wipes, or pantry goods.

While essential, procurement of these items has been difficult over the past few months due to the impacts of the pandemic on the supply chain.

With Amazon’s improved B2B arm, however, it would provide a platform where buyers can efficiently manage the complexities of procuring and shipping by tracking spending, purchase orders, and inventory levels all in one place. This essentially makes Amazon Business a one-stop-shop for a company’s needs for office supplies from multiple merchants.

But long-time rival Shopify wants to challenge that with its new B2B eCommerce tools and features.

Shopify Enters B2B to Grab a Piece of the Pie

Shopify announced on June 22 that it will be focusing on B2B commerce, primarily to compete with Amazon and increase revenue after losing $1.5B in the first quarter of 2022.

The Canadian eComm giant will introduce new tools designed to make it easier for wholesalers to sell in bulk and manage procurement in one place. These tools will also allow them to easily integrate with their own enterprise resource planning software.

In a statement told to Financial Times, Shopify President, Harley Finkelstein, sees this move as an opportunity to fight for a bigger market share and to not just “go after Direct-to-Consumer businesses, big and small, but to now go after wholesale business, which is a huge untapped market.”

With this move, Shopify stands toe-to-toe with Amazon Business, which takes the competitive rivalry between the two tech giants to a new level. As previously reported, Amazon launched Buy with Prime to open its fulfillment services to non-Amazon sellers, taking aim at Shopify’s customer base.

In response, Shopify acquired Deliverr to be able to offer 1- to 2-day shipping to merchants. The Canadian company also recently rolled out YouTube Shopping to enable sellers to upload their stores onto YouTube and set up live shopping videos, allowing them to compete with Amazon Live.

🤔 Curious to see how all of this will unfold! Amazon may already be too big to fail at this point, but it would be great if Shopify could shake things up a bit to make the market more competitive for sellers and consumers.