Amazon to tap into UK business-to-business market with new service, stretching beyond its traditional consumer base
Amazon seeks to enter into the multibillion-pound U.K. business-to-business (B2B) market by launching a new service, which sells office supplies, industrial tools and laboratory supplies to companies, expanding well beyond its consumer retail market to attract businesses.
In an announcement on Tuesday, Bill Burkland, head of Amazon Business U.K., said the service will be available for small, medium, and large firms, offering business features which range "from reporting and analytics to spending limits and purchasing workflow approvals".
"Whether you are a sole trader, a buyer in a mid-size company or a chief procurement officer in a large multi-national organization, Amazon Business has the products and capabilities to serve your needs," he said.
The U.K. online market for B2B sales was valued at £96.5 billion ($120 billion) for 2015 by the Officer for National Statistics.
Amazon Business will offer more than 100 million products, including free delivery on orders above £30, pricing free of Value Added Tax (an indirect tax on goods and services), and in-depth analytics to allow purchasing managers to track how much they spend on their account.
Businesses will also be able to buy specialized equipment, covering commercial-grade power tools and thermal imaging cameras – many of which will only be available to verified customers.
Following its latest move, Amazon is expected to pose a serious challenge to B2B e-commerce vendors.
"B2B organizations in the U.K. are going to have to start competing on customer journeys rather than just good customer service or good value prices if they are to withstand the competition that Amazon will bring," Felicity Hardley, professor at the University of Westminster, told CNBC in an email.
She added: "You can't compete on price alone when Amazon can offer the economies of scale that others can't. Essentially you have to act like another division of the customer – how can you help build their business and meet its targets for efficiency rather than trying to squeeze as much profit out of them as possible."
The service was launched in the U.S. two years ago, serving 400,000 businesses and generating more than $1 billion in sales in its first year, according to the company. Another version launched in Germany in December, serving an additional 50,000 business customers.