Amazon is giving businesses two-day shipping for items like industrial and medical supplies

Key Points
  • Amazon launched a Prime service for Amazon Business, which competes with industrial supply shops.
  • Shares of W.W. Grainger and Fastenal dropped after the announcement.
  • Amazon Business launched in 2015 and passed 1 million customers in July.
Smith Collection | Gado | Getty Images

Amazon is bulking up its service for business supplies with free two-day shipping on select items.

On Tuesday, the company launched a Prime membership service for Amazon Business, with subscriptions starting at $499 a year for 10 users and going up to $10,099 for more than 100 users.

Amazon Business sells everything from industrial supplies like screws and pumps to lab and medical equipment. Industrial suppliers are feeling the pain, with shares of W.W. Grainger dropping 4.7 percent on Tuesday, and Fastenal falling 3.9 percent.

Amazon said "millions" of items are eligible for the new prime service. In July, two years after its launch, Amazon Business announced that it surpassed 1 million customers. The marketplace hit $1 billion in sales in its first year.

Small merchants turn to Amazon Business to avoid complicated, long-term contracts with big suppliers. In a report last year, RBC Capital estimated that business supplies are a $5 trillion market, "and Amazon's offering is unique and leverages Amazon's core competencies."