Amazon (AMZ) keeps its strategic information well under wraps, but it’s obvious that the company is building an innovative supply chain that begins not with the product but with the customer. AMZ is designing backwards, from customer to factory, and they’re doing it on a global scale. AMZ has thrown out the century-old factory model that depends on a rep-intensive, product push channel. Each link in this new chain instead relies on a digitally and/or robotically scalable platform that is used by increasing numbers of buyers and sellers.
With AMZ’s digital, customer-centric vision in mind, let’s take a deeper look at their recent Prime Day (PD) stats. Amazon Prime Day was July 11, 2017 and here are some interesting B2B tidbits.
Sales up 60% and testing the system
PD serves multiple objectives. One is to stress test delivery from Asia to the U.S. before the Christmas rush. The bottlenecks uncovered during last year’s PD sparked the leasing of cargo planes, trailers and containers to reduce shortages, delays, and surge-shipping prices. My prediction is that AMZ will win an even bigger share of this Christmas’s sales. The question is, what B2B (AMZ private label) goods will start flowing through this seamless channel in the future?
New Prime members
Over 50% of the wealthiest, highest-spending households in the U.S. are now Prime members and over 50% (and climbing) of all product searches start at Amazon. In addition, Millennials, who are aging into B2B purchasing jobs, are taking their 100% digital buying habits to the office. And, AMZ has locked in an increasing number of future B2B buyer eyeballs with intense, ever-increasing, crowd-sourced product information, reviews, product FAQs, photos, and more. If you sell a physical (B2B) product, can you not be on Amazon?
Fulfillment by AMZ can’t be ignored
Competitors tried to counter PD with their own deals. Their weak-by-contrast performance boosted AMZ experience and fulfillment brands. AMZ sold 6000 items a minute across 13 countries with real-time fulfillment tracking and on-time delivery. Won’t more B2C and B2B resellers want to piggyback on Prime’s reach, AMZ’s best website experience, and fulfillment by Amazon (FBA)? What are the performance trends for FBA? Prime Now distribution centers are on the edges of over forty of the biggest North American metro markets. With more throughput, both target delivery times (30 minutes) and costs will drop. The number they are keying on is deliveries per hour to an ever-smaller city zone. UPS averages one stop per mile driven. What if AMZ gets to .25 miles per stop using AMZ Flex (gig) drivers? Won’t an increasing number of urgent B2B orders go to FBA v. legacy distributor capabilities?
Learning the hottest items
Clearly, Echo and Dot with Alexa on board are toys for the home now, but what about B2B “voice commerce” in two years? Surveys reveal that Millennials can’t wait for voice ordering. Look for ever-improving releases of Alexa, Dot, Echo, and the Dash button on many buyers’ phones, desks, and in supply closets in 2019. Automatic reordering of B2B staples will grow!
Deny and minimize the AMZ B2B threat, or learn and act!
B2B distributors won’t disappear completely, but profits and the number of firms will fade. What are your counter plans? For more on these ideas, catch my presentations at both fall Advanced Profit Innovation Conferences. Investigate and register: