74. Millennials Want Their Corporate Amazon, So Does Big Government

AmazonBusiness, Distribution Strategy, Index, WayPoint Analytics

Recent data shows that 23% of consumers are digitally-obsessed buyers, and this number just keeps on growing. Even at work, millennials immediately compare their internal buying system to Amazon’s (AMZ) offerings. What are they finding? Some pretty important features including more choices, more product information, faster ordering, faster fulfillment, and increasingly often, lower prices.

Some corporate procurement departments have taken notice and set up a contract with AMZ-BIZ to complement their existing supply contracts. What are the results?

  • Over 20% of purchases shift to AMZ in the first year
  • Procurement departments prefer AMZ’s total-spend management and agility benefits

With such obvious improvements, will big government agencies known for their inefficient procurement systems follow this pattern?

AMZ-BIZ and Government Milestones    

Last January, U.S. Communities (a buying co-op for more than 55,000 state and local public sector agencies) kicked off a deal with AMZ-BIZ that could run eleven years and total $5.5 billion in purchases.

Now, Alan Thomas, the U.S. General Services Administration (GSA) head, is excited about Section 801 of the 2018 National Defense Authorization Act (NDAA). The bill passed the House on July 14th to head to the Senate. Section 801 would allow the GSA (and all allied entities) to buy from two online marketplaces, Amazon being one.

GSA hopes to experience the same benefits as large corporate clients. However, there are some concerns that still need to be addressed. To meet the concerns, AMZ will have to:

  • Sell GSA goods at a profit after charging their merchandise division the same fees billed to resellers (perhaps audited).  But, AMZ will still get fees from resellers for website and Fulfillment by Amazon (FBA) services. An added plus may be the user data to cross-sell more.
  • Tolerate a second, competitive marketplace to their own! What marketplace(s) will emerge is still a question. And, why wouldn’t distributors (among other strategic moves) seek to partner with both marketplaces?

The Entrenched Order Fights Back

Incumbent suppliers and government procurement folks are fighting Section 801. Their lobby group, the Coalition for Government Procurement, is already pushing back through instilling fear, stalling with infinite analyses, and reducing potential benefits with infinite controls. Because AMZ’s total capabilities are instantly transparent and beneficial to all parties, how can politicians vote to perpetuate the past without both angering both end users and voters? Stay tuned to this struggle.

Distributors’ Next Steps?   

As a distributor, these are topics you want to pay attention to. You can read the story of Section 801 here. AMZ-BIZ is poised to be a big player in big government procurement, and I’ll be talking about all things AMZ-BIZ at the upcoming Advanced Profit Innovation Conferences. Here are the dates:

See you there!