Amazon Business landing in Asia, this corporate procurement business is becoming a trillion-dollar market capitalization catalyst

Time: 2020-12-16

Yesterday, Amazon Business officially landed on Amazon's Japan site. This is the first time that Amazon Business has expanded its corporate procurement business to mainstream Asian markets following its release on sites in the United States, Britain, and Germany.

Who is the most willing to spend money on scientific research? It seems to be Bezos.

In the recent statistical ranking of the R&D investment of various technology giants by the technology website Recode in the previous fiscal year, Amazon ranked first with 16.1 billion U.S. dollars, ahead of the second place Alphabet (the parent company of Google) with 13.9 billion U.S. dollars. Intel, Microsoft, and Apple followed. Amazon, which has been unprofitable for a long time, can have a current market value of nearly 500 billion US dollars, largely because Wall Street is optimistic about its ability to lead future technology and business models.

In the process of Amazon's march toward trillion-dollar market value, cool new technologies (vertical) and the expansion of emerging markets (horizontal) are the main driving factors. However, there is another new business that is growing rapidly behind it, which is Amazon Business. Although it is a corporate procurement business, it is naturally lacking in the eyeball effect of the retail end user market, but since its launch in 2015, this corporate procurement site has quickly gained more than 1 million corporate and institutional buyers, and 85,000 sellers from all over the world provide it for it. goods.

Yesterday, Amazon Business officially landed on Amazon's Japan site. This is the first time that Amazon Business has expanded its corporate procurement business to mainstream Asian markets after it was released on sites in the United States, Britain, and Germany.

According to eMarketer's forecast, in 2020, the scale of North American B2C e-commerce will reach 532 billion U.S. dollars, and B2B e-commerce will double it, reaching 1.13 trillion U.S. dollars. The case from the University of Washington explains the driving force behind this.

The University of Washington and Amazon are headquartered in Seattle, with 80,000 teachers and students, more than 300 internal procurement units, and 4,000 suppliers in the past. Since each department and each research director wants to buy different things, the purchasing list in the hands of the purchasing supervisor is very long, but the demand for each type of goods is not large, not only is it difficult to obtain the most favorable price, under the traditional wholesale model Of suppliers are unable to meet this fragmented supply demand. Therefore, they turned to Amazon Business to complete such orders.

Corporate purchase orders are becoming increasingly personalized and fragmented. This trend is becoming more and more prominent in North America, Europe, Japan and other markets, making corporate procurement transactions more and more online. Amazon’s corporate procurement business follows this demand path. To expand. In addition to this change in the consumer market, the Chinese market, one of the main sources of goods purchased by enterprises, is also undergoing changes.

In the corporate purchasing market, the traditional foreign trade supply chain is generally factory-foreign trade company-importer-wholesaler-retailer-terminal purchasing enterprise. If the independent design of Chinese factories and the improvement of e-commerce operation capabilities in the future, this chain may become a factory-B2B platform-terminal purchasing enterprise. The intermediate links are compressed, giving manufacturers the opportunity to directly face end users, and the pricing power and product development capabilities will naturally increase accordingly.

But for most domestic manufacturers who are accustomed to "taking the medicine according to the order", they are still at a loss when facing the 20-year-old e-commerce, let alone directly selling the goods to the Americans and Europeans. This transition requires process. Therefore, the first batch of Chinese sellers to enter Amazon Business are mostly those who have already done retail business on Amazon's overseas sites through "Global Store" and have accumulated experience in e-commerce operations. For example, Viya Office, a company that produces office chairs in Zhejiang, started with individual consumers, and then entered the most mainstream contract order market (ie, corporate procurement market) for office supplies in North America through Amazon Business.

In addition to office supplies, Amazon Business’s investment in China is focused on tool products, home improvement building materials, industrial and scientific research products, etc. This is the mainstream procurement demand of North American companies, and the main demanders range from schools, restaurants, private hospitals, to manufacturing Industry, technology companies, business service companies, etc. This is quite different from the needs of individual consumers at the retail end.

In general, Amazon’s corporate procurement business, Amazon Business, was only launched in the United States in 2015. At the end of 2016, it established an investment promotion team in China. Although it entered the game late, it bypassed the yellow page stage of early B2B platform online negotiation and offline transaction, and directly opened the transaction function. The closed loop of search, inquiry, order, payment, and evaluation was completed on this platform. This is similar to the shopping path and experience of individual consumers in Europe and the United States on Amazon. This inertia allows corporate buyers to make online purchases more smoothly.

In the second half of 2016, a survey by Internet marketing company BloomReach showed that more than half (55%) of online consumers in the U.S. would first use Amazon.com or its App instead of Google when searching for products they want to buy. In 2015 it was 44%. The Amazon entrance effect in consumer awareness is increasing, making it easier for them to think of Amazon when shopping as corporate buyers. In other words, the Amazon Business business is actually sharing the B2C dividend established in the early years, which makes Amazon Business stand on a higher starting point.

For Chinese sellers, if they do not have reliable third-party logistics accumulation, they can choose to send the goods directly to Fulfillment by Amazon (FBA), which is responsible for warehousing, order processing, delivery and reverse logistics. As Amazon expands its self-built operation centers around the world, Amazon Business has also benefited from the ever-expanding logistics system.

Of course, FBA storage requires the seller to pay a fee, which will increase a part of the cost, but this can improve the user experience, thereby greatly increasing the order volume and achieving an increase in total profit. Especially when selling goods to countries where Prime has already landed, the requirements for logistics timeliness will be even higher. Chinese sellers need to find out the price/performance ratio of FBA between cost and sales volume. On the well-known domestic trade forum "FOB", some Amazon Business Chinese sellers summarized the experience of giving priority to FBA, "saving worry, effort, and value for money".

But unlike the domestic retail e-commerce market, these Chinese sellers face European and American corporate and institutional buyers who have more rational purchasing decisions. They value quality and experience more. Chinese sellers need to get rid of the thoughts of hot models, hot search words, traffic, and buying advertisements that have formed in the past, and focus more on products, so that they can have independent pricing power when they build their own brands. This increase in awareness and ability is an invisible threshold for Chinese sellers to enter the purchasing market of European and American companies.

Amazon Business allows Chinese manufacturers to directly face European and American terminal enterprise users. This is not possible in the traditional foreign trade era, but it also places higher demands on Chinese manufacturers. To flexibly organize the production cycle, supply chain, and stocking in accordance with changes in market demand, sellers will increasingly rely on the help of back-end data tools and models. Production with data navigation is expected to allow Chinese manufacturing to get rid of the blindness of just raising orders and lowering their heads in the past. era.

(Editor in charge: DF207)



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