Manufacturing guy-at-large.

Notes on Amazon Business and decisions in B2B ecommerce

Added on by Spencer Wright.

This week, while in Seattle, I had the pleasure of visiting Amazon and talking with some folks there about Amazon Business. To prep, I spent a bit of time reflecting on the B2B ecommerce world, and how the major players in it have approached & prioritized their efforts there. I've written about both Amazon and B2B ecommerce a bit before, but what's below clarifies my thoughts on their position in the ecosystem significantly.

To an outsider, Amazon has always struck me with two core messages:

  1. We are insanely customer focused.
  2. We have built a massively impressive logistical operation - the biggest of its kind, outside of China.

Also of note: Amazon has always seemed to target specific audiences in its external messaging. Most prominent to me are:

  • Consumers; people who would otherwise be shopping at Walmart or local retail stores. Basically everything on the website is directed towards this group.
  • Other retailers/competitors. This is a bit less immediately evident, but it’s my impression that Amazon’s willingness to talk openly about their fulfillment centers (one of which I toured last year) and the way they’re thinking about logistics & delivery (cf. drone delivery, rumors about a NYC store, etc) are intended specifically to scare off firms that might want to compete with Amazon’s retail business.
  • Google/Apple/Microsoft. This is specific to AWS, which has become increasingly in focus over the past year (but was always assumed to be huge).
  • Investors. The best example of this is the shareholder letter, which is always a good read. The core intent here seems (and I’ll admit that this is a half-baked theory at the moment) that investors should trust Amazon, because they’re a truly visionary company - like Apple and Google, NOT like some retailer that should be focusing on short term objectives.

What’s missing in the list above is business customers. I’ve bought plenty of business related stuff on Amazon, but it’s usually been from my personal account, and the shopping experience isn’t aware (or doesn’t care about) the context shift that I (presumably?) go through when I clock in and out. The “Recommendations for you” sections switch over, but it’s on a visit-by-visit basis. Amazon treats me as a person, and it simply recommends that I look at things that are similar to what I looked at recently. 

Now, I’m sure that plenty of businesses have Amazon accounts that are just for business purchases. I worked at one such business a few years ago, and again recently. In both of these cases, I got the impression that (and please, pardon the pseudo Christensen here) Amazon had trickled *up,* being used first at home (whether by the person in charge of purchasing, or someone who was bugging them to buy something) and then later at work. As a result, it always made sense that the Amazon product we used at work was the same as the one we were using at home. I was used to it, and it has gotten *so* easy to buy stuff for personal use there, and changing my mindset a bit to use Amazon for business stuff was really very easy.

The arrangement worked well. When I was running a prototyping shop, I made a *lot* of purchases from McMaster-Carr and MSC and Rutland. Those companies’ catalogs were tailored for the work we were doing, and they (especially McMaster) do *such* a good job of providing a consistent browsing, purchasing, and fulfillment experience, that once you get used to their system it’s hard to imagine life without it. But there were plenty of times where I used Amazon too, especially when it came to items that fell more on the “office supplies” end of the spectrum. Amazon’s search features are really good, and it’s great to have ratings sometimes as well. Amazon’s product discovery system is dramatically different from those of the industrial suppliers, and there are a lot of cases where I’ll hit the wall with one system and really just want a change of pace.

This is worth highlighting: 

  • McMaster-Carr’s search is very good, but their browse features are just *awesome.* This works because they’re basically a walled garden: McMaster curates their catalog well, and they do a really fantastic job collecting & displaying (consistent!) data about every product that they sell. 
  • Amazon is basically on the other side of the spectrum. Their catalog is enormous, but it’s full of stuff that comes from third parties, and is often really poorly documented. Plus there’s a lot of stuff that you can buy on Amazon that’s basically a joke (that 55 gallon drum of lube comes to mind). This is partly made up for by their review system, which is really helpful when you’re evaluating multiple products whose data doesn’t line up directly. But it also feels like a crapshoot sometimes, especially with decidedly consumer products (that three wolf shirt comes to mind). In the end, the Amazon shopping experience is definitely less consistent than McMaster’s - but then again, McMaster won’t sell you a 55 gallon drum of lube. (I’m being facetious, but the point is real. Amazon’s huge catalog is definitely a feature.)
  • The other industrial players are a mixed bag. None of them are as good about data keeping (or, consequently, browsing/filtering) as McMaster. None of their searches are as good as McMaster or Amazon, and none of their catalogs are as large, either. They make up for these shortcomings with depth: Uline does shipping, MSC and Rutland do tooling, etc. They have niches, and their capabilities within those niches make them incredibly valuable.

It’s also worth noting that these companies each take a different approach to knowing/caring who (or what type of entity) their customers are:

  • It’s implicit from McMaster’s site, but I’ve been told in person that they take it very seriously that they do *not* treat different customers differently whether they’re a business or an individual. The prices I see as some schmo on the street are the same prices I see if I’m an engineer at Lockheed Martin, and they don’t give quantity discounts either. They’ll even turn away large orders, and are in general happy to send customers to their suppliers if it’d make more sense to cut McMaster out of the transaction. 
  • A lot of the same could be said of Amazon, with the caveat that there’s a public perception that Amazon is constantly optimizing their pricing - definitely for time of year (supply and demand), but possibly also on a person-by-person basis. I have no way of knowing how much of this is true, and personally I wouldn’t find it offensive if it was. But it does strike me that Amazon takes the stance that “everyone sees the same site, but that ‘same site’ is one that’s constantly shifting depending on who you are and when you’re looking at it and what you looked at recently, and when we talk about the ‘same site’ we’re talking about something that might vary in layout, graphic design, product recommendations, pricing, and any other number of variables.”
  • Most of the industrial players, on the other hand, do kind of want to be selling to actual businesses. Some of them will go so far as requiring EINs or sales tax IDs (this is more common with suppliers that sell products at wholesale), but almost all of them will at least have the “business name” field be required.

If it’s not clear, I *like* these differences. I enjoy living in a world where companies put philosophical approaches to commerce up for debate, and let consumers decide which they prefer. The variety is good, and I find myself enjoying trying to use each to its most powerful effect. But the differences are worth noting, and it’s fun (and possibly useful) to project outward where each of these perspectives might lead in the future.