EDITORIAL VIEW: If you can’t beat Amazon, should you join it?

Nikhil Amin, head of Amazon Business UK (Market Place) detailed to Hotelympia visitors how ‘sellers’ can utilise Amazon’s sales engine.

A question for catering equipment distributors: Is Amazon an opportunity or threat? Your answer to that will probably depend on the level of product resell and replacement business you do, but the time has come when providers are going to need to start thinking carefully about where to hang their hats.

Amazon’s entry to the UK foodservice market is a topic that always provokes an interesting conversation. While some accept its arrival is an inevitable consequence of a world where more and more businesses are turning to ecommerce, others perhaps regard it as yet another “middle man” attempting to seek a slice of an already fragmented pie. And that is before we even get into the debate over margins.

Catering is, of course, just one component of a much larger and dynamic B2B market that Amazon is feasting its eyes on. Its data already shows that a growing number of businesses prefer to order online, especially for repeat purchases where they are fully aware of what they are buying, know what they are looking for, and essentially consider price and convenience the most important priority.

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It won’t shock you to know that the B2B ecommerce market is forecast to grow to twice the size of the B2C market – but what might surprise you is that this is on course to happen within the next 24 months.

But while Amazon’s size and scale might leave some catering resellers fearing the worse, the company’s ‘Market Place’ model is designed to provide a sort of middle ground where instead of going head-to-head with the 800lb market gorilla, dealers can benefit from its back-end systems and enormous customer reach.

Amazon has been notoriously quiet about its plans for the UK market but at this month’s Hotelympia, Nikhil Amin, head of Amazon Business UK (Market Place), provided a fascinating account of how ‘sellers’ can utilise its huge sales engine, and outlined the sort of features that now make selling online noticeably easier for businesses.

So how do you become a seller in the first instance? Well, that is as simple as going onto Amazon Business and creating a selling account. Once registered as a seller, you can are free to define exactly how much of your portfolio you want to list. It could be 10 items or it could be 100,000.

Sellers can set business prices and quantity breaks in their pricing, which from a traditional B2B sales perspective means you can target customers through specific pricing as well as quantity discounts. Automated VAT invoicing and VAT-exclusive pricing has also now been integrated into the system.

“Business customers want to see this,” insisted Amin. “They want to know what the ex-VAT price is and they want to receive an invoice that has it broken down in terms of the cost price and the VAT. That is really important in terms of their accounting partners, so we have built a VAT calculation service into our B2B setting so it creates a VAT-exclusive price on site and it provides a VAT downloadable invoice whenever a business makes a purchase.”

If you become a seller, you have two ways of getting your equipment to customers. You can either do it from your own warehouse facilities when an order is placed, or you can use Amazon’s logistics infrastructure. That means your inventory is despatched to one of Amazon’s warehouses and products are picked, packed and shipped once a sale is made. Amazon Business will also handle customer returns.

It has branded the second option ‘Fulfilment by Amazon’ and the key benefit here is that it gives sellers immediate access to its ‘Prime’ customers – those who receive a next-day or same-day delivery promise. More importantly, according to Amin, it gives sellers the opportunity to use Amazon Business’ logistics network to access customers across Europe.

“I don’t want to go into too many of the complexities of how to sell in Europe, however the idea is you can use our Fulfilled by Amazon network to reach customers in Germany, Italy, France or Spain with a next-day promise. That’s exciting for a lot of sellers. It is a really easy and fast way to scale up through Europe with very minimal effort,” he said.

The final point – and arguably the most important in the eyes of a seller – is payment. When do sellers see the fruits of their labour? “You will be paid as soon as the item is shipped,” promised Amin. “That payment will be paid into your account and then the account will disperse – it can be set on a daily disbursement back into your own bank account.”

Although he didn’t delve into the various fees, charges and obligations involved with becoming a seller, the clear emphasis on the ease with which sellers can engage with Amazon Business highlights the scale of its own ambitions to create the ultimate one-stop-shop for business buyers.

Many dealers, particularly those operating predominantly at the lighter end of the market, in terms of cookware, utensils, crockery and basic commercial kitchen supplies, will be tempted by the lure of tapping into a customer base and logistics infrastructure that would otherwise be unattainable. Others, I’m sure, will be just as content to stay where they are.

The Amazon juggernaut is rolling into town. Whether you regard it as friend or foe is up to your business to decide.

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2 Comments

  1. Simon said:

    I’ve looked at it but the fees are horrendous, even compared to Ebay. The problem being is that with the heavy equipment at lot of online dealers will only add on maybe 5% on the cost of the item. If you paying Amazon 15% then is quickly become unrealistic to compete. The main added benefit that I can see is for the extra exposure that a company like Amazon can bring.
    On top of this there is the age old issue of who is going to site survey, install and commission the unit. Short term the main competition seems to be the likes of Nisbets and the people who use their local distributor will still go to them

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