Amazon_Business_Launch

Amazon Business Explained

Back in 2015, Amazon announced the launch of Amazon Business, a new marketplace strictly for businesses featuring hundreds of millions of products as well as a variety of benefits, including price comparisons, fast delivery options, and analytics reports. For the record, Amazon acquired Smallparts.com in 2005 and changed its name in 2012 to Amazon Supply, which transitioned to Amazon Business in 2015.

Amazon Business allows businesses with an Amazon Business account to both sell and purchase products. The platform is Amazon’s attempt to dominate the B2B sector and to reap the same success as on the B2C market. It is not surprising that Amazon has jumped into B2B distribution – after all, the company has entered a variety of industries, including hardware, entertainment, and cloud-based storage. Product distribution rests on Amazon’s traditional B2C business, allowing it to scale fast and acquire B2B market share.

So, how does it all work? Any business, organization, government or non-profit organization can sign up to buy via Amazon Business. To get access to Amazon Business, buyers will have to register their companies and undergo a vetting process.

Existing Amazon sellers can add Amazon Business account features through their Seller Central account. The fees to sell as an Amazon Business seller are the same as having a professional selling account. There are also certain performance standards that need to be met that are higher in comparison with a standard B2C professional seller account.

  • Performance Standards
  • Order Defect Rate of 0.5 percent or less.
  • Pre-shipment cancellation rate of less than 1 percent.
  • Late shipment rate of less than 2 percent.
  • Limited number of chargebacks, A-Z guarantee claims and negative feedback.
  • If your business participates in the Amazon tax collection services, then your business needs to honor the customers’ tax exemption through the Amazon tax exemption program.
  • The business needs to include a tracking number, packing slip, and purchase order number with every business order package.

Let’s examine now some of the super interesting features which will help us understand the differences between Amazon Business and the regular Amazon marketplace.

Business-only prices & products

Users get access to price discounts on more than five million products, including quantity discounts on multi-unit purchases. In addition, users can find specific business products (from IT to janitorial, from office to restaurant supplies…)

Multi-user accounts

Once the Amazon Business account is created, users can connect the entire team and create purchasing groups to match organization structure.

Approval workflows

Order approvals can be customized and spending limits can be set to not only manage the organization’s buying but also to gain visibility into how funds are spent.

Integrate purchasing systems

If there is an interest in having Amazon as a punchout option for customers, it’s easy to connect the purchasing system to Amazon.

Consolidated deliveries

If an order qualifies for a consolidated delivery, one of Amazon’s carriers will deliver it on a pallet to receiving dock or doorstep.

Tax-exempt purchasing

In the US, the Amazon Tax Exemption Program (ATEP) is available for qualifying businesses, governments, non-profit entities, and educational institutions. In the UK, businesses have access to exclusive VAT pricing and downloadable invoices.

Live Experts button

This tool is a chat function that lets buyers consult the sellers of the product.

Amazon Business launched in spring 2015, and by 2018, Amazon said it was already generating $10 billion in annual sales.

In the US, Amazon Business serves 80% of the 100 largest enrollment education organizations, 55 of the Fortune 100 companies, and more than half of the 100 biggest hospital systems.

What is worth noting is that Amazon Business offers a Business Prime membership that unlocks additional benefits for subscribers – very similar to Amazon Prime. It elevates the whole procurement experience of an organization, by offering tools to analyze spending patterns and create policy rules that guide employees to approved products. Amazon Business Prime is only available in the US, Germany, and Japan. More information about the overall cost of Business Prime can be found here.

Payment Terms for Business Customers
Extended terms for Pay by Invoice: Business Prime members can request “Extended Terms for Pay by Invoice” – Pay by Invoice allows approved Amazon Business customers the flexibility of 30-day payment terms.
Receive your invoiced orders daily

In the Seller Central’s Payments’ Reports screen, all outstanding Invoiced Orders are reported in the ‘Open Invoices’ tab with their respective ‘Invoice due date’.

Amazon Business customers who have access to Pay by Invoice for their Amazon purchases have payment terms such as net 30 days. Meaning that Amazon sellers stand to receive their proceeds on average in 44 days, two weeks after the invoices are settled since Amazon transfers the funds to the Sellers in the next scheduled payment date.

Shortening_the_Cash_Cycle

Storfund allows Amazon Business Sellers to access their proceeds from unpaid shipped business orders daily for a flat fee of 1.50%. The Storfund fee is applied on the net balance – net of all Amazon related fees, charges, and product returns. Moreover, Storfund will finance your Open Invoices as well as your regular B2C sales across 10 Amazon marketplaces.

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