Amazon.com Inc. reported a number of key increases for its first quarter, when total sales rose 20.5% year over year to $20.58 billion from $17.08 billion, producing net income of $513 million compared with a net loss of $57 million.
But even more important to the business-to-business market was its surge to “more than 300,000” businesses that it serves in its Amazon Business marketplace, “ranging from small to Fortune 500 companies,” Amazon said last week in its financial statement for the first quarter ended March 31.
That’s up 50% from the number of companies on Amazon Business the company cited in its statement for the fourth quarter and year ended Dec. 31, 2015, when it said Amazon Business had “more than 200,000 businesses,” also ranging from small to Fortune 500 businesses.
The increase in the number of Amazon Business users, though significant, didn’t surprise Scot Wingo, executive chairman of ChannelAdvisor Corp., a company that helps companies sell products through Amazon and other online marketplaces. “This is a huge area for Amazon, so to see them grow the base 50% quarter to quarter is impressive, but it’s clearly a top priority for them,” he says.
Wingo adds that the surge in the number of businesses on Amazon Business is sure to coincide with a sharp increase in the range of available products.
The expanded range of available products puts Amazon Business in a better position to help companies manage what’s often referred to as the “long tail” of products, including ones that companies may purchase only occasionally and outside of procurement contracts, says Andy Hoar, principal analyst covering B2B e-commerce at Forrester Research Inc. “Amazon Business has keyed in on a growing pain point for many B2B companies—tracking and controlling employee long-tail spending. For B2B companies looking to reduce rogue buying in the organization, Amazon Business now offers them the ability to aggregate and analyze unplanned spending as well as simplify a fragmented supplier invoice/billing/payments process.”
Amazon has also improved its spend management software that B2B buyers use to control spending, such as by setting spending limits for individual buyers or departments, Hoar says. But the major improvement is in the growth in numbers of suppliers and products, giving Amazon Business a stronger position as a B2B marketplace. “This is more about achieving critical mass and finding a sweetspot in the market,” he says.
Amazon doesn’t break out revenue figures for Amazon Business. But it says marketplace sellers—retailers and other companies selling on Amazon’s consumer and B2B sites—accounted for 48% of units sold in Q1, up from 44% in the year-earlier quarter. It also says the value of commissions it receives from marketplace sellers increased “nearly 52%.”
Business sellers 15% of the total number of two million third-party sellers Amazon says operate on its e-commerce sites. Wingo notes, however, that many sellers—“probably a good 15% to 25%”—sell across both the B2B and retail sections of Amazon.
Amazon Business is No. 37 in the B2B E-Commerce 300.
For more about Amazon’s Q1 results, click here: