Balancing the pros and cons of selling on Amazon Business can be difficult for B2B sellers. While many sellers realize that they need a presence on Amazon Business for the high traffic volume it attracts and the customer experience it provides, they also know there are drawbacks. Those drawbacks include fierce competition from other sellers, including Amazon itself for commodity goods such as batteries, and transaction fees.
One way sellers can get the most out of the Amazon Business marketplace is to change their perception of Amazon from a third-party sales channel to a provider of ecommerce technology and services, Shalin Shah, vice president of ecommerce and digital strategy for Georgia-Pacific, told an audience earlier this month at the B2B Next Conference and Exhibition. By doing so, suppliers can better leverage their relationship with Amazon Business to get the tools they need to successfully sell through the marketplace, he said. Georgia-Pacific, a subsidiary of Koch Industries Inc., is one of the world’s largest manufacturers and distributors of paper products, dispensers, building products and related chemicals. It sells a range of paper and other products on Amazon.
“Amazon cares about the services it provides its customers, so the mindset a supplier should take is: How can Amazon help me, as a customer, improve the services I am delivering through its marketplace or develop new ones?” Shah said.
How to talk B2B ecommerce with Amazon
A key first step in the process is not assigning a company’s own sales representatives to manage an Amazon Business account. Instead, have the ecommerce team be the liaison to Amazon because they understand the strategic goals of selling through that channel, Shah said.
“Sales representatives don’t understand the technology needed to sell through Amazon or how to strategically manage the relationship with Amazon,” Shah said. “You want to able to talk use-case studies with Amazon because that is their language. Becoming a customer of Amazon Web Services, for example, allows you to dictate what functionality your store needs.”
Sellers shouldn’t be timid about asking Amazon to make use of its data on marketplace buying activity, he added. Amazon Business gathers data from buyers as they browse the ecommerce site, and it uses that data to build a 360-degree buyer profile that can be used to recommend products. Product recommendations simplify the purchasing process by helping buyers quickly zero-in on the products they need.
Tapping into Amazon’s data
“Amazon has data that benefits your business; talk to them about what kind of data you’re looking for and what they are willing to share,” Shah said.
In other words, push Amazon to provide better data sets that can increase sales, and don’t just accept what it wants to give you, Shah added.
One area where sellers fall down in negotiations with Amazon Business is in saying “No” to listing their best products, Shah said. Georgia-Pacific, for example, does not offer its top-two selling products on Amazon Business; that strategy helps it maintain a strong negotiating position, Shah said.
“Saying no to Amazon provides leverage in negotiations because Amazon doesn’t like it when you say no,” said Shah. “Think what it is that you want or need from Amazon. If you can’t dictate terms, don’t sell on Amazon.”
The potential ROI of selling on Amazon
Suppliers should also remember that, as a technology company, Amazon Business has vast resources for building new webstore features and can typically build those features faster and cheaper than a supplier can in-house, Shah said. Granted, he added, the seller has to pay for Amazon’s technology services, but the speed to market and the potential return on investment can be huge, he said.
“By taking an investor mindset to having Amazon develop new functionality, suppliers come to understand that while 90% of the dollars spent on these endeavors will go nowhere, the 10% that succeed will make up for those losses—and then some,” Shah said.
While 85% of Georgia-Pacific’s sales are through its traditional distribution channels, a ratio Shah does not expect to change, most of its distributors lack the technological prowess of Amazon, he said. “Try thinking of Amazon as a technology vendor and see how it works,” he added.
By changing their approach to Amazon Business, Shah said, suppliers will come to understand that they stand more to gain by being an ecommerce technology and services customer of Amazon than just a seller trying to figure its own way of doing business on the marketplace. “Managing Amazon as just a sales channel rarely works,” he said.
Peter Lucas is a Highland Park, Illinois-based freelance journalist covering business and technology.
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