As one of the few industry analysts with roughly a quarter century focused on and working in procurement, it was surprising to me how little I knew about the multi-billion dollar behemoth, Amazon Business, as I descended on its Reshape Conference in Dallas last week to learn more about the business.
Amazon Business (“AB”) is a unit within Amazon focused on the B2B market, and specifically the tail spend market (at least for now). About a dozen or so years ago, as the founding team was staffing up, they made several attempts to recruit me to join them. I didn’t let the discussions go very far as Ardent was still in its early days. Over the ensuing years, outside of the occasional Amazon Business booth at another provider’s user conferences, I’ve neither seen or heard much about it or from it. With the recent hiring of an AR team, I believe that that is about to change.
Reshape 2024 – Main Stage Presentations
Welcome Address
For its third annual Reshape conference, the team decided to invite analysts from the major firms covering the procurement space, although not all attended. The conference began with MainStage keynotes at 10 am on Day One with a brief welcome from VP, Shelley Salomon, a 21-yr Amazon veteran who only recently joined AB. Shelley delivered a general state of the business address that began by highlighting three trends Amazon is seeing:
- More procurement teams looking to operate in a decentralized environment.
- Procurement teams are focused on innovation, not simply savings
- Purchasing for “good” (sustainability and diversity) is becoming more prominent
To those ends, Shelley noted that the AB marketplace has more that 7,000 small and diverse suppliers and more than 360k products that have signed on to the Sustainability pledge, which can enable buyers to understand and track the impact of these products on sustainability goals.
Shelley also highlighted her team’s three focus areas:
- Product selection – having the largest and most relevant offerings available
- Price – offering competitive pricing
- Customer convenience – making it quick and easy to use.
As she concluded with their top goals this next year of deepening partnerships and better engaging customers, Shelley noted that AB considers itself a technology company first.
Customer Success Stories
AB VP Todd Heimes next took the stage to interview two procurement leaders about their companies’ specific experiences with AB.
Philip DelDebbio, Senior Director of Strategic Programs, Amphenol Corporation, talked about the seven years using AB across 135 different operating divisions. He was followed by Philip Saylor, VP, US Supply Chain, Aramark who is overseeing a highly complex supply chain with over 15,000 purchasing locations. Before AB, Saylor’s team lacked visibility into its tail spend. Now they have visibility and can set purchasing controls to guide buyers to the right items, which is even more important for Aramark because they have many third-party workers that need to order on behalf of their company. Among Saylor’s main points and takeaways was that working with AB has been great and that the rollout was extremely easy (this being one of AB’s biggest benefits, from his perspective) and that the company has just reached an annual run rate of $12 million in total spend.
Digital Innovations
Next, Doug Gray, VP of Technology, came to the stage to present new and forthcoming innovations from AB and answer the question – what guides AB’s innovations (Doug’s short answer: “our customers”). After a high-level review of AB’s take on the procurement lifecycle, Doug introduces a few new innovations including:
- New program dashboard to centralize visibility and spend
- Amazon Account Switching: Gives customers the option to use the same login credentials, security settings, and mobile number for both their personal Amazon account and their Amazon Business account
- New Punch-in capability with SAP Ariba which allows some users to start shopping in AB and then punch-in to checkout within SAP Ariba. Full availability is planned for June, 2025
Doug also announced:
- Amazon Business Restock, 2 new replenishment services – (1) a Managed Inventory service is live now in select markets and (2) a Vending service will begin rolling out in 2025
- Punch-out catalog capabilities with Oracle NetSuite SuiteProcurement will also be available
- AB will join the Coupa Advantage on November 1, 2024
Summary
While it did not announce any financial or transaction details this year, the company reportedly did so at Reshape 2023 when it announced that it sold $35 Billion to its Amazon Business customers, so this is no small-time operation. There’s a long runway to continue growing a global tail spend business and reshape this market, but my sense is Amazon has designs on a bigger future within the procurement world. But, that’s a different and, I would argue, an entirely new market for Amazon, requiring AB to reshape itself if it is going to succeed.
