Two Years After Launch of Amazon Supply, How Much Impact Did It Have on the Wholesale Industry

Two Years After Launch of Amazon Supply, How Much Impact Did It Have on the Wholesale Industry?

Now on its second year of operation, Amazon Supply has grown from a beta site with over 500,000 products, to a wholesale distribution giant of 2.2 million items in its inventory. Meanwhile, its major competitors such as WW Grainger, MSC and Fastenal are not claiming to have experienced any big impact on their businesses with the coming of age of Amazon Supply. Did Amazon Supply live up to expectations?

“If 2.2 million products doesn’t sound like a staggering figure on its own,” reports Forbes staff Clare O’Connor, “consider that the average wholesaler sells closer to 50,000 products online. ‘The question is not whether AmazonSupply will be a threat,’” Forbes quotes Richard Balaban, who follows developments in the company for management consulting firm Oliver Wyman. “‘Rather it is which customers, purchase occasions and categories will be attacked first.’”

Since its inception, Amazon Supply has trained its aim on businesses and industries, where Chicago-based company WW Grainger is king. With over $9 billion in reported revenues, Grainger is clearly the business to beat. It controls an estimated 6 percent of the entire B2B market. Grainger, however, refuses to comment on the impact the Amazon Supply has on its business. Yet, in sheer volume of online stocks, Amazon’s 2.2 million dwarfs Grainger’s 1.2 million.

“While we don’t comment specifically on other companies, it’s important to note that Grainger’s multichannel business model and our target customers differ significantly from how online-only retailers serve the market,” Forbes quotes company spokesperson Jim Ryan as saying.

Industry observers, on the other hand, doubts the expected “disruptive” impact of Amazon Supply. For one, the wholesaler lacks “on-site service capabilities, such as inventory management — in high demand from some B-to-B customers right now – and a deeper understanding of the B-to-B market,” said Lindsay Konzak of Modern Distribution Management.

“Amazon has always focused on how people buy, not what they buy. In some categories that may be very powerful and disruptive; in others, customers may need a much higher level of expertise on product selection and service from their suppliers, which may include installation and ongoing maintenance to keep, for example, a production line from going down.”

ABOUT AMAZON SUPPLY — Launched in beta on April 2012, Amazon’s wholesale store for businesses and industries aims to disrupt B2B distribution the way the company did on e-books and consumer items. Described by its CEO Jeff Bezos as “an incredible category,” Amazon Supply sells everything from industrial motors, flanges, valves, fasteners, materials, and janitorial supplies, among others. Now on its second year of existence, Amazon Supply boasts of over 2.2 million products in its inventory.

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