Chapter 5:
Accelerating the Move to Digital for B2B
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“If COVID-19 hasn’t been a call to action [for B2B brands to adopt Amazon], I don’t know what has.”
Brian Beck, Author of “Billion Dollar B2B Ecommerce” and Managing Partner at Enceiba
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B2B Brands Aren’t Immune From the ‘New Normal’ — Is Amazon the Answer?
t’s no secret that Amazon is the number one spot for online commerce, especially for companies employing business-to-consumer (B2C) or direct-to-consumer (D2C) business models. Often overlooked, however, are the opportunities lying in wait for business-to-business (B2B) brands. Forecasters believe that Amazon Business is expected to reach $52 billion in annual sales by 2023 — an already impressive rate of growth that is likely to accelerate under pandemic market conditions. Events like Prime Day have continued to ignite Amazon's sales rising 36% this year, compared to Prime Day in 2019. If you’re considering bringing your B2B brand to Amazon, now is the time to make your move. A recent study by ecommerce consulting firm Enceiba found that 72% of B2B manufacturers hope to bring their brand to Amazon within the next five years, with 70% indicating they believe the platform will be a “significant player” in their industry by that time. One thing is for sure: As these consumer behavior trends continue, companies willing to do the work now will be well-positioned to outshine their competitors later. Author and B2B ecommerce expert Brian Beck joined the Digital Shelf Virtual Summit, presented by The Digital Shelf Institute (DSI), to share his insights and strategies for accelerating your B2B brand’s move to Amazon’s digital shelf.
Josh Walsh
Founding CEO - The Refinery
Watch Full Session
Brent Bellm
Chief Executive Officer - BigCommerce
Brent Bellm is the CEO of BigCommerce, a powerful SaaS ecommerce platform for tens of thousands of established and rapidly growing businesses, including many internationally recognized brands.
Josh Walsh is the founding CEO of The Refinery, a strategic consulting firm for enterprise brand manufacturers. After starting the company out of his college dorm room in 2001, it has since grown to become a leading ecommerce operation.
Brian Beck
CEO and Advisor
Brian Beck is a B2B ecommerce expert with over 20 years of experience helping brands go digital. He’s the author of “Billion Dollar B2B Ecommerce,” and serves as the managing partner at Enceiba, an outsourcing firm that specializes in helping brands stand out on Amazon.
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How Does B2B on Amazon Work?
Amazon first started testing B2B offerings in 2012, with the launch of Amazon Supply. This was later replaced by Amazon Business, which included key changes aimed at incorporating more of the traditional “Amazon experience.” Added features include enhanced content capabilities, business seller profiles, tools designed specifically for business buyers, and a Business Prime subscription. Amazon Business was also directly incorporated into the traditional Amazon platform, broadening the product brands to a larger customer base. While not necessarily the right choice for every business, Amazon Business does fulfill a growing demand with over half of B2B buyers now making at least 10% of their work purchases on the platform according to Beck. Pandemic shopping habits further indicate that these numbers could grow significantly over the next few years.
Is a Move to Amazon Right for Your B2B Brand?
“If you're a manufacturer or distributor selling to businesses, you have to have an Amazon strategy — even if that strategy is not to play,” Beck said. Amazon Business is poised to become one of the world’s largest distributors over the next four years, but that doesn’t mean it’s the right fit for every business. Beck encourages any B2B brand considering the platform to weigh a few important pros and cons before making their decision.
Pros
Cons
Revenue
Significant brand exposure
Brand control on the number one seach engine
Potentially higher gross margins
Speed to market
No longer "your" customer, but Amazon's customer
A surrender of control
Pricing pressure and competition
Resource investment
Lacks full brand presentation control
The Start of Almost Every Product Search
Top 3 Amazon Benefits for B2B Brands
Lower Capital Investment Starting your ecommerce journey with Amazon Business means you won’t have to devote resources to build your own marketplace, hire a team to manage it, or market traffic to your website — all of those tools are already provided within the platform, free of charge. Coupled with Amazon’s competencies in logistics, scale, customer base, and infrastructure, you’ll have a powerful partner with which to get started.
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Amazon can be an excellent first step in your company’s exploration of new digital channels with additional benefits worth keeping in mind for a B2B brand just starting to dip its toes into ecommerce.
Content Development Selling on Amazon forces businesses to develop content, something Beck identifies as one of the “biggest struggles” B2B brands contend with online. Not only can you re-use this content as you expand into other online channels, but you can utilize Amazon’s data tools to figure out which content works best on one of the busiest marketplaces in the world.
Sharpens Your Company’s Organizational Competency in Ecommerce Taking your first digital steps onto the Amazon platform is a great way to get your teams used to operating in ecommerce spaces, before you make bigger moves into other channels. “There’s a bit of learning about not just Amazon, but a general change of thinking that digitally enables the organization,” Beck said. “Amazon is a stair step away from getting there.”
Amazon is the starting point for over 70% of product searches — up from 45% in 2015. COVD-19-related trends suggest this growth will only accelerate
2015
2020
45%
70%
Source: Enceiba
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Step 1: Assess How Unauthorized Resellers Affect Your Business
Your first focus should be determining who these unauthorized third parties are, as well as establishing the means by which they’re obtaining your products. “More often than not, those items come from your authorized channels,” Zmuda said. Once you’ve developed a clear overview of the problem, you’ll be better equipped to address it moving forward.
Step 2: Assess How Unauthorized Resellers Affect Your Business
Once you’ve identified your problem channels, it’s time to reconsider your pricing, incentives, or contracts in those spheres. You might change the type of volume discounts you provide to a specific vendor, drop volume discounts entirely, or swap them out for other incentives such as back-end rebates tied to sales through authorized channels. “You start to play a game of multi-dimensional chess: what are those economic incentives I’ve traditionally provided to my channel, [and] how might those channels be causing a margin situation?” Zmuda said. “Can you terminate your agreement with them? Stop shipments and pull back? Each situation will be different depending on your relationship with, and the power dynamic between yourself and the distributor.”
Step 3: Take Precautions That Protect Your Right to Sell
You can also take legal action against unauthorized resellers, but be prepared: Most third-party resellers operate under what is known as the “First Sale Doctrine” — a legal principle that stipulates brands only have control over their products before the first sale. After that, its new owner is free to resell it however they wish, even without the trademark holder’s consent. However, the law does provide some exceptions: Garcia points to both the “material difference exception” and the “quality control measures exception.” The material difference exception provides that unauthorized third parties must sell a brand’s products in a way that is “not materially different” than what the brand itself provides. Approaches that provide additional value — such as warranties, satisfaction guarantees, or other offerings that a third party would be unable to honor — are ways to ensure you have legal recourse against unauthorized resellers. Secondly, most brands have internal quality control measures that inherently cannot be reasonably replicated by a third party reseller. Because unauthorized resellers cannot match those quality control measures, they are prohibited from selling the brand’s products. “Any sold outside of those controls, or that interferes with them, can be deemed ‘non-genuine’,” Garcia said.
Step 4: Educate Your Stakeholders
Once the problems have been identified and addressed, educate your stakeholders — including those in roles traditionally outside of ecommerce — about the dangers of unauthorized resales and the efforts your company is taking to combat them. Problematic channels are easier to identify and address when everyone is on the same page.
Sell Directly to Amazon This strategy entails selling your products directly to Amazon, who then resells them to the customer directly from their fulfillment centers. The method provides some brand control (utilizing Amazon Brand Registry) and is the least resource and labor-intensive approach of the three.
Be prompt: Setting up a third-party relationship with Amazon allows you to create your own presence on the platform, including more control over content, branding, and customer fulfillment. This approach, Beck notes, is the one most often recommended by Amazon themselves. It also provides the most analytical insights that brands can use when determining content in new digital channels, as well as allows you to ship to customers directly. “Many B2B companies are moving in this direction due to full pricing and brand control, as well as higher profitability,” Beck said.
Control and Leverage Resellers This method relies on relationships with approved resellers, who then sell your products on Amazon. As this technique can lead to channel conflict, Beck recommends using distribution agreements and minimum-acceptable-pricing policies to make sure your brand experience stays consistent, even when rerouted through a third-party.
First Steps for B2B Brands Adopting the Amazon Platform
If Amazon Business sounds like a platform that might work for your company, Beck identifies three different approaches a brand might take to sell there. Which model works best will depend on your company’s unique needs and position in the marketplace.
Beck stresses how COVID-19 has accelerated the adoption of B2B buyers, preparing organizations to navigate for the “next normal.”
Accelerating the Adoption of B2B Buyers
63% of Shoppers Use a Mobile Device While Shopping or Considering a Purchase In-Store
Source: BRP
Comprises about 15% of consumers. Very worried about health, finances, and going out in public during the pandemic. Most likely think restrictions are being lifted too quickly, and are highly adverse to visiting public spaces.
Amazon Business Best Practices for B2B Brands
What Products Should You Start With? Brands can start by offering one, some, or all of their products on Amazon Business — all of which are better than no products at all. If you move forward with a piecemeal-style rollout, Beck recommends incorporating the broadest portion of your catalog as possible: You’ll gain better insights that way, as well as better sales.
Communicate Your Brand Story While Amazon is sometimes noted for its lack of brand controls for its vendors, the platform does provide some useful tools that you should utilize. Remember to use descriptive titles with listed benefits, captivating images or video, detailed and bulleted descriptions, and generate supporting positive reviews. Responding to questions and imperfect reviews is also a great way to demonstrate consideration for the customer experience.
Lean In on the Analytics — But Stay Adventurous While insights are certainly important — they can confirm if your brand is on the right or wrong track — don’t be afraid to experiment either. Rather than resting on your laurels, Beck notes the importance of trying new ideas, testing, and learning.
Invest in Experienced Resources Depending on your company’s needs and size, you may want to consider developing internal or external teams with a background in Amazon sales to maximize your returns. Roles like content planning/production, web merchandising, paid marketing, and other responsibilities are common for brands who find success on Amazon.
Don’t Forget About Prime! Amazon Prime members typically exclude products in their searches that aren’t available under the higher-end Prime service — companies that are Prime-ready will always have an intrinsic advantage over competitors that don’t.
The B2B Model of the Future
“We believe these [consumer] behaviors are likely to sustain after this crisis has ended. Unfortunately, some distributors, retailers, and other resell channels may not survive this event,” Beck said. “It’s not a critique necessarily, on their business: it’s a matter of survival.” Luckily, brands have a number of strategic options when developing an Amazon Business strategy. Whatever approach you take, remember to keep experimenting. Above all, Beck recommends using Amazon as just one part of a holistic omnichannel approach to digital sales — and using the insights you discover there to inform your decisions throughout the digital shelf.
Continue to chapter six to hear case studies from top ecommerce executives on how to lead amid COVID-19.
Go to Chapter 6
