Amazon Business Vice President Prentis Wilson told MDM in an interview Tuesday that it will reach $10 billion in annual sales this year, a little more than two years after reaching $1 billion in sales in its first year. Third-party sellers account for more than half of its revenue. 

In June, MDM ranked Amazon Business as the sixth largest industrial distributor in the U.S. in its annual MDM Industrial Distributors Top 40, estimating its core industrial MRO product revenues at $4 billion. Overall, MDM estimated Amazon Business topped well over $5 billion in 2017 revenues in the U.S., with B2B sales across a broad range of product sectors and customer segments that it called out in its blog Tuesday: hospitals, universities, Fortune 50 companies, government agencies, daycares, restaurants and more. Across distribution sectors, the office products sector has arguably seen the largest degree of penetration since the launch of Amazon Business in early 2015, and even going back to the 2012 launch of its predecessor, Amazon Supply. 

Wilson told MDM that he is seeing strong growth in its e-procurement system customer segments. “The very first place that most of our customers launch with us is in the tail-spend purchases,” he said. “It’s a great way for customers to start ramping. One of the things we found along the way is there are a number of customers that start to use us for tail spend, but then through that, they start evaluating us for more [core] items. We’ve had a fair number of customers stop managing certain categories and just turn them over to us completely, and they’ve been able to shift their resources to the other categories that they were trying to spend more effort on and just didn’t have the bandwidth to do so.”

Amazon Business first announced the $10-billion global revenue mark in a blog released Tuesday. Among the key stats on its current U.S. market coverage, Amazon Business said it now serves:

• 80 percent of the largest education organizations;
• 55 of the Fortune 100 companies;
• More than half of the 100 largest hospital systems; and 
• More than 40 percent of the 100 largest local governments

The rate of innovation is changing the dynamic quickly, Wilson said. “If you look at the business now, it’s actually considerably different than it was even nine or 12 months ago. Partly it’s because of the additional capabilities we’ve opened up for sellers, and additional capabilities we’ve opened up for customers to reach those sellers; it’s continuing to accelerate.”

Wilson called out a few specific areas where Amazon is seeing its investment in innovation translate into growth. “We’re finding that the small businesses and what we call credentialed sellers (veteran-, women-, minority-owned businesses) are winning a lot (of business),” Wilson said. “A lot of our customers have been struggling to find suppliers that meet those requirements. And the suppliers in some cases have struggled to meet some of the more complex procurement system integrations, for example, or some of the other things that customers are looking for. When you couple that with some of the pressures these big companies have to reduce their supplier base, it’s just made it really hard for them and we’ve really opened up a lot of doors there.”

Wilson gave an example of the guided buying services it offers to customers to direct purchases to preferred suppliers. “We had a large university on the East Coast that was able to direct all of their office purchases to a local woman-, minority-owned business – one that they were unable to buy from before Amazon Business existed and this company does a great job. They have their own vehicles. They deliver every day. They stock shelves, they know the campus, they do all the support and services and the back end. We handle all the complexities of their procurement systems. We direct purchases, drive compliance, and it's been such a strong win. The customer wants to expand to other categories.”

In the last year, Amazon announced several updates and features aimed at bringing more transparency to the procurement process, the blog said, including Business Prime Shipping, "Curation" and Workflow Approvals. These have allowed Amazon Business to integrate directly into e-procurement systems to create intuitive buying experiences. 

Curation falls under its guided buying services, Wilson said. “Our customers can now start to curate certain categories to identify the categories in their preferences for preferred products; they can even identify preferred suppliers. We even have relationships now where our customers and sellers have pre-negotiated pricing that they're transacting through our marketplace.

“Workflow has been around since the beginning, but it's continued to evolve,” Wilson continued. “That essentially gives our customers additional approvals and control over purchases and enabled anybody – from a tiny business with one or two employees – to give their employees freedom to purchase, but yet still maintain control over what gets purchased or what doesn't within their goals and priorities… all the way to large companies who do the same.”