Amazon Business this week announced a new set of benefits to its Business Prime program. Customers in 8,000 U.S. cities now have same-day access to more than one million SKUs. In the U.S., Germany and Japan, Business Prime members get deeper spend analysis and preferred supplier management tools as well as more attractive payment terms in a few different flavors. Amazon also once again raised the bar on delivery and speed.

Spend Management & Analysis

From a distributor’s perspective, the upgrade to the loyalty program is likely to have the strongest impact on small- to mid-sized customers who aren’t using dedicated e-procurement software. The new spend-visibility tools have baked in a business intelligence visualization service to help analyze purchasing trends. Guided buying lets company managers set restrictions on their users’ vendor and product selection options to increase compliance to company purchasing policies. Here’s Amazon’s summary of the new features:

• Spend Visibility: Powered by AWS QuickSight, Amazon’s BI tool, Spend Visibility provides advanced visualizations of company spend in ready-to-present graphics, freeing up the time it takes to download and analyze data and discover spending trends.
• Guided Buying: Guided Buying enables Amazon Business account administrators to identify certain suppliers and products as preferred, as well as set specific product categories as restricted, offering buyers greater detail about company policies or recommendations while shopping and helping businesses reduce rogue spend, improve compliance and consolidate suppliers.

Reading only slightly between the lines of the details in this latest program build, a natural next step is for Amazon Business to offer spend analytics on all buying activity, not just what flows through Amazon Business. Think about a similar application more and more people now take for granted: Your bank or an independent budgeting app will aggregate all your financial accounts and provide investment and cash flow analysis in a single view. With Amazon’s unique position as a platform for more than 1.7 million sellers, why not give customers better visibility into spend across all vendors?

Loyalty, Rewards – Looks Like Costco!

These enhancements are interesting and continue to transfer the B2C consumer experience over into B2B channels. The credit card rebate tiers by product-category spend look a lot like what Costco and other retailers have put in place as foundational pieces of their loyalty programs. Let’s take a look at Amazon’s summaries of its two payment-related benefit programs. Here’s the first:

• Amazon Business American Express Card: The no annual fee credit card offers flexible benefits, including the choice of 5% Back or 90-Day Interest Free Payment Terms for Business Prime members on U.S. purchases at Amazon Business, Amazon Web Services, Amazon.com and Whole Foods Market. Upon sign-up, eligible Business Prime members also receive a $125 Amazon.com Gift Card. Click here to see the details page about the new Amazon Business American Express card.

Amazon keeps pushing out limits on payment terms. It’s an interesting contrast to their Days Sales Outstanding (DSO) metric, which in 2017 stood at just under 27 days. Our thesis is that with a high concentration of immediate payment through credit cards already, they have ample runway to build share into more traditional payment terms and conditions that have typically defined the playing field for their competitors. Here’s their summary:

• Extended Terms for Pay by Invoice: Business Prime members can now request Extended Terms for Pay by Invoice. Qualifying customers can extend their payment terms to 45 or 60 days, depending on their plan, to pay an Amazon Business invoice so they have more flexibility and can better manage their cashflow.

Delivery Speed Increased… Again

This is arguably the bar that Amazon invented, and they keep raising it. The pool of products for faster free delivery grows. Here’s Amazon’s summary of the final piece of the new Business Prime benefit package:

• Upgraded Shipping Options: Business Prime members already enjoy free two-day shipping on more than 100 million items. Now, Business Prime members in the U.S. can choose free same-day delivery or free one-day shipping for more than one million items on eligible orders over $35 in more than 8,000 cities and towns. Members also have the option to choose consolidated shipping on eligible bulk orders to receive their order in fewer shipments.

The consolidated shipping option is interesting. Just a few years ago, Amazon Business was struggling, about as publicly as they have shared on any aspect of their business, with bulk order management. One Amazon representative shared at an industry meeting a story of delivering hundreds of shipments for the same order in individual boxes containing single items. The new consolidated shipping benefit indicates they have found a solution to this tricky logistics problem, thus removing a significant barrier to taking share from traditional distributors.

Conclusion

From our vantage point, these latest adds to the Business Prime program demonstrate just how fast this $10B distributor can learn and grow. The company is leveraging its unsurpassed cash management practices to enable much more flexible payment terms. Amazon Business is leveraging its enormous DC network to create a same-day assortment that surpasses any rival, thereby offsetting part of the advantage branch-based distributors have used as a differentiator.

Amazon Business is deepening its sweet spot and increasing its value proposition rapidly. The company is writing new rules for distribution financial and business models, and for customer-focused service through technological tools. How will you respond?

As always, I welcome your comments in the comments below or email me at tom@mdm.com.

Amazon.com announces sales were up 29.3 percent in third quarter.

To explore all angles of Amazon Business – including this latest upgrade to its customer benefits – please join us at the MDM Forum: How Distributors Should Respond to Amazon Business, to help strengthen your digital planning for 2019 and beyond.