Reuters reports that as part of its global restructuring, Amazon plans to expand its business of selling office supplies in Europe and internationally.
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During an interview, Vice President Alexandre Gagnon stated that gross sales of its Amazon Business unit experienced a compound annual growth rate of 25% in Europe between 2020 and 2022.
The business was first introduced in Germany in 2016, followed by Britain the next year, and Italy, Spain, and France in 2018.
Amazon Business has a client base in the region that includes companies such as Siemens Gamesa, Centrica, and ABB, and provides a variety of products ranging from IT and healthcare equipment to school supplies.
The company’s B2B business has the potential to generate higher profit margins as compared to its main consumer business.“Because businesses buy in larger quantities, the fulfillment economics are more advantageous,” Gagnon said to Reuters.
Additionally, Amazon Business gives business buyers discounts for bulk orders, boosting efficiencies on a per-delivery basis.
Since the company intends to shut down all of its physical bookstores, pop-up shops, and “4-star” stores in the United States and the United Kingdom, it is searching for more high-growth, high-margin businesses to pursue.
The motivation behind Amazon’s efforts to enhance its B2B business is also fueled by corporate buyers who aim to achieve their corporate social responsibility (CSR) objectives while still optimizing costs and enhancing efficiency.
In the company’s 2022 State of Business Procurement Report, Amazon found:
- Buying online is the preferred mode of purchase for 91% of B2B buyers.
- As many as 58% of B2B buyers now make purchases that require direct delivery to an employee’s personal residence.
- Nearly half (47%) of B2B buyers anticipate managing a higher budget this year compared to the previous year, while those facing budget cuts are expected to spend smarter.
- 84% of B2B buyers reported that their organization intends to allocate a larger portion of the purchasing budget towards businesses owned by Black or other diverse-owned businesses.
- Nearly two-thirds (63%) of B2B buyers have identified enhancing sustainability in their purchasing practices as a top priority.
- Over half (55%) of B2B buyers who have set sustainability goals have reported challenges in sourcing suppliers that adhere to sustainable practices. Of this group, 81% of buyers agree that these difficulties are hindering their organization’s ability to achieve procurement sustainability goals.
- An overwhelming majority (89%) of B2B buyers have stated that they would be more inclined to purchase sustainable products if it was easier to identify sustainably certified products.
Although this survey was carried out among corporate buyers in the U.S., its findings are readily applicable to other countries. Reuters said Amazon declined to provide specifics on which countries it would target next.
However, in light of the recent developments such as the optimization of its logistics network and shutting down unprofitable or redundant business units, it appears expanding its higher-margin Amazon Business unit globally has become a top priority for its retail division to regain profitability.
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