The strategy: Amazon plans to grow its high-margin, high-growth B2B ecommerce division, Amazon Business, by expanding into new markets in Europe and elsewhere, per Reuters.
- The retail giant launched Amazon Business in the US in 2015, before expanding into Germany, Britain, Italy, Spain, and France.
- “We believe that we’ve only scratched the surface of what’s possible to date, and plan to keep building the features our business customers tell us they need and want,” wrote Amazon CEO Andy Jassy in his letter to shareholders.
Building off a sizable base: Amazon Business has more than 6 million active customers, including 96 of the companies listed in the global Fortune 100, wrote Jassy, who also noted the division drives roughly $35 billion in annualized gross sales.
- Amazon Business' gross sales in Europe grew at a compound annual rate of 25% from 2020 to 2022, Alexandre Gagnon, vice president, told Reuters.
- In the US, we expect Amazon Business product sales to grow 20.7% this year to $43.05 billion.
A major growth channel: While Amazon is in the midst of a slew of aggressive cost-cutting measures that include layoffs and pausing construction on its HQ2, it continues to invest in areas such as B2B ecommerce where it sees significant growth opportunities.
B2B ecommerce is a massive market. Our US B2B Ecommerce Forecast expects nearly $1.9 trillion in B2B product sales over ecommerce websites in the US alone this year.
Amazon has room to grow its share. Even though Amazon Business is the leading US third-party marketplace, we expect it to account for just 2.3% of the US B2B ecommerce market this year.
B2B ecommerce offers higher margins than its main consumer business. Businesses buy in large quantities. That enables Amazon Business to make fewer deliveries than for its consumer business, which requires it to deliver millions of small parcels to customers’ homes.
European workers have returned to their offices. While US office occupancy rates remain stagnant around 40% to 60% of prepandemic levels, it's a different situation in Europe and the Middle East where rates range from 70% to 90%, per JLL data reported in The Wall Street Journal. In some Asian countries rates range even higher, from 80% to 110%, which means some workers are spending more time in their offices than they did before the pandemic.
The big takeaway: B2B ecommerce represents a huge market without any dominant players.
- That’s why it's a natural place for Amazon to generate growth both domestically and abroad.
Go further: Read our US B2B Ecommerce Forecast 2022–2026 report.