Canalys Channels Forum 2018 Pity the poor resellers, because Jeff Bezos and his Amazon Business business is coming for their business, and they'll play ball with him at their own peril, so an analyst claims.
Currently, the division operates in 21 countries, eight of which are in Europe, including Germany, France, Poland and the UK, but is expected to expand to a total of 10 in Europe by the end of 2019, Steve Brazier, Canalys CEO, told a room full of resellers, distributors and tech vendors at his annual forum last week.
Launched in 2015, Amazon Business generated $10bn of sales in a year and third parties contributed half of this via the shop-within-a-shop concept, it confirmed last month.
"They are a threat to you, there's no question," Brazier said. "Our message to the vendors is: if Amazon wins fair and square, ie, it buys products at the same price and manages to provide better customer service and cheaper prices, and it wins a customer, that is fine.
"But we think Amazon Business will put the vendors under a lot of pressure for special terms and conditions and deals, and we strongly encourage vendors not to... It will be in your long-term disadvantage to do that."
The advice for the resellers in the room was not to play ball with Amazon's shop-in-a-shop route to market as it will make them "even stronger" and "let [Amazon] take your customer relationship away".
Amazon has form in pressuring suppliers to see things its way, sometimes deprioritising their products in its search function - Brad Stone, author of The Everything Store said as much in his 2013 biography of Bezos.
Dion Weisler, CEO at HP Inc, said his firm "treats Amazon like other large partners" and does "not give them preferential treatment". He agreed they are a "force to be reckoned with".
He pointed to one example of Stanford Hospital backing off all of its procurement to Amazon Business from toilet rolls to computer products and "everything else in between".
Competing purely on a transactional basis will mean that Amazon Business wins, the HP boss said, but tech suppliers that have an "intimate relationship with their customers" will power through.
"That's something [Amazon] can't do," Weisler added.
The reaction from tech suppliers on a panel was fairly emphatic: if all you do is resell boxes, the clock is ticking. Rudolf Hotter, COO at German-HQ'd Cancom, said: "To team up with Amazon [Business] is like to team up with the devil. We team up with Amazon but not in a transactional area."
Rinaldo Ballerio, CEO at Elmec Informatica in Italy, agreed its first line of defence against Amazon Business was managed services; he said selling hardware as a service would stave off competition from the giant because it is purely a transactional sales engine. ®