Case Study: How Amazon Is Impacting The Office Supplies Market

Amazon Prime Day 15th July 2015

Prime Day shoppers will be able to take advantage of thousands of Lightning Deals and seven Deals of the Day

Amazon will turn 20 on Wednesday, 15th July and it is celebrating in style with Prime Day. This one day event is expected to make Black Friday look like a quiet trading day and gives the UK office supplies market a taste of things to come with the launhc of Amazon Business just around the corner.

Prime Time

Exclusive to Amazon Prime members in the US, UK, Spain, Japan, Italy, Germany, France, Canada and Austria, shoppers on Prime Day will be able to take advantage of thousands of Lightning Deals and seven Deals of the Day. For consumers who are not yet Prime subscribers, they have the opportunity to take up the 30 free day trial with the option after the trial to become paying subscribers at the cost of £79 per year.

Prime membership is popular with consumers, with free unlimited next day delivery and access to other exclusive deals, but more importantly it has proved great business for Amazon.  In a survey carried out by the Huffington Post earlier this year, US subscribers to the service were found to be spending $1500 on the site annually in comparison to non subscribers who were spending less than half that amount at $625 per year.

One Hour Delivery Launched in London

In June, Amazon launched a new delivery service within certain areas of London enabling Prime customers to have orders delivered within an hour of ordering, for a charge of £6.99 or, for free if they were happy to wait 2 hours. The service is available between 8am and midnight, seven days a week.

Covering over 10,000 products including essentials such as coffee and batteries, Amazon are expected to roll out this service to other areas of London and other major UK cities during this year.

Amazon Business Waits Around The Corner

Whilst in the UK the summer school holidays have only just begun, offers on Back to School supplies are expected to be very popular on Prime Day. For UK office supplies businesses, it gives a preview of the shape of things to come. Amazon Business has already launched in the US and is having a drastic effect on the market.

As we discussed in our article Staples Merger Doubts After Sysco Ruling with its aggressive pricing policy Amazon has already obtained a large market share in the office supplies category. With the launch of Amazon Business in the US in April 2015, Amazon is looking to attract SMB customers with a portfolio of products including office supplies, IT and food and beverages.

Amazon On The High Street?

Amazon on the high street

In a recent survey 53% of UK shoppers’ stated they would like to see Amazon on the high street

Since last Autumn there have been several rumours regarding the prospect of Amazon having a presence on the high street.  Earlier this year it was thought they may buy stores from US electronics retailer Radio Shack as it filed for bankruptcy.  In the UK it already has 16,000 pickup points for customers to collect their parcels from newsagents, post offices and convenience stores within the Collect+ network.

The “Bricks and Clicks” concept must be very tempting one for Amazon to enter, and would see a challenge to Apple’s success on the high street. In a survey carried out by retail agency Live and Breathe, when asked which online retailer they would like to see on the high street, 53% of the 1000 UK shoppers’ interviewed stated Amazon as their choice.

Pricing Is Key

Amazon Business has launched in US

Amazon Business has a portfolio of products including office supplies, IT and food and beverages

As it enters into new markets, Amazon is no longer just a B2C retailer challenging traditional high street retailers and eCommerce businesses.

At the OPI’s Global Forum in Chicago in May, EVO Group CEO Robert Baldrey put forward “10 Big Questions for the Industry” with his peers from the OP Industry.  One of the main issues addressed at this forum and one that the industry must get right was pricing. Speaking about the growing threat posed by Amazon Business, Baldrey explained:

“Amazon Business has now launched in the US offering its excellent service levels and huge product range with the added benefits of customer service agents on the phone, and reporting tools and authorisation controls for procurement managers to use. Above all, it’s offering credit terms. The traditional wholesaler-dealer channel can survive and thrive against this threat, but not if we cling to the traditional methods of working.”

The challenge for B2B resellers, wholesalers and distributors now face is how their business models must adapt and change to take on this retail phenomenon.

Sam Rose