Daily Archives: September 4, 2012

What Does AmazonSupply Mean to the Business Supply Chain?

Rummaging through the Supply Management sites recently, looking for tidbits I might have missed, I came across this post over on Supply & Demand Chain Executive that asked what AmazonSupply means to the business supply chain. Given the force that Amazon is in the consumer world, it’s certainly a question worth asking, but is it a question worth answering?

If you check out the AmazonSupply beta web site, you see that they carry a wide range of products classified into thirteen categories which primarily focus on shop floor manufacturing, basic laboratory equipment, cleaning, and office supplies — which is only a sampling of the categories that are easily obtained through MFG.com or Alibaba.com. Plus, the prices on some of the products aren’t that great. For example, the LEGO Education DUPLO Playhouse Set in the Science Education Category, as I write this, is $99.58, while the same product on the legoeducation.us site is $104.95. Sure, that’s a savings of slightly over 5%, but no where near what you could get sourcing direct from the manufacturer in bulk (even at small volumes). And the DeWALT DCD940KX 18V 1/2″ Cordless XRP Drill/Driver Kit is 229.57, only 11% less than the same product on CPO PowerTools and more than what I’ve seen the same product on sale for at Home Depot – a consumer retail establishment.

In other words, it’s very convenient, and probably guaranteed not to charge you any more than the hardware / office supply / janitorial supply / laboratory supply store down the street / in your local industrial park for the vast majority of items carried, but certainly not revolutionary for anyone need to source more than one drill bit, or drill, when sourcing product. As far as I am concerned, it is NOT a threat to e-Procurement providers and, in its current form, no where near as revolutionary as Amazon was to the book distribution market a decade ago in its current form. Right now, the only people who have to worry are chains like Home Depot and Canadian Tire, Staples and Office Depot, Henry Schein and Sanplatec, and your local providers of cleaning supplies and machine parts. Basically, any store where someone would go for a one-off purchase risks losing business. But anyone who was selling in bulk, on negotiated contracts at discounted rates, hasn’t a thing to fear with AmazonSupply.

In fact, the only companies with anything to fear are e-Procurement solution providers who provide nothing more than catalogue and punch-out functionality, as AmazonSupply makes that irrelevant for many companies who will be able to use AmazonSupply as a one-stop one-off shop and the ability to easily track orders is a big plus for anyone having to deal with mounds of paper receipts. And while AmazonSupply could, with time, offer a more integrated supply management solution with financing, purchasing support, and even spend categorization and baseline analysis, I don’t see this maturing all that quickly. What good is advanced functionality that only works on a small portion of you one-off off-contract spend? In other words, for the foreseeable future, any e-Procurement platform with any level of sophistication has nothing to fear.