The ‘Amagoogle’ effect

18 September 2013

Consumer-style business shopping is on the rise. According to recent research by Acquity Group, 45 per cent of corporate buyers spending in excess of $100,000 (£62,715) annually have made purchases on Amazon Supply since its launch in 2012.

Many may be dabbling in it, but according to the research 25 per cent of them have made purchases ‘frequently’. This is significant; it’s a clear indicator organisations are open to supplementing traditional and carefully constructed supply chains with product and supplier-aggregating marketplaces. Of course Amazon Supply was joined early this year by Shopping for Suppliers – Google’s first foray into the business buying market. While Google’s strategy of launching many different products in beta to gauge market interest means this might not stick around, having two of the world’s largest organisations showing an interest in the business shopping market is bound to change things. Despite Amazon and Google being potential competition for my own business, I think some of those changes could be for the better. Ease of use and intuitiveness has long been a bugbear for users of many procurement platforms. But the arrival of online shopping giants will put pressure on the market to up its game and ensure all procurement platforms do more than manage the buying processes. At odds with the ERP systems they often accompany in organisations, procurement platforms are not designed for the in-depth needs of a select few in finance. They are, essentially, online shopping platforms for organisations and should be just as easy and intuitive to use. But how far can Amazon and Google go in this market? It’s feasible commodity items can and will be purchased en masse from these sites by many companies in the future. But we all know the work and effort that goes into sourcing the right suppliers and contracts in terms of relationship management, compliance and risk management. In contrast, Google is currently selling the top spots in its business buying searches, which could distort the validity of a supplier and the relevance and quality of its products. Procurement software specialists may also bite back. They may need to move position to become providers of independent commerce hubs full of pre-vetted suppliers. Through their clients they certainly have the established supplier relationships and our Vendabank project funded by the Technology Strategy Board is one current innovation in this area. Google and Amazon’s entry into the business buying market may have some benefits but also could cause disruption. Pushing the use of consumer style technology in business is a definite plus point. But with recent scandals putting pressure on supply chain visibility, it could be the specialists rather than the generalists that win. ☛ Daniel Ball is director at Wax Digital
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