Documents Show Amazon's Secret Ambition To Take Over Office Supply

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Documents Show Amazon's Secret Ambition To Take Over Office Supply

 news 2016-09-20 at 1:10:11 pm Views: 183
  • #46860

    Court documents show Amazon's secret ambition to take over the industrial and office supply market in 3 years
    By Eugene Kim.

    Court documents show that Amazon considers its recently launched industrial and office supply business, Amazon Business, a "top priority," and that it sees incumbents Grainger and Staples as its main competitors.

    According to financial research firm RBC Capital, Amazon Business's chief Prentis Wilson made these comments in court where he was subpoenaed as part of the Staples-Office Depot antitrust trial earlier this year. The merger was eventually blocked by the federal court who saw it as violating antitrust law.

    RBC Capital's analyst Deane Dray was able to see a transcript of Wilson's testimony and gave a summary of some of his comments that show the urgency in Amazon Business's plan. Here's a quick run down of the the key takeaways from the note:

    Amazon senior level management calls Amazon Business a "top priority" and "must win" - 
    Internal documents identify only Grainger, the $13 billion industrial supplier, and office supply seller Staples as its main competitors - 
    Amazon sees the competition as a "land grab," but says there's only a "limited window" that could close by 2018 in the market - 
    Amazon is "pleasantly surprised" by the response from large customers (Amazon Business initially targeted small and medium sized businesses) - 
    Amazon Business is using custom pricing as a key difference maker vs. Grainger's more opaque pricing process - 
    Amazon Business plans to launch 80-plus new features to make the selling and buying process easier - 
    Amazon Business plans to keep hiring, but the exact number was redacted

    "Now, for the first time, investors have some specifics directly from the head of Amazon Business that corroborate our view that Amazon/ecommerce represents a formidable threat to Grainger," Dray writes in the note.

    Amazon Business started at the end of April 2015 and replaced a service called Amazon Supply that had launched in 2012. It sells hundreds of millions of products from IT and lab equipment to basic office supplies. In May, Amazon disclosed that Amazon Business sold over $1 billion worth of products in just a year since its launch.