Amazon Is Attacking A Potential Trillion-Dollar Industry And No One Ever Talks About It
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Amazon founder Jeff Bezos.
For all the attention focused on Amazon's new TV-streaming device and expanding selection of Prime Instant TV and movies, the company's next big moneymaker could be something scarcely talked about and entirely less sexy: wholesale distribution.
In an incredibly interesting deep dive, Forbes reporter Clare O'Connor writes that AmazonSupply, the wholesale site that Amazon launched in 2012, is poised to become an incredibly large business for the company.
When AmazonSupply — which is still listed as a beta product — went live in April 2012, it had 500,000 different products for sale. It now has more than 2.2 million spanning 17 categories, including janitorial supplies, cutting tools, food service and groceries, and office supplies.
That's huge, especially compared to most of the other 35,000 wholesale distributors in the U.S., almost all of which are regional and family-run companies. W.W. Grainger, one of the biggest players in the wholesale space, controls 6% of the entire business-to-business market but has only 1.2 million products.
Boston Consulting Group told Forbes that AmazonSupply's prices were about 25% lower than others in the industry.
Of course, wholesale is an extremely low-margin business, with most companies making only between 2% and 4% on each sale. But Amazon's model and scale are accustomed to those kinds of razor-thin margins, and the potential market is enormous: Wholesalers made $7.2 trillion in revenue in 2012, according to recent Census data.
Although Amazon wouldn't reveal how many of its 125,000 employees work on AmazonSupply, there are 17 open positions on its jobs page.
Check out the Forbes article here »
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