Amazon enters business supplies market

Amazon is targeting companies with a new service selling business supplies, such as laptops, power tools and cleaning products.

Called Amazon Business, the online marketplace offers firms VAT-free pricing, VAT invoices, and software to track and limit spending.

The new venture adds to Amazon's huge range of businesses from online video, to groceries to cloud computing.

Amazon has had success with a similar service launched in the US in 2015.

In its first year of operation in the US, the business supply service generated more than $1bn (£800m) in sales. It launched a similar service in Germany last year.

The UK online business-to-business market was worth £96.5bn in 2015 according to the ONS, only slightly lower than the £119bn spent by consumers.

Amazon said there would be more than 100 million products available on the new marketplace, which would include ordinary office supplies and storage solutions as well as more specialist products such as microscopes and test-tubes.

Bill Burkland, Head of Amazon Business UK said the service would offer "a new set of unique business features - from reporting and analytics to spending limits and purchasing workflow approvals". It will also offer free one-day delivery on orders of £30 or more.

"For many small businesses this will be a welcome opportunity to get everything in one place," said Bryan Roberts a retail analyst at TCC Global.

'Natural extension'

Laith Khalaf, senior analyst and stockbrokers, Hargreaves Lansdown said further competition was likely to mean keener pricing for business supplies. He said Staples and Office Depot were the businesses most likely to be affected by the increased competition.

"I can't speak to the quality or function of what [Amazon has] got, but if you're in scenario that you're ordering lots of stuff, having a service that tracks and analyses your purchases is very useful."

For Amazon it represented a logical move, he added. "It is a more natural extension of their business than video content or expanding into groceries. Its nearer to its core business than those enterprises."

"They have got the infrastructure in place in terms of the website, the suppliers who'll want to sell their services and the logistic services... so it makes sense to extend that to business customers as well."