Amazon takes the Procure-to-Pay path

This article originally appeared in Décision Achats, a leading French procurement magazine, on July 2, 2019 (reprinted here with their authorization).

Since February, 2019, Determine has been offering the Amazon Business punch-out integration right from the Determine Cloud Platform. Several customers have already adopted it, including SQLI (an international agency dedicated to digital experience). SQLI’s CPO Laurent Jeanmaire explains how the adoption of Amazon Business punch-out catalogs helped the company drastically reduce the company’s maverick spend.

E-commerce platforms have been an essential part of the B2C model for a few years now. In the B2B space, even though the adoption of this business model was initially slow due to the many challenges around compliance, price negotiation, the rationalization of items and supplier databases, it is now considered a must have.

As in B2C, finding the right product at the right price and having the capacity to rate and comment on a purchased product are features required by Purchasing Departments. Amazon Business is on track to take the lion’s share of this promising market. Launched in 2015, Amazon Business was made available to French companies more than a year ago. “Our goal is to meet the business’s needs for one-time, non-strategic purchases, what we call Class C purchases,” said Amelie Veron, Head of Amazon Business France. “Amazon Business provides more than 250 million products in one place with just a few clicks, saving time and improving efficiency. The number of available products increases steadily because we are sourcing new suppliers every day.”

Acting as a supplier, Amazon Business can be embedded right in the Procure-to-Pay process. Determine, a provider of SaaS source-to-pay solutions, has been offering punch-out catalog integration for 10 years and is now offering Amazon Business punch-out integration right from the Determine Cloud Platform. “Users now have instant access to Amazon Business from within the Determine Procurement Solution,” explains Romain Chauvet, Director of EMEA Product Value at Determine. “The integration combines the Amazon user experience with Determine’s flexible business features, which creates many benefits: Total compliance (certified suppliers, authorized catalogs, approval workflows), automated AP process, cost allocation and budget management, as well as substantial savings realized through the outsourcing of catalog management and better pricing.”

One of Determine’s customers who chose to implement the Amazon Business catalog is Laurent Jeanmaire, CPO of SQLI. “We were already using the Amazon Business catalog before implementing the Determine Cloud Platform in 2018. Setting it up was very simple, and only took a few minutes. Previously, non-strategic purchases made on Amazon Business were managed through employees’ expense reports. By integrating Amazon Business in the Determine Platform, not only were we able to eliminate these expense reports but also drastically reduce maverick spend on categories covered by Amazon. The integration amplified the benefits of Amazon Business.” Regarding user feedback, Laurent Jeanmaire adds, “Of course they are happy! They use a tool they already know how to use from their B2C life, while being 100% compliant with the company purchasing rules.”

Companies that want to access the catalog simply need to set up Amazon Business as a new supplier in their solution. Then, they have access to a customizable management tool that offers different levels of control. “It works like a traffic light, the green light for a selection of preferred suppliers (no validation required) , the orange light for restricted products that require a validation from managers, and the red light that blocks some categories. Purchasing managers (catalog managers) are in charge of selecting the color for each product or category.” The tool communicates with users to let them know which type of product they are buying.

Laurent Jeanmaire of SQLI has little use for the “green light” that allows users to purchase items without going through a validation workflow. “For now,” he says, “once the item is added to the shopping cart, the purchase requisition follows the usual validation workflow — we have kept our validation system [in the Determine platform].”

Dynamic pricing

Amazon prices “are set by sellers and Amazon takes an average commission fee of 15%, depending on the products,” says Amélie Véron, Head of Amazon Business France. Everything works with a dynamic pricing system. Between the moment the products are put in the cart and the final check-out process, prices can change. That means a company’s validation workflow better be quick. “When the prices are volatile, we can end up with invoices that do not match the order, so we can have good, as well as unpleasant, surprises,” said Laurent Jeanmaire. But, he specifies, SQLI has had “more positive than negative deviations.”

“It is possible to block prices, but activating this feature adds additional steps to the process,” says Amelie Veron. “Prices can be frozen for several days, depending on the user experience that the company wants to offer to its employees.” If invoices are input and reconciled in the Determine Cloud Platform, “The Determine Cloud Platform knows how to manage the invoice reconciliation tolerances,” says Gerard Dahan, Chief Marketing Officer and Senior Vice President EMEA at Determine. Invoices sent in PDF format by suppliers are integrated in the platform.

On the reporting side, Amazon Business provides live dashboards to its customers, with data being fed into the Determine Cloud Platform and integrated with a company’s global order reporting. Finally, delivery costs are covered by the purchasing organization and are set by sellers who have two options: Use their own delivery system or go through the Amazon logistics network. This second option allows sellers to offer Amazon’s next-day delivery for orders above 25 Euros. Amazon manages the returns, just as they do for B2C purchases.

Asked about Amazon Business’s relationship with sellers, Amélie Véron indicates that “The prices are set by the sellers and our commission fees are public.” Payment takes “A maximum period of 15 days,” she adds. According to Amélie Véron, being on Amazon Business is a real opportunity for sellers to access the B2B market and expand their trading area. “Today there are more than 10,000 French-based very small to small / medium enterprises selling on Amazon who have access to the global European market .”

Author Aude Guesnon , Chief Editor, Décision Achats