The Wall Street Journal recently ran a feature story “Uncle Sam wants to shop online too!”, discussing the latest developments in the so-called Amazon Amendment. The story goes on to note that Walmart.com and eBay are also submitting bids to participate.
Upstart has been tracking this growing topic and the impact it can have on businesses who sell to the government and tap into a market worth as much as $50 billion a year.
Current legislation puts a limit of $10,000 purchases through e-commerce platforms, but even that market runs to $6 billion a year according to GSA estimates. Once the program has proven itself, the purchase limit should be lifted, and federal purchasers will be able to spend whatever they need online, just like any other consumer.
Government officials are hoping that purchasing on e-commerce saves time, creates more competition for the government’s business, and provides clarity on how taxpayer money is spent.
The program will follow federal rules governing supply chains and other matters; this is where selling to the government through Amazon really shines due to the ability for federal procurement officers to specify and track specific seller criteria.
As an example, The WSJ cites Maj. Gen. Cameron G. Holt, who manages contracting for the United States Air Force. Amazon is helping to steer purchases to contractors located near bases, he said: When an Air Force officer logs on, Amazon places a blue ribbon next to sellers in those ZIP codes, allowing them to “buy local” and support neighboring businesses.
Small Business Administration statutes mandate the federal government to make at least 23% of their purchases from small businesses. Federal customers are in every state and all major cities, and these customers usually prefer working with businesses that are located near them. This is a huge market waiting to be tapped.
A 20-year-old Houston office-supply business set a sales record the year it began selling on Amazon Business in 2018. Owner Rita Bonarrigo says she believes government customers “are finding us on Amazon because, they’re looking for diversity.” Amazon labels her company as woman-owned, certified by the Small Business Administration.
“The reach was almost overwhelming,” Bonnarigo recalls. “We found customers we didn’t even know were out there.” Amazon allows their small business to highlight credentials and reach a growing market of businesses that are looking to increase their sourcing from diverse suppliers. “The fact that they can search for ‘women-owned’ on Amazon Business is a huge benefit to us.”
The ability to highlight ownership certifications has been particularly helpful in attracting new business customers. Buyers on Amazon Business can search for businesses based on the diversity certifications they’re interested in or are required by law to support. There are several categories of small business purchase quotas for government buyers – check out the complete SBA list here.
This is the power that making government sales through Amazon and other e-commerce platforms gives to businesses of any size—and this is happening! Legislation is in place now to make e-commerce the preferred choice for government buyers, a market of $50 billion in annual sales. Think about it, you can scale from their current pool of customers to serving the entire federal government.
Is your business ready?
Whatever online platform your business is selling on, there’s a whole other level of complexity required to succeed in government sales. For example, you’ll need to be aligned with an Amazon Government Sales Team – they’ll be your best friends through this process – and you’ll want to take the steps necessary to certify your business for any applicable designations – veteran-owned, minority-owned, etc. You’ll need to get up to speed with the government’s communication and verbiage in order to optimize attraction and pique interest.
It’s a little more work, but it’s well worth the effort. Another benefit is that the government mandates that small businesses are paid within 15 days of submitting an invoice. We can help you navigate the appropriate certifications and labels to help you rise to the top in listings targeted at government buyers.
Read the Wall street Journal article here, and make sure to contact UpstartWorks to get your business ready for success on an even bigger stage.