RBC Says Amazon’s B2B Unit Will Be Worth $31B By 2023

Royal Bank of Canada (RBC) Capital said there’s an overlooked part of Amazon’s ecosphere of services that’s being casually overlooked but will be extremely profitable for the company in the coming years, according to a report by CNBC.

RBC said Amazon Business will see revenue exceeding over $30 billion in just a few years.

“We believe Amazon Business has largely been ignored by investors,” said Mark Mahaney, RBC Capital Markets analyst.

Amazon Business is the eCommerce giant’s B2B unit, and it serves all sorts of organizations, including large companies, hospitals, schools and colleges. It can source things like office supplies or even large industrial products.

“With GMV [gross merchandise volume] over $10 billion and growing faster than Amazon’s Retail and AWS [Amazon Web Services] segments, it continues to gain market share while also triggering seismic changes to eCommerce business models across the industrial distributor landscape, with Underperform-rated Grainger still in the cross hairs,” Mahaney said.

By 2023, RBC estimates the business will see $31 billion in revenue on $52 billion in sales.

Amazon Business was launched in 2015, and it saw $1 billion in sales during its first year. Last year, the unit hit a milestone of more than 2 million customers around the world, and 200,000 merchants offering hundreds of millions of products.

The unit is so successful that it surpassed other higher-profile offerings by Amazon, like AWS. The Business segment is even growing faster than Amazon’s retail business, which had an annual compound rate growth over three years of 28 percent. AWS growth is at 48 percent, but Business is at 115 percent, which far exceeds any other Amazon ventures.

“We believe Amazon is well positioned to gain market share,” Mahaney said.

“Amazon has the right competencies — substantial competences include logistics, large scale, loyal customer base, and technology infrastructure,” he added.

RBC placed an outperform rating on Amazon shares.