£400 million YPO framework sees Amazon take giant step into public sector procurement
One of UK’s largest buying organisation, supplying products and frameworks to a wide range of public sector organisations, has launched a major new agreement with Amazon Business, providing public sector buyers access to the digital behemoth’s extensive product range and unique benefits.
Publicly owned by a consortium of 13 local authorities, the Yorkshire Purchasing Organisation (YPO) provides goods and services to public sector bodies including schools, local authorities, charities, emergency services, as well as businesses including care homes and nurseries.
According to YPO, eight in 10 of its customers already purchase using Amazon, using the digital marketplace for ad-hoc spending that falls below EU thresholds, however, there has been no framework that exists to accommodate this spend compliantly.
Launched at the end of May and worth £400million, the new four-year agreement between YPO and Amazon Business marks the first-time public-sector bodies will have a compliant purchasing route when buying from the world’s leading digital marketplace.
It will see the world’s largest digital marketplace gain a significant foothold in public sector procurement, offering public sector customers the opportunity to access its hundreds of millions of products, including from tens of thousands of smaller independent suppliers.
A key difference between Amazon’s normal B2C platform and its B2B platform is access to a credit facility. According to YPO’s user guide, customers will be provided with a credit facility if they apply to ‘Pay on Invoice’, based on their organisation’s credit rating.
In addition, the buying organisation states that by accessing Amazon Business via YPO, its customers will be earning income for the public purse with a percentage of each sale given back to the public sector.
Discussing the new Amazon Business framework, Simon Hill, Managing Director of YPO, commented: “The demand for innovative ways to buy better is one of the highest priorities for public sector organisations and our new framework agreement represents a forward-thinking approach to public sector purchasing. It offers brand-new benefits in a first for a public sector buying organisation in the UK.
“Our recent customer survey showed that 80% of our customers already use Amazon so this will give them an opportunity to complete their list of requirements through YPO, without fragmenting their spend and threatening the ‘one-stop-shop’ proposition.”
Local authorities, multi-academy trusts and other public sector bodies will be able to benefit from Amazon logistical might, with free one-day delivery service for orders over £30 or Amazon Prime customers, as well as enjoy a number of unique features, such as discounted pricing.
YPO customers will be directed to Amazon Business where they can set up their account and use a framework to buy products YPO currently doesn’t sell confirmed Simon, emphasising that Amazon Business’ products have been compliantly sourced.
“YPO will continue to sell its 30,000 products but many more business-related products will now be available, everything from agricultural supplies to medical equipment,” stated Simon.
“Customers will also benefit from an enhanced offer in terms of value as well as service, such as competitive prices and delivery accessed through a single YPO route.”
Launched in the UK in April 2017, Amazon Business is aiming to capitalise on Britain B2B e-commerce market, estimated to be worth £100 billion, according to the Office for National Statistics.
The new framework contract with YPO represents a significant step in Amazon’s ambition to expand from being the market leading B2C digital marketplace to the leader in the B2B space as well, becoming the go-to one-stop-shop for public sector buyers.
With over 100 pre-procured frameworks open to the public sector to access, including frameworks for mobility aids supplied by NRS Healthcare, Harvest Healthcare and Caretech UK, there is a risk the new agreement could impact on YPO’s pre-existing frameworks where there will be inevitable product crossovers.
According to YPO’s Amazon Business Framework User Guide, however, public bodies that already have existing frameworks for some of the many products Amazon Business provides can review the product ranges with compliant contracts already in place and add procurement restrictions.
With the potential to significantly disrupt the market, for suppliers in the industry keen to engage with public sector buyers, it may add further pressure to engage with the digital behemoth’s seller programme and sell through its B2B platform.
Andrew Stevenson, interim Director General of the British Healthcare Trades Association, commented: “This development indicates the potential direction of travel for more aspects of public sector procurement. In the meantime, businesses may see this as an opportunity for them to supply or purchase products in a convenient way, but it may also be a threat to other models of procurement”.
