Amazon having acquired its first significant public-sector contract in the UK has seemingly launched a compulsive incursion into the country’s public-sector procurement industry with an approximately £600 million deal. Through this agreement, the e-commerce giant will be selling every basic item to the schools, emergency services and social care providers of Yorkshire.
As per sources, the online shopping goliath is aiming to become a one-stop-shop for public bodies of Yorkshire and replace a complicated procurement system that involves a number of suppliers.
Through the new Amazon Business division, services ranging from education, office supplies, social care and emergency services will be provided. The deal covers 13 local authority areas. Yorkshire Purchasing Organization (YPO), which is a procurement body owned by local authorities, has apparently signed the five-year deal with Amazon. The aim of the YPO is to bring down the cost of goods by entering into mass deal agreements with suppliers.
Reliable analysis by a data company that tracks public sector contracts suggests that Amazon, after having revolutionized consumer retail habits is launching its next step and attempting to shape the purchasing patterns of the public sector as well. Sales through the dedicated Amazon site are being estimated to surpass £600m during the five-year agreement period.
A contract notice published by the YPO reportedly suggested that Amazon turned out to be the sole contractor that was operating in the market at present that showed interest for the job. Though this is Amazon’s first public sector venture in the UK, similar agreements are already in place in the United States where, in 2017, the company in an agreement with purchasing organization U.S. Communities settled to supply parts of the public sector.
The deal has faced criticism in UK as it is considered to take business away from local suppliers.
Amazon launched the Amazon Business division in the UK targeting the multi-billion-pound B2B market. The new division showcases features that are appealing to the business community such as a tracking system to help purchasing managers keep account of expenditure and a VAT-exclusive pricing.