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Amazon Prime a Bellwether for SMB Cloud Services Adoption

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The new LSA survey of 265 U.S. SMBs showed that 71% were members of Amazon Prime. The fact that among this group 72% now use it for business-related purchases points to a potential game changer — the use of cloud based services to manage the supply chain.

As small business owners begin to use Amazon to source everything from office supplies to tools to auto parts to antiseptic gauze, traditional suppliers to offices, car repair shops and hospitals will come under increasing pressure to match Amazon’s price and convenience, and many will fail as a result.

The Local Search Association has launched a new research initiative called the Tech Adoption Index, which tracks how small businesses are adapting cloud based software to use in the day to day operation of their businesses, including accounting, payroll, human resources, customer relationship management, payments and supply chain.

As small businesses adopt cloud based tools, for greater functionality and convenience or cost savings, traditional providers of business services face disruption. The new survey on Amazon Prime offers more evidence that the shift is taking place.

A key thesis driving the Tech Adoption Index is that as cloud services providers acquire more small business customers, they will expand their menu of services into natural adjacencies, e.g., Square’s recent move into lending from its origins in payments. As this occurs, those selling products and services to small businesses will face new sources of competition.

Perhaps the most compelling datapoint from the new LSA survey on Amazon Prime is that 60% of respondents who use Prime to shop for their business say they now buy less from traditional providers as a result. That’s direct evidence of disruption.

The first wave of Tech Adoption Index survey data found that 10% of SMBs have moved their supply chain to the cloud, with another 14% planning to do so in the next few years. The increasing use of Prime as a supply chain tool suggests we may see an acceleration of this shift in coming waves of research. LSA plans to run the Tech Adoption Index survey twice a year, with the next wave coming out in Q4 2017.

You can access a free report here that summarizes of the first wave of Tech Adoption Index data.

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