Distributors. Has Amazon Business Been Good for You?

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Conventional wisdom is that Amazon Business is not good for MRO and construction distributors.They are a technological behemoth that knows nothing about “our space” and are only successful because they can:

  • throw money at the issue / opportunity
  • have the most advanced technology and know-how to mine data
  • have access to consumers who work in companies (and hence are familiar with their system and name)
  • have a great PR engine
  • their cost of capital is low
  • have the ability to showcase millions of SKUs through their marketplace approach (thereby having virtual inventory and no costs) but a resulting revenue stream.

And they are a learning machine, as evidenced by some of their recent enhancements to Amazon Business.

A formidable competitor.Scary? Yes.  Bookstore replacing dominant? No.

Amazon Business has been good for many distributors as the challenge they represent is forcing distributors to re-evaluate their role in the channel.
While some are content to remain product aggregators, provide a warehousing function and localized delivery services (in technicalese … “the last mile”) and be credit providers, leading distributors are taking Amazon Business as a wake-up call.
They are recognizing that:

  • customer expectations have, and are, changing
  • technology is more than an ERP system
  • they are defining and communicating their value proposition and are
  • identifying customer “pain points” to create new service opportunities.

Essentially, they are affirming their value proposition and investing in their business to be easier for their customers to do business with them.The value proposition element is critical as, consider the adage,  “If a tree falls in the forest and no one hears it, did it fall”?  If distributors do not define their message and communicate it much better than they have, customers and prospects, will not hear nor prefer them …. versus any competitor.
So, while a threat, like any other large, well-funded, competitor, Amazon Business, conceptually, can create opportunities to strengthen your company, make you a better resource for your customers and improve the profitability of your business.  Analyzing and evaluating Amazon Business can make you stronger.And yes, Amazon Business could be a sales channel for you for selective opportunities.
 
Need help thinking “differently” to compete? Sometimes an outside perspective helps. Give us a call.

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