Amazon Forum Preview: The Race for Second - Will Distributors Become a Marketplace? (Part 2) - Modern Distribution Management

Log In

Amazon Forum Preview: The Race for Second — Will Distributors Become a Marketplace? (Part 2)

How B2B distributors can challenge Amazon at its own game.

In Part 2 of this two-part series, Alex Moazed, founder and CEO of platform-innovation company Applico, uses past examples to propose a model for how B2B distributors can challenge Amazon at its own game. You can read Part 1 here. Alex is also a featured speaker at MDM’s Amazon Business Forum in December.

Cooperation Can Overcome Platform Disruption

In Part 1 of this series, I wrote about how the medium-to-large incumbents who dominate specific verticals could band together to pose a real threat to Amazon and provide an alternative marketplace for smaller distributors. The good news is that such a cooperative model is by no means unprecedented. In fact, the B2B distribution industry looks in some ways like the financial services industry: lots of big but fragmented players who are all threatened by the entry of big tech platforms into their industry.

In September 2017, more than 30 banks (including Wells Fargo, JP Morgan Chase, Citi, Capital One, and Bank of America) banded together to create Zelle, a casual person-to-person payments platform. Zelle was the incumbents’ response to Venmo, a subsidiary of Paypal that had caught on fast with consumers who wanted a simple, mobile way to exchange money between friends.

By June 2018, Zelle was on pace to surpass Venmo. This success echoes the story a generation earlier of Visa and Mastercard, which were originally bank-owned cooperatives created in response to the growing threat of proprietary payment platforms like American Express.

Over the past decade, a similar story has played out in the smartphone market. Google owes the success of Android to cooperation among device manufacturers who are traditionally competitors. In January 2007, Apple released the first iPhone and revolutionized what a smartphone could be. In July 2008, it unveiled its App Store and opened up its operating system to third-party app developers. Google wasn’t far behind; the following month, Android also unveiled its app marketplace. However, unlike Apple, Google did not have a device that could carry Android to market in a large, scalable manner.

Device manufacturers such as HTC, Samsung and Motorola did not command enough market share alone. To address its problem, Google brought together six device manufacturers in 2007 in the Open Handset Alliance who would run Android’s open source operating systems on their phones. Today the alliance includes 23 handset manufacturers.

Through the alliance, Android emerged as a challenger to Apple, and the two have effectively become a duopoly in the smartphone market. Blackberry was all but forced out of the market and, despite major investment, Microsoft’s phones never captured more than a few percent of the market.

Winner Takes All

In the cases of Walmart, Zelle, and the Open Handset Alliance, challengers to tech monopolies eventually grew to such scale that they formed a duopoly. That’s a typical dynamic within platform-dominated industries. When platforms compete, one of two things may happen: either the winner takes all (e.g. Facebook vs. Myspace) or the winner takes half. Rarely do mature platform markets fragment beyond two main competitors.

Without cooperation, the best path would be for an incumbent to try to launch a vertical-specific marketplace within its industry. Given the highly specific nature of network effects, there is ample opportunity for a number of industry-specific marketplaces to flourish alongside Amazon Business’s dominant generalist marketplace. This route puts the platform in a strong competitive position, certainly stronger than any distributor today, but not in a position to beat Amazon.

However, with B2B distribution not yet under the thumb of a dominant marketplace, incumbent distributors have the rare opportunity to achieve more. Traditional companies can beat Amazon at its own game by taking a page from the Open Handset Alliance or from the financiers who banded together to fund Zelle, and before it Visa and Mastercard. In the end, Android surpassed Apple, Zelle surpassed Venmo, and Visa and Mastercard surpassed American Express. 

That could be B2B incumbents’ story too. All it takes is strategic cooperation.

Alex Moazed is the founder and CEO of Applico. Visit for more information.

MDM’s Forum, “How Distributors Should Respond to Amazon Business”, is being held in Denver on December 4-6. Visit for more information or to book your spot. 


Share this article

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

Get the MDM Update Newsletter

Wholesale distribution news and trends delivered right to your inbox.

Sign-up for our free newsletter and get:

  • Up-to-date news in a quick-to-read format
  • Free access to webcasts, podcasts and live events
  • Exclusive whitepapers, research and reports
  • And more!


articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events



You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.

Register for full access

By providing your email, you agree to receive announcements from us and our partners for our newsletter, events, surveys, and partner resources per MDM Terms & Conditions. You can withdraw consent at any time.

Learn More about Custom Reports

Request a Market Prospector Demo

  • This field is for validation purposes and should be left unchanged.