Preparing for the Future Amazon - Modern Distribution Management

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Preparing for the Future Amazon

While AmazonSupply is considered a nonfactor by many distributors today, that reality may change.

Amazon and AmazonSupply aren't keeping distributors awake at night to the same degree they did in previous years, according to results in the MDM Industry Outlook Survey, which outlined and analyzed key trends and issues affecting how distributors will do business in 2015. The companies' diminishing presence in the heads of wholesale distribution executives was reinforced during the recent MDM Webcast, 2015 Distribution Industry Outlook.

"Ama­zonSupply … is pretty much a nonfactor from what we’re hearing," David J. Manthey, senior research analyst, industrial distribution services, Robert W. Baird & Co., said during the webcast. "I think it’s out there. There’s a certain group that’s using it, but it's much less of a factor than I think people thought initially. I would say that the respondents to the surveys are much more concerned about what’s going on at Grainger and MSC and McMaster-Carr than they are about Amazon specifically."

However, just because AmazonSupply isn't impacting your business now doesn't mean that it won't have an impact going forward. Amazon has a strong history of disrupting businesses that it targets, according to Brad Stone, author of The Everything Store: Jeff Bezos and the Age of Amazon. Stone spoke at the NAW 2015 Executive Summit in Washington, DC, this week.

"It's time for everyone in this room to truly get ready," Stone said.

Stone recommends a three-pronged approach for that preparation:

  1. Be omnichannel. While Amazon is an online force to be reckoned with, that's all it is. And though online customers are becoming a more significant source of sales for many distributors, customers want the ability to transact in multiple manners. They want to research online, they want to be able to call someone with questions, they may even want to stop into a branch to see the product before purchasing it. You have to be available on all the platforms or risk losing customers to the convenience of Amazon.
  2. Focus on your business – what it is you do best. Amazon is convenient, and Amazon is often cheaper, but that's because they don't provide the expertise and service that you do. Make sure you understand why your products may be more expensive and be able to explain that to your customers. For example, Stone said, a local distributor can respond more readily to a localized disaster such as broken pipes from a deep freeze.
  3. Constantly get better. Make sure your business isn't just relying on what it has always done, Stone said, because Amazon isn't; that's just not Bezos' nature. And if you're sitting still while Amazon keeps improving, you're just opening the door wider for them.

Distributors can also use Amazon to reach wider audiences through its marketplace. But be careful that you're not making it smarter, Stone says. Be selective about the products that you list through the service – maybe focusing on highly commoditized products or slow-moving stock – so that you're not providing a target product for the online giant to target for itself.

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