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Amazon Business represents more than a new competitor – it’s an entirely new business model. To address new rules Amazon continually rewrites for traditional channel competition, distributors need to develop new strategies. This article, part 4 in our series, outlines key response alternatives for distributors and the industry collectively to define value, keep customers engaged and avoid displacement.
In October 2017, Spend Matters surveyed 100 procurement professionals. In this research – sponsored by Amazon Business – “tail spend improvement was the top priority heading into 2018.” Spend Matters defines “tail spend” as the “85 percent - 90 percent of the suppliers that represent less than 5 percent - 10 percent of spend.” (Download the research report here.)
We believe Amazon Business was developed, in part, to capture these purchases, which are difficult, time-consuming and expensive to execute. Since launching in 2015, Amazon Business has become an enormous competitor to traditional distribution – from nibbling at the edges of many product portfolios to an increasingly expansive existential threat. Its value proposition, fueled by massive data analysis, has enticed one million purchasing organizations – as of July 2017 – to become customers. What’s next in 2018?
To read the rest of this article plus much more analysis of the threat distribution faces with Amazon Business, click here to download our free report, Your Amazon Business Playbook.