Why Amazon Doesn’t Mean the End of Distribution - Modern Distribution Management

Why Amazon Doesn’t Mean the End of Distribution

Amazon Business' scale and capabilities are intimidating. But as Benj Cohen advises here, distributors can fight fire with fire.
Amazon Business' scale and capabilities are intimidating. But as Benj Cohen advises here, distributors can fight fire with fire.

Less than a decade ago, Amazon announced it would offer B2B eCommerce. As one of the largest eCommerce sites in the world, Amazon quickly became a topic of conversation among distributors. Would this massive disruptor lead to their demise?

In 2015, Amazon Business racked up $1 billion in sales in its first year. Since then, Amazon has grown at an unprecedented rate. Amazon Business gives procurement professionals the selection, convenience and value of its B2C marketplace.

Experts project that Amazon Business could post $83.1 billion of annual gross merchandise volume as soon as 2025. Digital Commerce 360 estimates that these sales would account for one-third of B2B marketplace sales.

What does this mean for you?

To compete, distributors need to improve their customer experience. And you don’t have to do it alone. You can become more profitable with the help of online tools for distributors – and enablers, companies who can arm you with the same kinds of technology Amazon uses.

Disruptors Vs. Enablers

Like Amazon, digital disruptors use new technology and business models to displace current companies. They often make the “first move” from a competitive standpoint, leaving traditional distributors reeling to adapt.

As initial disruption settles down, enablers emerge to help distributors succeed by adapting the new technology. Enablers develop solutions for distributors to stay competitive. And, with the right online tools for distributors, you can also become a disruptor.

With the help of enablers, distributors give customers the benefits they want, including personalized recommendations, omnichannel interactions and more convenient deliveries.

Frequently, enablers enter the marketplace after disruptors to help traditional distributors respond to disruption. For example, in the B2B marketplace, disruptors like Ankorstore and Faire created the space for enablers Proton.ai and Enable to grow and help traditional distributors.

In freight brokerage, disruptors Uber Freight and Convoy led to enablers Parade and Emerge. Convoy and Uber Freight streamlined the process of matching truckers with loads by digitizing the process in app-based workflows. Companies like Parade and Emerge are offering the same benefits to traditional distributors.

TechCrunch gives three ways enablers can help distributors respond to disruption:

  • Fight Back – Enablers allow distributors to go head-to-head with disruptors to compete for existing customers. Enablers in this category include RPA Labs (online quoting) and Freightify (rate management and online booking).
  • Expand – Distributors can develop new ways to win customers through enhanced value propositions. Enablers include Proton.ai (brings sales intelligence to distributors) and Enable (managing rebates to incentivize retailers via promotions and pricing).
  • Retrench – These enablers allow distributors to fight competitive pressures by increasing operational efficiencies and lowering costs. Enablers include Vector.ai (leverages machine learning to automate identification and extraction of critical data) and others.

Using Technology for a Competitive Advantage

New technology sometimes poses an initial threat to traditional distributors. But, with the aid of enablers, this technology can help distributors compete against the disruptors in their industry, like Amazon Business, instead.

Traditional distributors are prime candidates to adopt AI-powered technologies. One of the most significant advantages distributors have over disruptors is their depth of data. AI can break data down to help your business use it more effectively.

Many enablers offer AI-based technology solutions that provide many improvements and benefits. Here are some ways adopting new technology can keep your business competitive:

  • Data Analytics: Distributors have years of sales data for AI to process and interpret. Managers can use data analytics to gain valuable insights into customer behavior and predict future sales.
  • eCommerce: AI-powered recommendation models use customer browsing data and purchase history to make accurate and effective upsell and cross-sell recommendations that result in improved customer loyalty. AI also offers powerful recommended search options that help drive a personal eCommerce experience for your customers.
  • Smarter Supply Chains: AI can expedite order-to-cash cycles and minimize supply chain disruption using customer inventory data. You can optimize stock levels and automate reordering based on pre-set minimum and maximum quantities.
  • Targeted Marketing: With AI analytics, your marketing team can better understand your customers’ struggles, taking B2C personalized marketing and utilizing the strategy to benefit your B2B customers.
  • Customer Service and Support: AI improves customer service by instantly providing valuable information about the customer’s purchases and support tickets, which drives customer satisfaction and brand image.

While Amazon Business may be convenient, distributors have experienced and knowledgeable sales reps and many value-added services that Amazon lacks, including:

  • Vendor-managed inventory (VMI): VMI solutions use technology to optimize order fulfillment and improve accuracy in the supply chain.
  • Logistics/delivery services: Technology improves logistics from shipment analysis to optimizing routes for the fastest fulfillment.
  • Online account management: Order management systems leverage technology to help manufacturers and distributors work together for improved sales, reduced costs and better customer relationships.
  • E-procurement: Everything can be tracked in a central location, making it easier to cut costs.

The Final Word

Amazon threatens distribution businesses’ longevity, but distributors can respond to the threat and come out stronger with solutions from enablers. AI-powered technology that offers robust tools such as customer recommendations, omnichannel interactions and more convenient deliveries, combined with data from your business, will allow you to withstand disruption.

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