The 2020 Mid-Year Economic Update_long

May 10 2012

What AmazonSupply.com May Mean for Independent Distributors

Volume:

42

Issue:

9

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Features

Amazon.com recently launched AmazonSupply.com, a B-to-B website with more than 500,000 products across 14 categories in industrial and lab supplies. This article, with input from distributors, manufacturers, service providers and industry consultants, examines the potential impact of Amazon’s move into industrial markets. MDM also outlines the next steps for distributors looking to compete more effectively in an increasingly crowded market.

With a broad product offering, name recognition and years of e-commerce best practices under its belt, Amazon and its new industrial marketplace – AmazonSupply.com – should not be discounted as a competitor to independent distributors.

That’s what many industry consultants, distributors and manufacturers say about Amazon’s recent announcement that it would serve the B-to-B market in a formal and more aggressive way by selling more than 500,000 industrial and lab supply products across 14 categories at AmazonSupply.com.

While Amazon has been growing its sales of these products over the past few years, AmazonSupply.com signals a much more serious intent to compete in industrial and commercial markets.

The Details
Amazon is capitalizing on what Grainger, MSC and other large MRO distributors call “unplanned spend” for MRO supplies. Grainger in the past has put the percentage of unplanned spend for MRO as high as 75 percent of all purchases in the category. That’s a huge opportunity.

It’s also homing in...

Customers segment distributors much like distributors segment customers. Because of this, customers don’t typically think beyond the products they already buy from you. This article examines how distributors can expand what they sell to existing customers by uncovering unexpected cross-selling opportunities in their transaction data.

As consumers, we routinely experience cross-selling by retailers. It can be as simple as “Do you want fries with that shake?” or in more complex e-tail environments: “Customers who bought X also bought Y.”

Companies who do this well include Amazon and Netflix. In fact, Netflix thought the problem was so important that they setup a contest with a $1 million reward for anyone in industry or academia who could create ...

We often hear distributors complain that no matter how many times they communicate to customers that they are the better partner, lowering costs and improving productivity for the end-user, the selling decision always comes down to price. These claims have grown louder in the wake of Amazon’s launch of its online industrial platform AmazonSupply.com.

But there’s a problem. ...

Bart Schwartz, president of Industrial Channel Research, believes consolidation will continue, but on a much greater scale than we are seeing now: “Distributors that don’t respond – and respond with thoughtful strategy and great execution – aren’t just going to be relegated to second place or bad profitability, they’re going to be gone.” Schwartz spoke at the Industrial Supply Association’s 2012 Product Show & Conference in San Antonio, TX.

There will still be room for niche players, “but they have to be really good, they have to offer something different, and they have to constantly evolve to stay ahead of the players of scale,” he says. Schwartz presented 10 measures of channel success: …

Selling more product to existing customers is a common goal for many distributors. The challenge is figuring out how to achieve that goal. And according to Paul Cherry, president of Performance Based Systems, the answer may be in the questions salespeople are asking. Cherry spoke at the Industrial Supply Association's 2012 Product Show & Conference in San Antonio, TX.

"There are still a lot of customer relationships that seem to holding back a bit," Cherry says. "We want to get them to share that money, and share that money with us."

But by the time your salesperson arrives …

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Amazon.com recently launched AmazonSupply.com, a B-to-B website with more than 500,000 products across 14 categories in industrial and lab supplies. This article, with input from distributors, manufacturers, service providers and industry consultants, examines the potential impact of Amazon’s move into industrial markets. MDM also outlines the next steps for distributors looking to compete more effectively in an increasingly crowded market.

With a broad product offering, name recognition and years of e-commerce best practices under its belt, Amazon and its new industrial marketplace – AmazonSupply.com – should not be discounted as a competitor to independent distributors.

That’s what many industry consultants, distributors and manufacturers say about Amazon’s recent announcement that it would serve the B-to-B market in a formal and more aggressive way by selling more than 500,000 industrial and lab supply products across 14 categories at AmazonSupply.com.

While Amazon has been growing its sales of these products over the past few years, AmazonSupply.com signals a much more serious intent to compete in industrial and commercial markets.

The Details
Amazon is capitalizing on what Grainger, MSC and other large MRO distributors call “unplanned spend” for MRO supplies. Grainger in the past has put the percentage of unplanned spend for MRO as high as 75 percent of all purchases in the category. That’s a huge opportunity.

It’s also homing in...

Customers segment distributors much like distributors segment customers. Because of this, customers don’t typically think beyond the products they already buy from you. This article examines how distributors can expand what they sell to existing customers by uncovering unexpected cross-selling opportunities in their transaction data.

As consumers, we routinely experience cross-selling by retailers. It can be as simple as “Do you want fries with that shake?” or in more complex e-tail environments: “Customers who bought X also bought Y.”

Companies who do this well include Amazon and Netflix. In fact, Netflix thought the problem was so important that they setup a contest with a $1 million reward for anyone in industry or academia who could create ...

We often hear distributors complain that no matter how many times they communicate to customers that they are the better partner, lowering costs and improving productivity for the end-user, the selling decision always comes down to price. These claims have grown louder in the wake of Amazon’s launch of its online industrial platform AmazonSupply.com.

But there’s a problem. ...

Bart Schwartz, president of Industrial Channel Research, believes consolidation will continue, but on a much greater scale than we are seeing now: “Distributors that don’t respond – and respond with thoughtful strategy and great execution – aren’t just going to be relegated to second place or bad profitability, they’re going to be gone.” Schwartz spoke at the Industrial Supply Association’s 2012 Product Show & Conference in San Antonio, TX.

There will still be room for niche players, “but they have to be really good, they have to offer something different, and they have to constantly evolve to stay ahead of the players of scale,” he says. Schwartz presented 10 measures of channel success: …

Selling more product to existing customers is a common goal for many distributors. The challenge is figuring out how to achieve that goal. And according to Paul Cherry, president of Performance Based Systems, the answer may be in the questions salespeople are asking. Cherry spoke at the Industrial Supply Association's 2012 Product Show & Conference in San Antonio, TX.

"There are still a lot of customer relationships that seem to holding back a bit," Cherry says. "We want to get them to share that money, and share that money with us."

But by the time your salesperson arrives …

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