The ‘Amazonization’ of Customer Expectations

With both AmazonSupply and Google offering a B-to-B solution, distributors need to think strategically about how to respond online.
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More than a year after AmazonSupply.com’s launch, signaling Amazon’s formal entrance into the industrial supplies space, the hype over the venture has settled somewhat.

In a survey from earlier this year, distributors said AmazonSupply, which now has more than 750,000 products, has had little impact overall on their business, but curiosity remained high. In the dozens of interviews we conducted with distributors and industry experts for MDM’s just-released 2013 Distribution Trends Report, this seems to still be the case.

But customer expectations appear to be changing as a result of Amazon and other more sophisticated B-to-B and B-to-C e-commerce platforms, including grainger.com. The recent launch of procurement portal Google Shopping for Suppliers, allowing buyers of B-to-B products to evaluate options from multiple e-commerce websites, will probably amplify the effect, though it’s too early to know for sure.

“We’re not seeing a direct threat from Amazon today. But I remain very paranoid about that,” said Julia Klein, CEO of specialty building products distributor C.H. Briggs. Klein believes Amazon is driving customer expectations and called the shift an “Amazonization” of all interactions.

“We’re all expecting the ease of ordering, the technical infrastructure, the speed of delivery,” she said. “Once you experience that with Amazon, you begin to expect that in every part of your world. And I think that puts incredible pressure on distributors, because we can’t afford that technical infrastructure.”

Industry experts said that AmazonSupply’s launch was a wake-up call and continues to drive new investments online in distribution. “I think the April 2012 launch of amazonsupply.com was much overblown,” said Evergreen Consulting’s Brent Grover. “But it caused people to sit up and realize or think about the fact that B-to-C e-commerce has arrived in the B-to-B marketplace. The bar is raised because there are companies that have great e-commerce programs.”

He said that just adding a module to current business systems is not enough to compete. “Some of what customers expect – one-click ordering or customized catalogs – may not be included,” he said. “I think the standards have been elevated a lot for what constitutes excellence in electronic commerce for wholesale distributors.”

And, most importantly according to Grover: “Having an e-commerce offering is going to be an expectation.”

How do you balance what you do best with that imperative to build out a more robust online offering? Distributors need a strategy online, just as they need one off. Get clear on your company’s core competency first, according to Jonathan Bein of Real Results Marketing. “For example, when was the last time you or I or anybody every spoke to Amazon about anything? And the answer for the vast majority of people is never.”

More distributors are investing in e-commerce in 2013 than in 2012, according to MDM’s 2013 State of E-Commerce in Distribution, researched by Bein.

But many small or mid-size distributors can’t compete on availability of a broad selection of products or on price. “That’s going to be a tough way to go, going up against AmazonSupply or Grainger or Fastenal or Ferguson,” Bein said. There are things the smaller distributor can do that those companies can’t, like providing a better sense of customer intimacy. Distributors need to understand what their customers care about and what they do well to compete and then apply those principles online.

A good example comes from a large distributor – Interline Brands – whose president told me in an interview that customers want more than the product online. One segment of Interline’s customers wants full visibility into what’s happening at each of their real estate assets, so Interline built out functionality that allows them to see that in their accounts online.

In other words, what AmazonSupply and Google Shopping for Suppliers are doing is important, but what’s more important is how distributors respond to the pressure to have a strong presence online. And even more important: how they apply their business strategy online to complement the high level of service they are already providing to their customers.

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