AmazonSupply: Should Distributors Try to Compete?

As usual, in business, that depends on several factors! Recent articles about this quietly growing segment of Amazon’s business say that since it launched in 2012 nearly half of US based B2B buyers have made a purchase from AmazonSupply. Many industry experts think that AmazonSupply is a threat to the traditional way most distributors have always conducted business.

Your Location

Is there an Amazon distribution center in the region where your business operates? If so, you may face challenging AmazonSupply head on because of their ability to deliver a wide variety of products quickly or on a specific transportation schedule. Currently, the most popular option is 2 day delivery in a specific radius from their warehouse locations. Check this list to see where Amazon’s Distribution Centers are located and if their presence will impact your region.

Your Products

Are the products you distribute in the categories which Amazon has started offering? AmazonSupply now has over 750,000 products listed online. They primarily started with industrial and scientific components, and then added supplies for Maintenance, Repair and Operations. If your product is unique, serves a small niche of users or is difficult to handle you may be in luck, and Amazon will not be a competitor in your market. Sales volume and turn over are important metrics which drive Amazons stocking decisions.

Your Price

If you are in a location with one of their distribution centers, have you checked their website for their pricing? Is your pricing competitive, can you make your pricing more competitive or price to make a profit on larger volume sales?

Your Customer Base

Is your customer base asking you about AmazonSupply? If they are aware of the delivery capabilities and lower pricing they may be mentioning this to your Sales staff. Make certain you know who and why these discussions with customers are occurring, and implement a consistent response for your Sales team. Convenience over loyalty may be driving business to online purchasing.

Ask yourself – what do your customers want from an ideal supplier? In most situations, they want good pricing, an easy purchasing process, on time delivery and great customer service response. If the service you provide your customers is on the same level with Amazon’s you should not lose customers to this new player.

This article is Part 1 of a three part series. Come back for our next article which outlines the best areas where wholesale distributors can compete with Amazon.


Links:

Amazon Distro Center List as of June 2014

Interesting Articles found in Research:

5 Better Business Practices to Beat Amazon

http://www.distributioncentermag.com/articles/84661-amazon-supply-brings-new-competition


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