Are Independent Industrial Distributors Helping Amazon to Succeed?

By John Sonnhalter, Rainmaker Journeyman I read a recent survey in Industrial Distribution magazine that stated distributors’ biggest concern now is dealing with Amazon. Distributors and wholesalers overwhelmingly regard Amazon Business as their biggest threat, dwarfing other concerns. That’s one of the findings Unilog released recently, after surveying 244 manufacturers, distributors and wholesalers. Surprisingly, 52 percent of those same survey respondents admit they don’t have a strategy for competing with Amazon Business. And, 43 percent of manufacturers surveyed said they sell direct on Amazon Business, often bypassing their traditional distribution channel. I wrote a post in 2015 regarding this subject on another survey from Industrial Distribution magazine. Back then, Amazon was convincing distributors to join their third party selling agreement and many jumped on board. Today it’s hard to compete toe-to-toe with Amazon on product purchases. But distributors sell themselves short. Distributors have the brick-and-mortar stores right in their customers’ backyards. They have the relationships with the customers. Distributors have the technical knowledge to help their customers work through application issues. Here’s a link to the 2015 post: http://www.sonnhalter.com/2015/02/24/are-independent-industrial-distributors-helping-amazon-to-succeed/  read more >

AmazonSupply – How Has it Affected Your Business in the Industrial, Construction Markets?

With an 800 lb. gorilla like Amazon, once they come into your playground, things will certainly have to change. Big online giants are not new to this market. We're used to the Grainger, McMaster Carr and MSC's of the world. The difference in my mind is that while price is important to them, they are selling more of a convenience. The Amazon model is a bit different and price points are more critical. AmazonSupply has been up and running for about a year now. I wrote a post last summer and asked how they might be influencing your business. Back then it might have been too early to tell. (I sure would like your input now.) I assume many manufacturers are using them as another outlet for their products. The trends are indicating that the traditional distribution models are declining. I recently read an article by Scott Benfield in Industrial Supply, Trials and Tribulations of Sales Growth in an AmazonSupply World that outlined the difference and suggested ways traditional distribution can effectively deal with them. According to Scott, it comes down to the way traditional distribution goes to market. He calls it the bundle approach (full service) as opposed to a transactional model with a much lower cost base. He also recommends strategies moving forward for the "new normal." In my mind, I'd hate to see the traditional distribution model go away. There's lots of value in their expertise, but if they are not willing to change, then the future might be dim for some of them. Manufacturers, what are your thoughts on the different distribution models and where is your sales staff spending their time and efforts? Better yet, what can Associations like ISA do to help their members?read more >