I recently read a great article in Industrial Supply magazine on how independent distributors are helping Amazon take business away from them. The article was written by Jack Bailey, CEO of IDC-USA, an independent distributor cooperative.
The article is interesting because it not only affects distribution, but ultimately the manufacturers who supply them. From a distributor’s point of view, they are either scared to death of them or they think it’s a passing fancy and this too will go away.
The problem is that most items that have part numbers and can be ordered online or through a PO are prime game for Amazon. Amazon has convinced many distributors to join their third party selling agreement to sell their products on the Amazon e-commerce site. Short term for many of them, it means more sales, but long-term, it will mean disaster. Amazon is a great collector of data and once they have enough profile info on who buys what, they can and will cut out the independents.
What does it mean to manufacturers who have resisted selling to Amazon is they run the risk of being replaced by a competitive product and literally lose millions in sales when Amazon comes to them with all this data of who bought what from whom.
This has always been one of manufacturers biggest challenges with traditional distribution of getting the names of their customers and what they buy. Now the distributors are willing to give that up freely to their biggest potential competitor that could put them out of business and they will!