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:


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Are Independent Industrial Distributors Helping Amazon to Succeed?

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!

How ironic!

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Podcast: Link Building is Dead – Long Live Link Building

Welcome to another edition of Marketing Insights. Today, we’re talking with Sage Lewis, President of SageRock, a search marketing agency here in the Midwest.

Sage is the author of a bestselling book on Amazon – Link Building is Dead. Long Live Link Building, and we’re going to pick his brain today about the book.

Sage highlights why people who are focused on search engine results should read this book. It’s an easy read even for someone like me, and it costs less than a Starbucks coffee for a digital copy.

Click here to listen to podcast.


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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?

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Customer Service: Does Yours Deliver Happiness?

Customer service in most companies can make or break you. How you are treated can define whether you will continue to do business with that company. You can spend millions on brand building and still fall short if customer service is the weak link in the chain.

I was at a trade association meeting listening to one of the speakers talking on this subject, and he kept referring to this company called Zappos in Las Vegas and what kind of brand they built around customer service. I had never heard of them (a billion dollar company that was recently purchased by Amazon), but my wife had. She sang the praises of this online company that sold shoes. Not their own branded ones, but everybody elses.

I wondered how they could make money selling “me too”-type things, but soon found out that it’s the way they sell them that makes the difference. They offered free shipping both ways so if you didn’t like them or they didn’t fit, it wouldn’t cost you anything. My wife has a narrow foot and has a hard time finding shoes. Zappos carries a better selection on not only the standard, but the hard-to-find narrow and wide sizes.

So what I did was get Tony Hsieh’s book, Delivering Happiness, that told his story of the Zappos adventure over the last 10 years. It was a good read of the ups and downs of trying to grow a company. What do selling shoes have to do with selling stuff to the professional tradesmen? I’d say plenty if you follow  Zappos ‘ 10 core values. Here they are:

  1. Deliver WOW through service
  2. Embrace and drive change
  3. Create fun and a little weirdness
  4. Be adventurous, creative and open-minded
  5. Pursue growth and learning
  6. Build open and honest relationships with communication
  7. Build a positive team and family spirit
  8. Do more with less
  9. Be passionate and determined
  10. Be humble

Many companies have core values but fail to follow them. Maybe it’s time for all of us to relook at our core values and see if we’re actually working towards them. Next time you’re in Vegas, give them a call and take the tour. They’ll come and pick you up at your hotel. My youngest son who is a business coach took the tour the last time he was out there and said it was worth seeing the culture at a billion-dollar company. All you have to do is call and set up an appointment.

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