Are you concerned about AmazonSupply.com? If you are a wholesale distributor you should be, just ask your local bookstore. Here at Beringer, we have been studying AmazonSupply.com since it was launched a few years ago and wanted to share our perspective on this important competitive threat.
The Wholesale Distribution space is somewhere between $5 trillion and $8 trillion annually depending on who you ask so it is easy to see why Amazon is interested in this space. It is a great fit for them as they have nailed the high volume, low margin business and have the logistics piece well in hand.
Amazonsupply.com is picking up momentum having increased the number of items they offer four-fold in 2 years and they are still officially in beta. Today they offer over 2.2 million items and stock over 1 million items where the average distributor only offers 50,000 items. They are approximately 25% lower price on common items than the rest of the market. Stock, availability, 24 hour delivery and a 365 day return policy should be very concerning to distributors.
What is ahead for Amazon and how do you compete against this significant threat? Below are some suggested strategies:
- Offer online product catalog and online ordering
- Certain items are less likely to be sold by Amazon; hazardous items like gasses, chemicals, etc.
- Stock more parts/supplies and arrange drop shipping for non-stock
- Use historical item sales data to determine items that should be stocked
- Reduce costs in all areas
- Optimize warehousing for speed of order fulfillment
- Rethink your go to market strategy
- Become an Amazon Fulfillment Partner
- Excel at customer account management
- Watch customer profit and sales purchasing
- Provide exceptional customer service and support
Let's face it you are not going to be able to compete on price or product availability. Most industry experts and analysts say that you need to differentiate, add value and to compete by providing a level of service and expertise that they cannot. If you do not have a Customer Relationship Management (CRM) system in place to manage Sales and Customer Service now is the time to consider this important investment. CRM solutions like our CRM for Distribution will allow you to provide superior customer account management as well as manage Customer Support incidents that will set you apart from the competition.
For more detail on how to complete with Amazonsupply.com we recently published a video presentation that contains background on AmazonSupply.com and offers great information on how wholesale distributors can compete. Click here to watch the video on our you tube. Please subscribe to our YouTube channel too to be kept up to date on topics like this.
If you would like to discuss this topic further or for more information on how CRM for Wholesale Distribution can help you better compete in the market please contact Beringer Associated here or call 800-796-4854.