Worried About Amazon Supply? Start Planning Now!

If you are worried about Amazon Supply, you probably already know something that you’ve been unwilling to admit openly. ….that is your product data base stinks.

That is to say, you probably don’t have good images, UPC codes or even a good manufacturer part number. Your up sale or extra line item suggestions are not what they should be. On top of that your inventory is out of whack. If you have been depending on MRO sales, Amazon Supply is not your cup of tea, because Amazon Supply will appeal to a number of your customers and can result in a loss of business. Customer service is what appeals to your customer. Amazon is known for getting the right stuff that was ordered delivered to their customer within a defined delivery time which meets their expectations. Can you say that about 100% of your business?

Over the years I’ve heard all the excuses that can be thought up about why one distributors database is perfect, pristine, lilly-white or how you “just use what the manufacturer sends” to you. Then you go on to brag about how well you collect your SPA’s; all the while not knowing for sure if you’ve collected all you could. There are the distributors that say openly to their buddies that they don’t have dead stock or better yet they “manage the size of their inventory” and get 6 or 10 turns a year on certain segments of that inventory. In the end they will say they make 3% net … and their money is at risk.

Guess what, we know some distributors who actually make 8, 9 10% net and a couple that make 15% net at the end of the year. Those fellows are not prone to brag. Some of them have fairly good web capability and tremendous back office productivity.

Many of you have looked at Grainger and watched with envy as they built their web capability and short delivery times. Grainger gets a piece of the market using terrific data that they built. Bet you didn’t know that they have terrific back office productivity.

So … realistically you can’t stop your business to address your data needs, but you can do something different by starting your planning right now. Why now? The type of planning I am talking about involves you taking a hard look at your company assets, your processes, the goals you’d like to achieve and your market. Unless you subscribe to a service like DISC or IMI, hard data about your market won’t be out until sometime in November in the form of Electrical Wholesaling’s Market Planning Guide..

Product Data

You can look at your product data  and pricing matrix right now. You may have to hire someone from outside to give you a third party assessment (if you want an objective viewpoint and want to ensure you don’t drink your own juice.)  You need to correct or change your prices to reflect the true profit you want to make. While you’re at it, you need to look at your SPA process. Look at it in detail…don’t accept the excuse “We get most of them”. If you got all of your SPA’s you’d have more profit. In short your data needs to be cleaned up and it will take some time. It is not like a light switch that you turn on.

People productivity

You can starting looking at your people productivity. This time you need to start looking at what can the computer do instead of your people … you need to reduce people handling paper. Based upon experience, you probably don’t have all the functions in your ERP software turned on because you don’t understand the savings you would  reap. You may have bought add on modules and not installed them, not understanding the value and profit you would reap. You need to revisit these before you sit down in November and December for your sales and purchasing hard planning. Customer service and getting the right product in your customers hands is what it is all about.

Talk to your Key Manufacturers

You can start talking early to key manufacturers before the regional and buying group meetings about key accounts or markets you want to go after next year. Some of you will openly admit that you don’t talk to manufacturers until after the new year (typically because everyone wants “final” numbers! (do you think that the final number makes much of a difference to what your plan is for next year?).

November rolls around you should get your copy of Electrical Wholesaling’s market planning guide. In addition you need to order in-depth market data from DISC or IMI. Don’t be afraid to ask us to interpret what the data means to you. The data should fit like a glove into your market goals that you have started working on.

Oh, and as it relates to Amazon Supply … are you throwing in the towel or plan to defend your turf. Communications, processes, pricing strategies, value-added services and e-capabilities can enable you to retain this business and make it more profitable.

Got questions? Or are we are off base. Share your thoughts.