Is Amazon Supply ready for Contractors?

In the October issue of Electrical Wholesaling magazine we asked the question of whether Amazon Supply could compete with      traditional distributors by using the traditional distributors inventory as a source of supply for MRO type of sales. Some have asked if Amazon Supply could also be a material source for construction-oriented contractors. Sometimes the stars align and strange things happen in the world of construction. While Amazon Supply labels its electrical section “Industrial Electrical” here is nothing to say that contractors couldn’t use it.

Earlier this fall we heard of a couple of projects that Amazon Supply “quoted” / fulfilled.

The ultimate building owner wanted the General Contractor to instruct the electrical and mechanical contractor to buy from Amazon Supply. The G.C. offered to pay the contractor for excessive time effort, if incurred,purchasing from Amazon supply.

After observing a contractor bidding the job from known prices in the area using traditional distributors, he set out to try and buy the bill of materials for the total job from Amazon Supply (probably thinking that Amazon is less expensive on everything). He learned right away that Amazon Supply is set up for ordering individual line items, but the freight rises and it is up to the contractor to call and start a conversation about freight (unless they already have Amazon’s Prime program). He then proceeded down the list and made a call for the next three items….at that point the contractor sensed that these items would come from different sources. Along the way there was a discussion about price. “Time consuming” was a real understatement through out this whole process.

While the bill of material was ordered on an Amazon Supply order, what was happening in the background was that orders were being bounced off Amazon Supply’s stock or it was being ordered from another source, or sources. Knowing where the product came from is important if you have to return items. Visualize wall switches or plates that come from three different sources. Contractors are not used to tracking from multiple sources. He got the feeling that they did not know a lot of the electrical products. After checking on our own, we have the impression that they currently don’t have a complete electrical offering.

Billing from Amazon Supply is up front….as in paid for before the order is released (so much for giving contractors credit / dating and either the contractor needs to lay out the money or the GC needs to pay in advance). So for change orders that are ordered through Amazon Supply, they are paid for and depending on the agreed freight terms, the contractor gets the product next day or thereafter.

The contractor finished the project and has overage that they want to send back. While it is true that Amazon Supply, on this job, paid for return freight. Guess what…the contractor has to pack it up, contact the shipping company and arrange for pick-up. Depending on where the job is located, the contractor may get the privilege of driving it over to a shipper or taking it back to their place of business (either way, material needs to be removed from the job site for a UPS pickup.)  In this case, it was very confusing about which product went to which supplier. The majority of the product went to Las Vegas to an Amazon Supply facility.

Additionally, multi-story delivery can be a problem that starts with the way product is packed and then there is the issue of UPS using construction elevators. Some shippers will not allow their personnel off the ground.

The contractor on this  particular job ended up buying wire and conduit from a local distributor. Because of price, the lighting was bought from a lighting rep.

If the building owner had not paid the difference, the electrical would have been12% higher than using a local distributor.

Could you compete with this?

David Gordon and Allen Ray researched this article.