Can Amazon Supply offer benefits to electrical distributors?

My biggest fear about Amazon Supply’s success is that our supplier partners will sell to them direct. 25 years ago, GE Lamp sold Grainger direct. That hurt our MRO business to this day.

Amazon’s capacity to disrupt electrical distributor’s will be directly proportional too the support they receive from the electrical manufacturers. The internet is, first and foremost, about information. If the electrical manufacturers rationalize giving lower pricing levels to Amazon, like they did with the DIY channel years ago, they will most certainly do harm to electrical distributors by facilitating the equivalent of “showrooming” where customers use pricing from the internet to beat down their local suppliers. In the DIY example, the association that purportedly represents the electrical distributor was in the pocket of the manufacturer community and gave a toothless response – actually flying cover for the manufacturers in the process of avoiding confrontation. Electrical distributor margins in some categories were negatively impacted and the market did not get any bigger. I would hold out little hope that NAED would take any meaningful position on the matter, they seem to have no stomach for anything but holding mediocre meetings and conferences (their primary source of revenue and largely paid for by manufacturers). If the Amazon threat is to be turned back, I think the most likely answer will come from manufacturers with a sense of history who learned from their DIY miss steps and from the marketing/buying groups and large distributors who are not afraid to take a stand and show their displeasure with bad actors in the manufacturing community by moving business elsewhere. Amazon will not grow the market and will add no additional value to the electrical industry. I hope there is sufficient wisdom and courage in our industry to not create more dilution of the electrical distributor’s business and further erosion of margins that will eventually circle back to kick the manufacturers in the teeth.

Distribution vs. Amazon: I don’t know if shifting purchases from suppliers who support Amazon to suppliers who are loyal to distribution will improve our sustainability but a revised purchasing strategy might have greater impact than expecting IMARK, AD or NAED to fight this battle without distribution doing most of the heavy lifting.

Depending on Amazon’s success, it could become impossible to find major manufacturers that will not sell to Amazon.

Bezos is a brilliant CEO and I am finding many worthwhile ideas that could improve our operation as I read The Everything Store.

My belief is that all distributor executives who plans to stick around a while should constantly & aggressively study their best competitors, suppliers and other excellent businesses with the goal of identifying new ideas that might improve their recruiting, retention, service offerings, revenue growth and operating efficiencies.

I enjoyed what this post offered, and the comments too. Amazon has branched out to a much larger entity than it once was, it will be interesting to see just how far it can go and the effect it has on businesses everywhere.

Don’t downplay the service dimension of online. Many women purchase 10-30 pairs of shoes at a time on Zappo, then try them on in the comfort of their own home, with their outfits at hand. They might keep 1-2 pairs and return all the others.