Amazon: Friend or Foe minefield

Amazon Supply can represent different threats to different types of distributors. It could depend on where you are located and what type of vertical you are in. If you sell into the large projects market, you may not feel threatened, presently. But if you sell a lot of light bulbs or small MRO type products, you may feel the sting of Amazon Supply as they move into the world of wholesale distribution.

But there might be a minefield out there that you aren’t prepared to navigate. In any case Amazon Supply deserves a watchful and wary eye.

Amazon Supply overriding thought: Amazon is in business to sell product easily on the web. They sell product, source it and fulfill the order. They makes returns really easy 365 days a year.

On July 25th Amazon will introduce the FIRE cell phone partnered with AT&T. All of the above are web platforms that can be turned into a web ordering platform. The new FIRE cell phone will come 3-D enabled.

Hold this thought: Web ordering is highly dependent on searchable data that means the same thing in Small town USA as well as big city East/West Coast.

Electrical Distributors

Many project a slow entrance into the electrical market for Amazon and hope for an increase of the marketplace’s size. At first many suggest that Amazon orders will be for smaller items such a boxes, duplex plugs, light bulbs, lamps and switches. They might live out of some distributor’s inventory, which could be disruptive later on. In that case Amazon Supply might be the friend that sells more product for your company at a discounted commission or profit. It will depend on the prices that are exposed and what you are willing to take as profit. They could become your best salesperson!

But will Amazon be so disruptive to the point where you are unable to develop intelligent purchasing for your products with the greatest turns?  If that happens will Amazon Supply be your foe?

When Automation Direct began to grow, some distributors and manufacturers were openly against them selling across established boundaries with really good, searchable data.. Now, the majority of distributors have Automation Direct on speed dial and many manufacturers sell through them. So, could the same thing happen with Amazon?   It appears they will sell wherever the order comes from. Right now Amazon and Amazon Supply has spent a billion dollars or so on technology to automate their business and fulfill orders almost untouched by human hands….or so it seems. It is one thing to download music and a book to a reader and another to ship distribution equipment. Amazon Supply will have their challenges with developing good electrical data and possibly fulfilling heavy, odd size, equipment.

The Product data search might be the key:

Certainly Trade Service and IDEA don’t seem to have all the searchable data and pictures that it would take to offer a robust electrical database. AD and IMARK could join forces on the data issue to encourage manufacturers to offer up better overall electrical data (since they are in the stream of commerce, perhaps manufacturers will respond better than NAED asking). Amazon Supply may be slow into the electrical market place because of the lack of a good electrical database, but they will get there with either manufacturer assistance or they will make the technological investment themselves.

On the flip side, Amazon has sold a very large number of Kindle readers that could be easily loaded with purchasing software. That software combined with a easy to search database could make quick in-roads into a marketplace. This could be further expanded with a version of purchasing software put on the new Amazon FIRE phone, subsidized by AT and T (the telephone provider).  Many suggest that they will wait and see what happens.

Business Plans for NOW and the future:

As Amazon marches on into the wholesale distribution market, will your company be one that becomes a supplier of product or will you decide to compete in your marketplace with greater customer service and sharpen your web store front prices? Or will you take a multi-pronged approach where you compete locally, sharpen price matrix to your existing customers and on your web store front? Or will you just ignore Amazon Supply?

Becoming more flexible may be the answer to your company navigating the Amazon Supply minefield.Certainly a wary eye is needed.

How will Amazon Supply help or hurt your business?