Arrival of the “Alt Channels”- Amazon and Zoro Advertise

Much has been researched, written and talked about the emergence of alternate (alt) channels. Amazon Business is regularly mentioned and Grainger’s eCommerce initiatives are lauded. Now comes Zoro Tools, which many may recall Grainger purchased and has been promoting here in the U.S.

Both companies have influenced eCommerce spend among electrical distributors but not many have seen a direct impact from strictly eCommerce.  In fact, it may be questionable if industry eCommerce (website orders) have exceeded the cumulative amount that distributors have spent on eCommerce software, hardware, product content and personnel.

But now it may start to change.

Amazon Business and Zoro are now being actively promoted to electrical contractors.

This ad was published in Electrical Contractor magazine (yes, the magazine produced by NECA):

And this one was emailed by Amazon to a list that they procured from Electrical Contractor magazine.

And here is an ad from Zoro targeted at readers from CEPro.

Zoro is Grainger’s low price option. Consider that low price is compared to the list pricing that is on Grainger.com and the difference between the two sites can be 15-25%.  Grainger considers its core customer companies with more than 10 employees and whom they offer “customer specific pricing” (sound familiar to distributors?)  Zoro is more of a competitor to Amazon Business.

The Amazon Business link for electrical contractors goes to https://www.amazon.com/b?ie=UTF8&node=16587898011 where test and measurement products are promoted with 3M, Fluke and Amprobe prominently mentioned with an ad for up to 30% off Fluke and Amprobe products.

So, the threat is here and is actively being promoted to contractors.  The question becomes, how do you educate your staff, plan your response and execute.

The competitors are now visible and are challenging “traditional” distribution based upon price.  And they may also be targeting smaller contractors whom distributors typically do not pay much attention and whom traditionally represent unassigned accounts, counter business and higher gross margin (at least percent-wise.

Some will compete on price. Some will promote their value proposition. Some will take a page from whom the big boxes entered the market and they let customers migrate to the big boxes. And some will compete.

The question becomes … what will you do? And, if you are a manufacturer, how are you arming your salespeople / sales managers with the information of why you are selling through this channel.

And if you need ideas … give us a call or let’s get together at the NAED Annual meeting in Boston.