Since Amazon Supply was launched by Amazon earlier this year I have listened to numerous B2B distribution executives tell me all the reasons why their business is different and how Amazon Supply will not be a competitive threat to them. I listen carefully and then begin to ask them a number of targeted questions.
- How much of their revenue comes from brand name (easily comparable) distributed products?
- How many of those products does Amazon sell today?
- Of the ones they sell today, how do you compare on price, availability, delivery, guarantee?
The conversation very quickly turns to a discussion about SOME of their products being vulnerable to Amazon Supply’s competitive offer. At that point I usually agree with them that Amazon Supply will not take the majority of their business but I remind them that Amazon Supply only needs to take, say, 10% of their business to be successful and cause them a great deal of hurt. Maybe only 5%. After all, the variable margin on the last 5-10% of sales to most B2B multi-channel merchants is often more than the net profit of their entire business. I also suggest that rather than pretending Amazon Supply will have no, nada, zero impact on their niche business wouldn’t it make more sense to assume they will have a 5, 10 or 15% impact on sales and plan what you would do, if in fact, that did happen. At the very least any B2B distributor who took this position would force the business to develop a defensive plan that might be useful regardless of who the new market competitor is. Now, the real thinking starts and a truly objective assessment of the competitive threat begins. More importantly, the question “What can we do about it?” gets asked and real effort goes into finding the answer. What are you thinking about the competitive threat of Amazon Supply?Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221
Comments or questions are welcome.