The Answer Is Yes. Amazon Will Disrupt Your Industry Too

By Neil Ruffolo, Director, Digital Strategy

A looming challenge for your distributors could be a rare chance to gain a competitive advantage for your brand.

The Baader-Meinhof phenomenon, or frequency illusion, happens when something that you recently became aware of starts popping up everywhere. This happened to one of our clients following an annual planning session when we raised the topic of Amazon Business. Even before catching a flight out of Chicago he forwarded two news items supporting the idea that eventually every manufacturer will be impacted by the e-commerce juggernaut. All of a sudden Amazon Business seemed to be everywhere.

Has news of Amazon’s pending takeover of industrial equipment and supply caught you by surprise? Don’t feel bad. If you blinked you could have missed it quietly go from startup to rivaling the likes of Fastenal and Grainger:

  • 2012: AmazonSupply Is Launched
  • 2015: AmazonSupply Retooled as Amazon Business
  • 2016: $1 Billion Revenue
  • 2017: $5 Billion Revenue
  • 2018: $10 Billion Revenue

I would bet you have suits in your closet older than Amazon Business.

Not Your Father’s Distributor: An Integrated B2B Platform

Don’t make the mistake of dismissing Amazon Business as just another channel partner. It is an integrated B2B digital marketing, e-commerce, and fulfillment platform like no other. And it has fundamental implications that business leaders should consider when planning a future go-to-market strategy.

With an aging workforce heading into retirement, younger people have filled B2B purchasing and procurement jobs in greater numbers. These are the same folks who prefer to order pizza with an iPhone app and use a kiosk at Panera to avoid the hassle of talking to a cashier. Their expectations for an effortless user experience (UX) have been shaped by Amazon. In fact, founded 20+ years ago, many adults today have never known a world without Amazon. And they will not tolerate inconvenience or inefficiency only to keep legacy systems and processes on life support.

We have seen a similar scenario play out before. Years ago people began turning to Google for B2B product information to avoid the hassle of talking to a sales rep. Internet savvy brands responded with digital content initiatives to generate demand. This changed the relationship between manufacturers and end users in a fundamental way. These new brand publishers are now engaging directly with end users via blog posts, social media, videos, white papers and case studies – in addition to advertising and datasheets. As a result, purchase decisions are more often than not settled before the first contact with a sales rep. No longer the gatekeepers between audience and information, sales organizations and trade publishers had to adapt.

Brands that embrace change and become Amazon Business Sellers will once again find themselves getting more cozy with end users. But this time the point of purchase is involved, making it a much bigger deal. So resistance should be expected from stakeholders. Some of your channel partners will find ways to offer value that Amazon Business cannot. Others will follow the fate of Toys-R-Us and Sears in the wake of Amazon’s retail operation.

Resistance Is Probably Futile: How to Prepare for Amazon Infiltration

By integrating with established e-procurement systems, Amazon Business has infiltrated both the public and private sectors in record time. By late 2018 the company claimed to be serving 80 percent of the biggest school districts, colleges and universities, more than half of the 100 biggest hospital systems and Fortune 500 companies, and almost half of the 100 biggest local governments.

Just as Amazon exclusively sold books before adding all consumer goods, office supplies were the tip of the B2B spear. Staples learned that the hard way. Like a cube-shaped Borg mothership hurling toward your home planet, it won’t stop there. If Amazon Business has not yet reached your industrial outpost, it is only a matter of time before it gets there.

So be ready. Start thinking about how you will manage the evolving relationship with existing channel partners. Find out what resources a VP will need to establish a successful Amazon Business channel. Will you need to invest in ERP or CRM integration with the Amazon API? Should product packaging be modified or optimized for Amazon fulfillment? Will everything need a UPC barcode? These are only a few things you and your leadership team may need to consider.

It’s no secret that industrial manufacturers tend to be on the trailing edge of change. So early adopters of the new order could find themselves riding a wave for years before their direct rivals realize what happened. In some cases, this could mean a lasting competitive advantage. Whether your industry feels its impact next year, in three years, or five years from now, the response to Amazon Business should not be delegated to a channel manager without proper resources and strategic direction from the top.