Distribution Industry Special Report: Your Amazon Business Playbook
25 Minute Read
“The purpose of this MDM report is to help you take your Amazon response strategy from best guess to a more analytical approach.”
Modern Distribution Management (MDM) and NetSuite recently published a new special report for the Distribution Industry. The full report is worth a read to build your wholesale distribution strategy; we’ve summarized the key points below.
A Strategic Evaluation for Distributors
Growing, or maintaining, in the Amazon Age
The MDM report shares important information on Amazon’s B2B platform – Amazon Business – and what this B2B marketplace means for the Distribution Industry. While the name has changed, Amazon Business has been around in some form since 2005. Its current iteration is positioned as everything the world has come to know, and expect, from Amazon B2C (amazon.com, Amazon Prime) now available for B2B. This includes free 2-day shipping, better customer experience, and many other capabilities. Learn more about Amazon Business and its effects in our recent post: Building Your Distribution Strategy in the Amazon Age.
What’s at Stake? Excerpt from Your Amazon Business Playbook
“B2B distribution moves more than $5 trillion in products through the U.S. economy annually, roughly 30 percent of GDP. If Amazon Business scoops up 10 percent of that market using the same “ease-of-buying” approach it built in consumer markets and then picks up another $500 billion in retail, AWS and other markets, it could become a trillion-dollar company, primarily on the backs of distributors. That doesn’t count B2B revenues it is already actively growing in many other countries.
Amazon will likely report sales in excess of $170 billion in 2017; to keep growing it needs large markets poorly defended by incumbents. Given that Amazon is many times the size of most distributors and immeasurably better at leveraging technology, wholesale distribution is likely to remain in the company’s bull’s-eye for a long time.”
How to Respond
The MDM report paints a good picture of the industry today, and how Amazon is threatening traditional distribution businesses. It also outlines specific ideas executives in the industry can take, including:
- If you can’t beat them – join them. Consider adding Amazon Business as another sales channel for your business. Read the full report for key considerations to keep in mind when making this decision.
- Form meaningful alliances. To compete, industry leaders need to be aggressive and innovative in creating partnerships with other businesses that can enhance offerings and the customer experience. Think technology partnerships, or partnering with a B2C company.
- “Build your own moat.” Using research and analytics, decide where you can take risks and define a new model for your business. Whatever the model, it needs to incorporate a strong distribution strategy.