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Amazon’s Bold Move Is Starting to Make an Impact

Amazon’s Bold Move Is Starting to Make an Impact

By Scott Costa, publisher, tED magazine

While we are keeping an eye on Amazon Business and its efforts in electrical distribution, we are also learning that the online giant is starting to have an impact on the auto parts industry.  And at least one follower of Amazon believes the move shows a little of the strategy it will use against our supply chain.

The New York Post is reporting that Amazon is not only seeing some success in the auto parts industry, but it may lead to about $5 billion in revenue this year.  That’s 10 percent of the annual $50 billion auto parts industry.  And that news has major auto parts retailers like AutoZone and O’Reilly beginning to worry.  In addition to the revenue headed to Amazon, the New York Post story reports Amazon is beating the big auto parts dealers on price and offering same day delivery.

Denise Keating with DATAgility not only works with NAED members in electrical distribution, but also works with clients in the automotive aftermarket industry. She is aware of the Amazon strategy in the auto parts industry, and knows its strategy.  “Amazon has been in automotive for a few years,” Keating told tED magazine. “It is a receiver of data (to put on its website) from the automotive data warehouse. They started from a very small subset of common car parts, and from that moved into performance parts.”  Keating also believes Amazon is capable of reaching its $5 billion goal in auto part sales this year. “That’s very true on the 10 percent of the market. They have some pretty significant numbers and I have no doubt they will reach that,” Keating says.

Keating also believes there is some connection in the strategy Amazon is using in the auto parts industry and our supply chain.  “Amazon is going to create those customer-buyer relationships,” Keating explains.  “They will have people targeting the customers. The scope of products they offer is only going to grow, and they will one day have a full line of everything that a full-line distributor would have.  They will also share their analytics, so the customer and the manufacturer will both know what is happening.”

The key question is how will Amazon be able to deliver electrical products more quickly than NAED distributors.  Keating believes Amazon has two strategies that could be used. “They have an Amazon Flex program now, which is a lot like Uber.  They have done some smaller experiments, but basically people sign up to be a driver for Amazon, and using their data points, they can assign drivers closest to a distribution center to pick up items and deliver them faster than ever.  And that could be a difference maker,” Keating reports. Or Amazon may partner with distributors, because Keating believe Amazon has a goal to be as close to the end user as possible, and distributors provide that opportunity.

Meanwhile, an NAED manufacturer member sent tED magazine an email from Amazon Business within the last 30 days, asking about creating a partnership.  The e-mail is from a Senior Business Development Manager at Amazon Business, asking for a meeting to learn more about the manufacturer’s products and “see if there are opportunities to partner.”  The email says Amazon Business will “enable them a platform to sell new, obsolete or overstock products to over 400,000 verified businesses on Amazon Business.”

Is electrical distribution Amazon’s next $5 billion business?

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