In April, Amazon announced that it was moving one step closer to providing everything for business owners via Amazon Business, a new website for business owners that will expand the AmazonSupply brand and provide business owners with a place to shop for all of their business needs. From office supplies to wholesale products, Amazon Business is expected to be even bigger than AmazonSupply. As part of an ongoing series of stories looking into the future of electrical distribution, tED Magazine explores some of the key points that NAED members and suppliers should be thinking about as this online retail behemoth continues to make its way into the B2B marketplace.
By Bridget McCrea
Electrical distributors are no strangers to competition. In fact, they’ve been battling some type of outside competitors (other than one another) since the industry itself was established to support the manufacturers and customers that they work with on a daily basis. And while the notion of Amazon Business making its way into the electrical distribution channel may send shivers up the average distributor’s spine, the good news is that there are ways to outsmart this online retail giant and not only maintain market share and sales, but also grow them.
One particularly good slant that distributors can be thinking about right now involves the suppliers that they’ve been working with for years – those manufacturers that could right now be eyeballing Amazon Business as a new (and possibly replacement) sales channel for their electrical equipment, components, and parts. “What’s new about Amazon’s effort is that the company itself is so big and pervasive, and it offers a huge selection; customers can get anything,” says Katrina Olson, a professor of advertising and public relations at University of Illinois Urbana-Champaign in Urbana, Ill.
For this reason, outsmarting Amazon requires a special touch – perhaps one that’s focused less on cutting prices and throwing money and resources into search engine optimization (SEO) and more centered on building stronger and more successful relationships with suppliers. As part of that effort, consider integrating the following elements into your marketing plan for the rest of 2015 and 2016:
Instead of cutting prices, build a brand. People buy from suppliers whom they know, like, and trust. And while best price is always a consideration, your customers come to you for more than just the best discounts. “Top distributors and manufacturers are building their brands, establishing strong relationships with their customers, and working one-on-one with their clients,” says Olson. “They’re holding events, using different modes of communication, and doing all of the things that distributors would normally do to establish strong ties – with or without the competition coming from sources like Amazon.”
Don’t try to be Amazon. Amazon is a low-price leader that offers one-click ordering in a 24/7 environment. “In terms of how easy it is to shop with them, that’s tough to compete against,” says Olson, whose own research shows that the online retailer operates on extremely slim (“razor thin,” if you will) margins that are also very tough to go up against. Where electrical distributors can compete is on service, relationships, follow up, easy return policies, helping consultants and techs, and the ability to pinpoint specific problems, solutions, and applications.
Find ways to prove your value. The fact that some of your suppliers may be looking at Amazon Business as a potential sales channel may not be the end of the world, but it should spring you into action to do something about it. One of the first steps should be to ask your manufacturers questions like: Why do you do business with us? What do we do the best? Where are we lacking? What do you need from us that we’re not giving you? “Find out the answers to these key points and you’ll have a good idea of the value that your distributorship brings to the table,” says Olson. From there, you can capitalize on the high points and get to work correcting any deficiencies. “Promote your strengths to your suppliers and basically remind them why you work together so well,” says Olson.
Develop supplier-targeted marketing materials. As part of your marketing plan, consider developing brochures, separate web pages, or other collateral that speaks directly to your suppliers. The messaging on these pieces should center on the reasons that manufacturers are doing business with you, and how/why your firm is going to continue to keep its promises and even enhance the relationships going forward. “Sell your brand to your suppliers by reinforcing these messages and speaking directly to them,” says Olson. “It’s a matter of finding out what the key selling points are, reinforcing those points, and then setting up underlying objectives, strategies, and tactics for each of these goals.”
Increase supplier contact frequency. Increasing contact frequency – particularly with those suppliers that you only deal with when it’s time to place an order – is another way to show manufacturers that you’re serious about working together to combat competition from sources like Amazon Business. “Maybe it’s about setting up more personal meetings or attending trade shows where you know they’re going to be,” says Olson. “Essentially, your goal should be to find ways to maintain and cultivate those relationships.”
Evaluate and improve upon your efforts. It’s not enough to send out a brochure to your suppliers and hope that it resonates, you also have to continually measure your marketing outreach efforts and then use the information to hone future campaigns and plans. “Set some marketing goals and then go back and look at what worked and what didn’t work,” says Olson, who tells distributors to solicit supplier feedback whenever possible. Ask them what they did and didn’t like, and then use that knowledge to devise even better campaigns in the future. “Ultimately, you want to be doing whatever needs to be done to make it easier for suppliers to do business with you as a distributor,” Olson advises.
Don’t be afraid to ask the tough questions. This is not the time to hide under a rock and hope that threats like Amazon Business will simply go away. A panel discussion at a trade conference, for example, can serve as a great platform for distributors that want to solicit input from one or more suppliers on specific topics (like, is Amazon Business a threat to us and if so, what can we do about it?). If face-to-face interactions aren’t possible, consider using web or videoconferencing instead. “There are a lot of different ways you can set this up and make it a very effective exercise for everyone involved,” says Olson. “Getting the high points and low points (i.e., pain points) right from the sources and their take on what can be done to enhance the relationship is a valuable exercise that can be kicked off by simply asking some basic questions.”
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at email@example.com or visit her website at www.expertghostwriter.net.
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