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Going Head-to-Head With Amazon: The Need for Innovation

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

Upon hearing the news that Amazon plans to further infiltrate the B2B industrial selling space online, Dirk Beveridge says his first piece of advice to NAED members is to “intensify your efforts to get better, faster.”

“We need to look at Amazon of course as a competitive threat, but maybe more importantly as a shining light that’s laser-focused on customers, experimentation, and innovation,” says Beveridge, founder of Chicago-based UnleashWD and author of INNOVATE! How Successful Distributors Lead Change in Disruptive Times. “While our research for INNOVATE! found that most distributors are using business models that are 50 years old, and that 85 percent of distributors surveyed believe they need to reinvent their business before someone else does,” Beveridge points out, “Amazon, after three years of testing AmazonSupply, pivots to another business model.”

This quick shift points to the ongoing need for distributors to “fight harder than they ever have before the gravitational pull to the status quo,” Beveridge asserts, “learn how to change as fast as the world is changing, and experiment without fear while keeping the voice of the customer at the center of their innovation efforts.”

The Three-Legged Innovation Stool
To cultivate innovation in today’s changing and increasingly demanding business environment, Beveridge says electrical distributors should start by looking at the current economic cycle that they’re operating in. And while many companies are enjoying this recovery period, he says it’s important to keep in mind that it won’t last forever. That means now is not to time to rest on your laurels and hope that the good times go on forever – especially with huge online retailers like Amazon promising to invade your turf (if they aren’t already doing so).

“We will have another 2008 at some point, even though I hate to admit it,” Beveridge points out. “We all tend to forget that and, as a result, overlook the ongoing need for innovation and reinvention.” Other excuses that companies use to avoid innovation include a lack of resources, focus, and manpower. “The key is to find the urgency to innovate in both good times and bad,” says Beveridge, “and not wait until it’s too late to do anything about it.”
One great reason to create an innovation-focused organization is simply because it’s what’s expected of independent, growing distribution firms. “You’re getting paid to position your company not just for the next quarter or year, but for the ‘next generation’ of leadership and ownership,” says Beveridge. “With this in mind, your goal should be to create a culture and business model that can sustain not just for today, but also for the next 100 years. That’s why you need to be thinking about innovation.”

Finally, Beveridge says the third leg of the innovation stool is the simple fact that we are all operating in an age of disruption. “We live in a time when change is coming at us faster than ever before,” he explains. “The change could be disruptive technology, it could be generational changes, or it could be new business models and non-traditional competition like Amazon.” Those companies that track these changes and focus on innovation, he adds, are generally better prepared to face and conquer the disruption as it surfaces.

Kick Innovation Into Gear
Acknowledging the fact that Amazon Business intends to disrupt traditional distribution models, Beveridge says one of the best ways to combat this issue is by committing to getting better faster. “Distributors have to find ways to raise their games,” says Beveridge, who encourages firms to view Amazon Business as a beacon of experimentation and innovation. “Use it as an opportunity or catalyst for getting closer to your customers than you ever have been before.”

“Automated warehouses and e-commerce are just fodder, but when you really look at what Amazon is doing, they’re just listening to the customer – in some cases better than you may be,” says Beveridge. “That means now is the time to commit to understanding the voice of your customer better than ever before.” As part of that effort, Beveridge advises independent distributors to carefully assess their internal organizational cultures. “Are you creating a culture that could become that magnet for the smartest, most brilliant people?” he asks. “Are you giving Millennials the opportunity to collaborate, share, and work together toward the common good of the company?” (This strategy is completely the opposite from the hierarchical management that most distributors still have today, Beveridge points out.)
To distributors that are either choosing to bury their heads in hopes that Amazon Business goes way, or are confused about exactly what they need to do to stand up to the web’s 300-pound gorilla, Beveridge says the first step is to look at this development as an opportunity versus a threat. “Step out of your comfort zone and stop looking at your business the same way you have been for the last 40 years,” he advises. “Then, focus on leading your customers to a better future for which they are willing and capable of rewarding you.”

And remember, says Beveridge, that if companies like Amazon Business are indeed changing the rules of industrial distribution, then ignoring the evolution – or, plodding along with a “business as usual” mentality – will inevitably catch up to you. “Electrical distributors have hung out with each other for too long, but what they haven’t done is inject new thinking, new ways of looking at the world, and new ways of looking at customers and markets into the equation,” says Beveridge. “Now is the time to start.”

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 bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.



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