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Top 20 Stories of 2017: #3 Amazon Starts Targeting Your Customers

Top 20 Stories of 2017: #3 Amazon Starts Targeting Your Customers

EVERY WEEKDAY IN DECEMBER, TED MAGAZINE IS COUNTING DOWN THE TOP 20 STORIES OF 2017. BELOW, THE #3 MOST-VIEWED STORY OF THE YEAR, ORIGINALLY PUBLISHED ON MAY 31, 2017.


 

By Scott Costa, Publisher, tED magazine

In between meetings at the LIGHTFAIR show in Philadelphia a few weeks ago, I happened to pick up a copy of Electrical Contractor Magazine. As I do every month, I read it.

Page 21 caught my eye. Not the article. The ad. It was from Amazon, and it was directed directly at the electrical contractor market.

Before I go any further, you need to know this: If I was the Publisher of Electrical Contractor, I would absolutely, 100% take that ad from Amazon. And if I was the Publisher at Electrical Contractor and Amazon came to me 100 times to buy an ad, I would take it 100 times. Put yourself in that position, and you would, too. This isn’t about the platform. This is about the new Amazon strategy.

So there it is on page 21. The Amazon branding. The words across the top that are becoming more familiar: “Everything you love about Amazon. For the contractor.” There’s a web address, Amazon.com/Electrical. At the bottom is an email address, electrical@amazon.com, if you can’t find what you are looking for. And the whole ad is a $10 gift card if you order $100 or more.

That seems like a pretty small discount for a pretty small purchase, don’t you think? I asked tED magazine’s marketing columnist Katrina Olson what she thought about the $10 off ad. “It’s effective. Not pretty, but certainly gets the point across,” Olson says. “It depends on where they go from here. Are they testing the waters or is this a full frontal assault on electrical distributors? I tend to believe the latter.”

Olson looked at the ad and didn’t notice any strategy mistakes because she describes it as “simple and straightforward.” She believes the ad really targets the contractor who is not happy with its current distribution partner. “If I were a contractor who wasn’t being well taken care of by the sales and service people at my electrical distributor, I might consider taking advantage of this offer,” she said.

“The print campaign from Amazon is alarming because it is a very traditional marketing method to reach prospective customers,” Denise Keating, President of DATAgility added. “It demonstrates their commitment to take away the contractors that distributors serve today. Amazon understands that companies have to be where your customers want you to be. In this case you have to find the best and most effective way to reach prospective buyers.”

Keating went to the website to see what it has to offer, and wasn’t incredibly impressed by what she found. There are only a limited number of products on the Amazon.com/Electrical landing page. It wasn’t until Keating typed in the specific name of a manufacturer that she found thousands of products. She is not sure of the short-term impact for electrical distributors, but suggests distributors who sell these products do a sales analysis for the past month to see if they recognize any impact.

What should we expect to see from Amazon next? Both Olson and Keating say the online giant is definitely not done. “I would be studying the electrical distribution industry to look for chinks in their armor,” Olson says. “I would be targeting perhaps smaller contractors or those who feel underserved by distributors. I would also be studying electrical distributors’ weaknesses and thinking about ways to exploit them.” Olson also believes Amazon will focus on price, but will also see if there are other ways to lure new customers.

Keating says Amazon CEO Jeff Bezos sees an opportunity to tap into a significant amount of money. “Amazon is going hard after the B2B business,” Keating notes. “Bezos definitely wants a large percentage of the estimated $1 trillion in B2B sales that Forester has estimated B2B will see by 2020. Bezos sees the electrical industry as a marketplace ripe for disruption.”

So what should you do now? Both Keating and Olson say a little bit of hard work and a little more relationship building will go a long way. “The value added services distributors provide are important. They provide them because they have insight into contractor needs in a way that Amazon doesn’t have today,” Keating points out. “I think we have to continually look at the customer we want to attract, and create loyalty based on solving a problem or fulfilling a need at a price point the contractor is willing to pay. And, they want to do that with a company that is ‘easy to do business with.’ Distributors need to up their digital strategy game (and if they don’t have one they need to get one–please engage an expert) and execute.” Keating adds that, right now, working with Amazon means contractors may have to wait for products to be delivered in a day or two, while many nearby distributors may have that same product in stock.

Olson adds that now, more than ever, distributors should be highlighting the value they provide. “As a distributor, I would be reinforcing the relationships I already have, making sure my customers were happy,” Olson recommends. “I would also be thinking about services that make their lives easier. And I wouldn’t assume I know what these are, I would ask through personal interviews, a focus group or a survey. I would also find out what contractors don’t like about ordering from Amazon, then I would address those pain points.”

Keating also provided one last piece of advice, since we aren’t certain what Amazon’s next strategy will include.

“Successful distributors prepare for the future,” she said.

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