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Top 20 Stories of 2014: #1 AmazonSupply And The Great Data Divide

Every weekday in December, tED magazine is counting down the Top 20 Stories of 2014. Below, the #1 story of 2014, originally posted on May 14, 2014.

This is the second in our series of stories on the threat AmazonSupply is making to our supply chain. Yesterday we looked at the need for innovation. Today we examine the data divide with a straight forward discussion on how you can narrow the advantage AmazonSupply has when it comes to how your customers view websites.

Brad Stone, the author of “The Everything Store: Jeff Bezos and the Age of Amazon” spoke at the NAED National Meeting in San Francisco a few weeks ago. And one thing really stood out to me, mainly because I have heard him say it before.

“Amazon will weave together a chain of small advantages,” Stone told the NAED audience. “Bezos is incredibly analytical, and he looks for those points of leverage to wield that advantage against his competitors.”

Just last week, Forbes Magazine published its story on Bezos and his AmazonSupply website, which it calls an “$8 trillion dollar bet to slaughter wholesale distribution.” The story says Bezos has built a “125,000 employee logistics and data powerhouse”.

Advantage AmazonSupply.

And keep this in mind: AmazonSupply is currently listing 2.2 million products online, while the average distributor lists around 50,000. The products listed on the AmazonSupply site have all of the technical specifications, plus at least one photo.

Advantage AmazonSupply.

But that’s not all. With its still expanding regional warehouses, and the ability to actually use e-commerce (more on that later), Bezos can process orders and deliver items within 48 hours.

Another advantage AmazonSupply.

Looks like Bezos has weaved himself quite a chain of advantages.

I talked to Denise Keating, president of DATAgility and partner with NAED in the DataFirst program. The program is designed to help distributors build and maintain their e-commerce websites to compete in a world where online purchasing is becoming much more common.

“The Forbes article does not address the manufacturer perspective or responsibility to the channel,” Keating says. “In order for distributors to thrive in the new ecosystem, they need the support from the manufacturer community. Typically, the B2B market is much more profitable for a manufacturer than the retail market. The manufacturer also needs to help level the playing field by offering robust product data content for all the items they expect distribution to sell.”

But Keating does not put all of the responsibility on manufacturers. She points out a recent survey that found half of distributors don’t even have a website that offers the ability to buy products. And if you want to break some of the chain of advantages that AmazonSupply has created, you need to upgrade your website.

“Distributors need to get their website’s functionality up to speed by offering online purchasing. While they are updating the platform, ensure it can be viewed optimally on mobile devices. Secondly, they need to have rich, robust, product data content, and sophisticated search capabilities in order to support the on-line store. A great web store without good content is just as ineffective as a poorly functional website with good content. Unfortunately, most distributors have one or the other at this point. Or worse, a poorly functional website with poor data content. Do not let your customers be one click away from becoming loyal to the competition.”

Since Keating and DATAgility has been able to go through electrical distributor websites first hand, tED magazine asked her to compare what she has seen on those sites compared to what AmazonSupply is offering.

“Amazon has the platform, the content, and infrastructure in place to offer products confidently and quickly to the market place. They are going after markets that are not sophisticated in their adaptation and implementation of technology; weak, poor data content; and product offerings that typically do not require additional assistance after purchase,” Keating reports. “The data that is available is sparsely populated in comparison to Amazon’s robust data content: normalized detailed product descriptions, multiple images, tech specifications, marketing copy, features and benefits, and physical and performance attributes. That including options for the customer to provide feedback on how to improve the quality of their data.”

And then we asked Keating to tell us what she thinks will happen if this data divide continues to grow.

“Your company has to be putting strategies in place to compete in the new ever changing market space. Distributors have to be more innovative in the way in which they connect with their customers. The web is no longer just a tool that allows distributors to offer their customers a different way to place orders. It is also a relationship building tool.  Your website/mobile app is an alternate way to connect to your customers in a way in which they prefer to communicate with you. Amazon has learned to combine powerful easy to use systems, with robust content, and an interactive experience that not only engages the customer the first time but keeps them coming back. Again and Again.

“The data divide is also evident in the lack of understanding of how to leverage data as a competitive advantage – Electrical distributors should participate the NAED DATAFirst program, to help cope with the data source issues, apply their exact data requirements, and learn how to “personalize” and Web-enable their product offering.Millennials make up 1/3 of the workforce today are digital natives ( i.e. expect to do business on line just as they do today in their personal lives) and that number is only going to grow while at the same time the baby boomers are going to diminish (not decease but rather leave the work force) with every passing day. If distributors don’t plan for the new generation today, there will not be a place for them in the future tomorrow. Amazon isn’t the only threat to the distribution channel — companies such as Ace Hardware and Staples are now offering products that were sold typically through ‘traditional’ distribution. Home Depot estimates that 30% of their business comes from the professional contractor.”

Keating also says distributors who lack a strong e-commerce platform are forcing manufacturers to change their sales plans.

“If distributors don’t engage in robust ecommerce platforms then they leave their manufacturers no choice except to engage channel partners who do so they have an opportunity to reach and sell their products to all buyers.”

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