Every weekday in December, tED magazine is counting down the Top 20 Stories of 2015. Below, the #3 most-viewed story of the year, originally published on February 5, 2015.
By Scott Costa, Publisher, tED magazine
If you have read any of my past stories about AmazonSupply and Jeff Bezos, you know that I am keeping a very close eye on its innovation and strategy, especially when it comes to electrical distribution.
In the past, I have written that a key strategy Bezos employs is to weave together a series of small advantages to create one large opportunity.
Bad news folks. Bezos’ weave of small advantages just got longer.
First, there is the impression by many that AmazonSupply has marketed itself as a high-moving, low-priced website that only caters to small businesses. But, now the banner at the top of the website says “2,250,000 supplies for businesses and organizations”. Hardly looks like a small business model any more.
Second, traditional distributors have been using product and industry knowledge as an advantage over AmazonSupply. But Bezos has responded, according the DATAgility president Denise Keating. “Amazon has jobs advertised for brand experts and is hiring people from companies like Grainger and MSC,” Keating told me. “They realize it is a weakness and they are taking action to fill the gap.”
Remember, Bezos is willing to take a short-term loss on AmazonSupply in order to build an audience for the future. That appears to mean taking on more full time salaries to compete with traditional distributors.
And third, there are still doubts that Amazon will ever be able to provide same day delivery. Keating believes it’s only a matter of time, and that time may come sooner than we think.
“When Amazon talks about same day delivery in a two hour time frame, most will say that it can’t be done. I say that it CAN be done, maybe not using the traditional methods we all know and are familiar with,” Keating says.
As if that isn’t enough, this week Amazon officially opened its first “Amazon Store” on the Purdue University campus in West Lafayette, Indiana. Right now, most of the customers are students who are buying textbooks online and having them shipped to the store. One student told the “Indianapolis Star” newspaper that he is saving hundreds of dollars each semester using Amazon.
That first store is weaving another Bezos advantage. Amazon is creating young, loyal customers who are about to enter the workforce and, as engineering students (it is an engineering school, after all) may one day be a part of this industry and continue to buy B2B products from AmazonSupply. That’s not good.
This is worse. The students are taking advantage of the Amazon Store to buy just about everything. One student told the newspaper, “I’ve been getting cleaning stuff. Instead of driving all the way to Walmart, I just get it here when I’m at work and pick it up when I leave,” said Eric Templin, a senior computer science major and store employee. “It’s really awesome (and) pretty convenient, honestly.”
So, while AmazonSupply is tapping in to Millennials as its future customers, Keating worries that distributors are falling way behind when it comes to e-commerce. “Do distributors see their technology weakness and are they willing to take action?” Keating asks. “I am encouraging our distribution channel to stop making statements about what can’t be done and ask instead how can they make what seems impossible – possible. It isn’t Amazon that is threatening our channel it is a lack of innovation and bold new ideas. Maybe a better way to say this to distribution is: it is thru innovation and bold new ideas that will keep this channel fully connected and engaged with their customers as the channel of first choice.”
So, you might want to pass this on to others: the chain of advantages from Bezos and AmazonSupply has definitely grown in the past few months.
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