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Webinar: Amazon And Google And Their Impact On Distribution

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By Jack Keough

I recently participated in a webinar panel discussion about the effect that amazonsupply.com and Google Shopping for Suppliers is having on the distribution business. Joining me on the panel were Scott Costa, publisher of tED magazine and Linda Taddonio, chief executive e-commerce strategy officer for Insite Software.

Dirk Beveridge, founder of 4th Generation Systems and UnleashWD.com, moderated the discussion.

There were several takeaways from this webinar, but what stood out to me was the belief that distributors are taking Amazon and Google lightly or may just be unsure of what they should do to compete against these Internet giants.

Costa noted that the threat of Amazon was one of the most talked about issues at the recent NAED annual meeting in Boston. “Distributors really wanted to share ideas as to how to combat this threat,” he said, but no real decisions were made as a group.

“I feel a lot of people are in a defensive posture,” he said, noting that distributors need to start taking action and doing something by looking at various strategies that are starting to come to light.

Taddonio agreed, noting that no one seems sure of the specific plans of Google and Amazon in its venture into the B2B marketplace. “One of the things that has gotten my attention is what we don’t know,” she said.

Amazon, she noted, does not send out press releases about its business plans, while Google is only slightly more transparent.

I added that there is, indeed, scant evidence as to the success of these companies reaching the marketplace, but referred to one study that indicates amazonsupply.com’s entrance is having positive results for Amazon.

The Acquity Group, a digital marketing company, said it has conducted a study of buyers and found that 45 percent of them have bought products from amazonsupply.com in the past year. Twenty-five percent said they had bought products “frequently.”

Amazonsupply.com began operation in April 2012 with 14 different product categories.

Based on these numbers, amazonsupply.com is making inroads into the operations of traditional distributors.

Google Shopping for Suppliers started a beta site earlier this year from which it is selling electrical and electronic supplies. Other product groups are expected to follow.

Taddonio, who has more than 25 years of experience in manufacturing and distribution, said that what can be gleaned from distributors’ reactions is that they are not translating what they see happening in the B2C marketplace into their own business world.

“Now it’s (those changes) coming like a tidal wave,” she said.

Many distributors do not have the proper business models in place to meet and adapt to changes in the way buyers want to procure products, she said.

Taddonio pointed out that many distributors have little or no marketing expertise within their organizations and rely on “shifting” resources around to meet various marketing needs.

Also, she noted that very few distributors have a three to five year strategy in place with a proper budget to carry out that plan.

Costa also offered a suggestion for those distributors and manufacturers who either have or are planning to adopt an e-commerce presence.

“If you are thinking of establishing such an online presence, or have one already, it has to be pristine as possible because that is their (Amazon and Google) area of expertise and they do it better than anyone else, so that’s their competitive advantage,” he said.

Beveridge said that the emergence of Google and Amazon into the marketplace emphasizes that “we need to look at our businesses differently.”

During a conference hosted by UnleashWD last November, 45 distribution executives identified 11 imperatives that distributors need to undertake to keep their businesses competitive in the years ahead. Beveridge pointed to one item in particular: Distribution leaders have to re-invent their businesses before someone else does.

With fundamental changes in the marketplace caused by a slow economy, rising e-commerce business and new competition, “the need for change is greater than ever before,” Beveridge concluded.

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