A blog about creating value in your organization through supply chain excellence
by Jim Tompkins, CEO & President, Tompkins International, supply chain consulting

Weathering the ‘Perfect Storm’: Major E-Commerce Competitors in Industrial Distribution Market Just Ahead

How do you prepare for a storm? When I know a winter storm is coming, I bulk up on food essentials, put on my warmest clothes and heat up some tea to fight off the chill.

Right now, industrial distributors need to know about and prepare for a new storm brewing.

Industrial distribution is at its biggest crossroads in history, and the “perfect storm” for transformation is looming. Maintenance, repair, and operations (MRO) customer expectations are at the center, with demands for increased customization, sophisticated e-commerce platforms, an “endless shopping aisle,” and faster delivery speeds.

Adding to this storm, the need for better online purchasing capabilities for MRO distributors are also higher than ever—just look at W. W. Grainger as an example. Since 2011, the company’s web traffic has grown from 3,000 to almost 11,000 hits per month. Due to gross margins that produce a hefty profit, plus the growing expectation for online sales, companies like Amazon are diving into the B2B MRO market with their own e-commerce sites, like AmazonSupply.

Recently, Google followed suit with its own MRO e-commerce space called Google Shopping for Suppliers. Google’s site connects buyers with global suppliers, while Amazon sells products directly to buyers. Which makes the most sense? So far, Amazon’s been the leader to watch, but we’ll see how quickly Google’s new capability captures the attention of suppliers. Take a look at Gaebler.com’s article on Google Shopping for Suppliers to learn more.

And to gain deeper insight into how to adapt and weather this storm, check out Tompkins’ latest paper, Industrial Distribution at a Crossroads.

Ask yourself what you can do to move with change and serve customers under their own terms. This is the key to what I call Multichannel Operations Excellence (MOE). MOE means reaching out to customers in new engaging ways, studying how to broaden your selection and availability, and integrating online/branch events with social media. It demands every aspect of the customer experience to be interactive, educational, engaging, and personalized—all through a variety of channels.

Don’t be a casualty to change by thinking that the Amazon Effect does not apply in industrial distribution. Be aware of your customers’ preferences, stay proactive, and be ready to expand what you offer and how you deliver it to make sure you’re not left out in the cold of this storm.

Jim

To read the full paper, please click here.

Photo Credit: MyBiggestFan

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Friend or Foe? Success in Multichannel Hinges on How You Handle the Amazon Effect

Amazon is your competitor, whether you like it or not. But are they also your friend?

I see some companies suffering from an Amazon anxiety factor, so they shun the wildly successful company, or they try to copy Amazon’s innovations in the hopes that this keeps them competitive.

We’ve all seen the news daily about retailers dropping the Kindle from their shelves, bookstores refusing to sell books published by Amazon, attempts to match prices with Amazon for the holiday shopping season, and retailers testing same-day delivery just like Amazon is doing.

But in this new, multichannel world, not everyone is reacting the same way. There are companies establishing partnerships with Amazon, despite the fact that they are clearly competitors. The latest major example is Staples’ announcement this week that it is installing Amazon’s lockers into its stores.

Staples’ business is known for having a very strong e-commerce focus, making it a clear competitor for Amazon. Yet the two are entering into a partnership that can be best characterized as “coopetition.”

When a customer orders an item from Amazon, they can drop by their local Staples store and pick up the order in the Amazon locker. In turn, Amazon is able to use Staples’ stores as local fulfillment  centers, amounting to great convenience for the customer and major cost savings for Amazon. Staples benefits from bringing in more potential customers into its stores, and it helps the Staples brand as the good customer experience is then tied in the customers’ minds to both companies.

While Amazon and Staples are both running the same race, they are helping each other along while they run it. This a great strategy, and clearly the wave of the future.

As Forrester Research reported, “For many businesses, Amazon is simultaneously a sales channel, a potential service provider, and a competitive threat.”

Is Amazon your friend? Your enemy? Or is there a potential partnership there as a third choice — making Amazon your “frenemy” instead? It is time to think of new strategies that work for your business and supply chain in light of the challenges ahead.

More Resources

The Amazon Effect Video: Amazon is every company’s biggest competitor. Watch the video to find out more about the mysterious around Amazon.

AmazonSupply: Not the End, But Industrial Distributors are at a Crossroads

The Amazon Effect Podcast: What are the tipping points that, if addressed incorrectly, will lead to even more business bankruptcies by 2014? Listen to find out.

 

Photo Credit: bark

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