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Posted October 31, 2019

Combating the Amazon Effect

Rich VurvaOur special feature on The Digital Transformation (page 16) offers advice from technology providers about how to combat the ‘Amazon Effect,’ the growing trend among buyers to conduct business via e-commerce. The advice is timely, because a recent survey by B2B E-Commerce World shows that 55 percent of buyers expect to increase their spending on the Amazon marketplace.

A separate report from McKinsey & Company called “The coming shakeout in industrial distribution” reports that 57 percent of professional buyers said omnichannel convenience was one of the top three improvements distributors should provide. Features they want include 24/7 customer service, a complete e-commerce website, order tracking, and real-time inventory management. Customers expect to make 30 percent more of their purchases from distributors via online means; those in the electrical segment expect a 50 percent increase.

Competing against Amazon Business and other e-commerce providers doesn’t necessarily mean that distributors need to go head to head with the online behemoth. That’s a fight that’s going to be hard to win. However, it is possible for independent distributors to improve their e-commerce presence, by partnering with buying and marketing groups for example, but focus their primary efforts on providing the value-added services and technical expertise that’s more difficult for Amazon to replicate.

That’s the approach taken by Gopher Industrial, a Texas-based distributor of hose, welding and safety supplies featured in this issue’s cover story. The company was founded in 2004 by two distribution veterans who dreamed of building a B2B e-commerce solution but changed their focus to a more traditional brick-and-mortar approach by 2011. Today, about 25 percent of the company’s sales are online, far higher than the typical independent distributor that struggles to hit double-digit e-commerce numbers. The duo has learned that while it’s important to offer an e-commerce solution to customers, their real value comes from the solutions and technical knowledge they provide.

Rich Vurva
Twitter: @IndSupplyMag

This article originally appeared in the Nov./Dec. 2019 issue of Industrial Supply magazine. Copyright 2019, Direct Business Media.


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