Distributors: Amazon Only Loves You For Your Data

Being a bit of a nerd, it’s not uncommon to see me staring at a blank piece of paper deep in thought, followed by a fevered session of doodling, sketching and note-taking. My wife calls this “unveiling the secret world inside Hal’s mind.” In truth, there are no secrets. I just don’t “download” ideas to paper unless I feel that they are worthwhile. This morning, I identified something worth sharing.

Many of the clients we serve wrestle with the disruption that Amazon Business is creating in the trade distribution industry. It’s no secret that Amazon sees profit in the sales channel as an opportunity for EBITDA. They’ve done a good job breaking down and understanding the distributor channel sales model. In short, I believe that Amazon studies three elements of any industry that they are looking to enter:

  1. Things that the industry does that Amazon can easily duplicate or improve.
  2. Things that the industry does that Amazon does not want to do.
  3. Things that Amazon wishes they could have, but the industry players are still in control of.

Item number three on that list is where most of the opportunity remains for our clients (and other distributors). Specifically, customer buying data is something that distributors have that Amazon does not (yet). For the past 25 years, I’ve seen a relentless effort by suppliers (and now Amazon) to collect and obtain this data.

I guess that’s one reason that Amazon is so eager to collaborate with distributors. With their “start with a customer need and work backward” mantra, it goes without saying that they covet this information.

How independent distributors use their customer data remains one of their remaining competitive advantages.

We owe it to ourselves to leverage this advantage and create value that industry disruptors cannot replicate. Customer insight, and what we do with it, has always been one of our most significant opportunities. Let’s start there.