Strategic Insights 34
AmazonSupply (AS): New
Competitor and Role Model
The news on AmazonSupply.com
(AS) will continue to accelerate. AS has recently increased its items for sale
into 17 (and climbing?) “vertical” distribution
channels in pursuit of “business-to-business” (B2B) sales. On May 8, 2014
Forbes Magazine published an article:
“Amazon’s Wholesale Slaughter”, which was long on short-term hype, but
short on long-term vision.
Because Amazon (AMZ) is the
most: innovative and channel-changing juggernaut ever, what we see today at AS
is just a beginning. Their mission statement suggests more to come: “to sell
everything needed to rebuild civilization”. How will AS pressure your
100-year-old channel’s service-model and rules? What other right, best questions
about AS have you written down to think about?
IMPROVE ON AND ADD TO THESE
How fast and in
what ways might AS poach, which specific-types of customers and products, from
your channel and company?
Will AS target
your most-profitable items with Every-Day-Low-Prices (EDLP) as AMZ has done in
every retail category they’ve entered?
If profits and
sales are lost on best items, how will you subsidize your super-losing SKUs?
§ What are your top-100,
most-net-profitable and un-profitable items? Why are they that way? What should
you do with these answers if you get them?
§ AMZ sells popular, small-dollar items, but:
bundled; as add-on-only items; and/or at higher prices. And, we still buy them!
Why can’t you do that with popular, small-dollar-per-pick items that have less
margin dollars than your dollar-cost for the line item pick?
AS has the
supply-chain math to know their cost and net-profit on every: line item, order
and active customer. You should too! Why? How? Then what new plays are possible?
As you assess
AS, what are your analytical blind spots? Are you:
§ Over-focusing on what AS can’t currently do to minimize their threat? You won’t be the
first! The business press has dismissed AMZ repeatedly. In May ’97, the media
proclaimed “Amazon. Toast” when mighty, Barnes and Noble opened their online
bookstore. In May ’99, Barron’s declared: “Amazon. Bomb”; etc. Don’t under-rate
AS’s longer-term possibilities!
§ AMZ’s core competency is empowering end-users by
taking cost (people) and time out of the ordering process with perfect service
on “everything”. To empower the customer, they must break existing channel
rules that are supplier/product-push and sales-rep centric. The biggest-clout
players in the existing-order have the most to lose. Who wants to see or
believe that they and their rules are losing value?
§ Will reacting to a new competitor distract you from
being like AS and reinventing your
own, next-level, value-solutions for your best target customers?
service-value reinvention for best accounts possible? Yes! Check out the 9
minute video below. A CEO explains how his one-location, $8MM distributorship
used customer-centric insights from Line-Item Profit Analytics to pioneer a
“customer intimacy” supply-chain re-tuning effort. They doubled sales and
increased profits more than 400% in 24 months with their top accounts with solutions AS can’t match!
Here’s the link: http://www.apicconference.com/APIC_videosBM.asp
ON TOP OF THIS UNPREDICTABLE FOE?
trade press has been watching AS for two years. Google “amazonsupply”
+ either “Modern Distribution Management” or “Industrial Distribution”. Their
ongoing coverage of the facts will appear.
Go to Google
News and search for both: Amazon.com and AmazonSupply.com. Sign for news alerts
on these names.
Maclean has done both a short write
up and video clip on AS. He has identified 5 capabilities of AS against which
you should benchmark your service capabilities.
The link? http://randymaclean.guru/latest-news-and-updates/
b. Randy’s comments ONLY HINT at what AMZ knows about
supply-chain-math profitability and most distributors don’t. For his full,
live-coverage on AMZ/AS AND
how to get and use supply-chain math, grab
one of his few, no-fee, fall-speaking slots for your distributor-group
Randy and I did
a 20-minute video interview about AS and AMZ strategies. At my
normal, 417-word-per-minute clip, I touch on how:
pioneered different pricing and service-models for different segments of the
SKUs: (1) popular profitable items; (2) popular, small-dollar items; and (3)
“long-tail”, dust-collectors which are “Fulfilled by Amazon (FBA)”.
distributors can do their own, next-level, supply-chain-math solutions for best
customers. (Link to our video interview:
Attend the Advanced
Profit Innovation Conference on October 1-2, 2014 in Phoenix. There will be a big-gun panel on AS.
Plus, the why and how for using net-profit analytics will permeate all of the
Check out my
deeper-dive exhibit on: “AMZ’s Extending Platform Potential, and What-If
Scenarios for AS”. See Exhibit 65 at
the following link: http://www.merrifield.com/exhibits/Ex65.asp.
AMZ is threatening EVERY
physical (and digital) product-channel player from Walmart down. Players with
biggest, old-rules assets will get hit hardest. Niche producers and dealers,
conversely, love AMZ for leveling the marketing, distribution advantages of the
Bigs with: “Marketplace + Prime + Fulfillment by
Amazon”. Start living the right questions to: defend intelligently against AS
and innovate like they do!
Strategic Insights 34,
Merrifield Consulting Group, LLC is related to Exhibit 65 at: