I was an indifferent French student in high school, but I always enjoyed the phrase “raison d’être” — the reason to be, to exist. For electrical distributors, their raison d’être has always been fulfilling a well-known mantra — getting the right product in the right quantity to the right customers, when and where they want — and at a fair price.
Every time a new competitor takes aim at the electrical market, it seems that electrical distributors face a new round of questions about their heir raison d’être. In the 1980s, people thought Home Depot and other big-box home centers could take over the electrical wholesaling industry. In the late 1990s, well-funded dot-coms run by newly minted MBAs wanted to redraw the channels of distribution. And today it’s AmazonSupply that has some industry observers calling for the imminent demise of the electrical distribution channel as we know it, and forcing distributors to once again reflect on their raison d’etre.
Every industry publication and website covering the wholesale-distribution arena and the many business consultants who make their living in this industry are now speculating about the impact of Amazon’s entry into the distribution market with its AmazonSupply business unit. Yes, some electrical contractors, facility maintenance personnel and other end users will spend money with AmazonSupply, particularly on commodity items and for products where the Amazon Prime delivery service is appealing. But no, AmazonSupply will not take over the distribution industry if electrical wholesalers focus on the core mantra that has helped so many of them survive for so long.
But to win against Amazon, distributors will have to market their value-added services — their real raison d’être. They will need to draw a clear distinction between the value-added services they offer and AmazonSupply’s role as an online source of supply. One of the key ways electrical distributors can differentiate themselves from AmazonSupply and other online competitors as a source of supply is by marketing themselves to customers, employees and vendors as a professional source of supply. This month’s cover story, “100 Marketing Tips that Really Work for Distributors” (page 16), offers readers a blend of evergreen marketing tips that continue to work for distributors and some ideas for how to harness the marketing potential of the web, LinkedIn, YouTube, Twitter and Facebook. I think even the savviest marketing veterans will find a tip or two that they have yet to integrate in their overall marketing strategy.
One of the biggest advantages distributors have over Amazon is the expertise they have in electrical products, the relationships they have built with electrical contractors and other core customers and their willingness to locally stock so much inventory — not only the fast-moving SKUs, but those that can take longer to sell — and deliver it, often at a moment’s notice right to customers’ job-sites. AmazonSupply will either have to find customers that don’t value these services or figure out ways to replicate them in the market.
One tough thing to know about Amazon’s foray into industrial supplies is how long it’s willing to wait to see its investment in this niche pay off. Brad Stone, a speaker at the recent NAED Annual, says in his book, The Everything Store – Jeff Bezos and the Age of Amazon, that while Bezos, the company’s CEO, is usually quite willing to lose a ton of money to drive competitors out of a market before taking over the category, there have been times when his initiatives fail and he just moves onto another market niche.
Several of the respondents to EW’s recent Top 200 survey said that while they wouldn’t be surprised if Amazon takes away some commodity sales from full-line distributors, they don’t expect AmazonSupply to compete effectively for any sales that require in-depth technical knowledge and a customized package of value-added services, like lighting projects or switchgear jobs.
This brings us back to this issue’s cover story and the importance of marketing the value-added services you offer. With another new competitor on the horizon, it’s a good time to analyze which services make you a more dependable source of supply than Amazon. I hope this issue’s cover story will help you do that.