4 ways for Distributors and Wholesalers to not get Eaten by the Hungry Bear… AmazonSupply.

“The question is not whether AmazonSupply will be a threat,” says Richard Balaban, who has studied the site for management consulting firm Oliver Wyman. “Rather it is which customers, purchase occasions and categories will be attacked first.” –Amazon’s Wholesale Slaughter: Jeff Bezos’ $8 Trillion B2B Bet – Forbes

Amazon is one of the most recognizable brands in the world, and they’re trying to maul Distributors and Wholesalers. If you sell a product that you don’t produce, then I’m sorry, there’s a Bear trying to eat you. There are hundreds of articles about how threatening it is, and I’m sure, being the responsible person you are, you’ve read quite a few. This article aims to address the areas you can work on to avoid the Bear.

So in order to not get eaten, you should ask yourselves these questions.

1. Why has my company succeeded so far?

You probably focused on customer service. A wise move, it’s all about the relationships right? You’ve probably given speeches to your team about how the customer comes first. You’ve probably gone out of your way to establish friendships with key clients. Yep, that stuff works.

But most likely, with some customers at least, you offered a lower price than your competitors. Consider the percentage of your revenue that comes from contracts won from offering the cheapest price. Now do the math. Being the cheapest provider isn’t going to be an option for long.

Now, let’s say AmazonSupply offers the same products as you do, along with probably 1,000,000 others that you don’t. Consider putting much more effort into customer intimacy. Which takes us to our next question…

2. What customer expectations will change?

It’s vital to think about what your company looks like to your customers and try to see the world through their eyes. You also have to go one step further. You must consider what their expectations are going to be like in 5 years, that’s exactly what Amazon is doing. Consider elements of the business that are going to be impacted like online ordering, and logistics. Innovate in those areas.

3. What Unique Information Value do you have?

Let’s think about ways to add value to your business by branding the specific information and experience you have, in order to offer a high-level of service, and provide a total solution for customers.

We recently performed an analysis of a phone system provider and communications infrastructure contractor. Only 10% of their customers bought products or services from them after the initial install. This was not unusually low for their niche. But their company has expertise in more than just laying lines of cables. They understand phone system technology. But the customer’s total solution requires better communication. We recommended partnering with a provider of integration with the customer’s CRM systems to do just that. Next, we identified another key problem with their company. The branding, which leads to our next question…

4. What’s the value of YOUR brand?

Lots of small to medium sized Distributors and Wholesalers piggyback on the brands of products they sell. We’ve heard things like this time and time again. “We sell PRODUCT NAME.” They use the logos of the manufacturers as often, if not more than they do their own.

Consider establishing your brand more distinctly in the minds of your customer. You’ve got to develop targeted messaging that establishes a connection to your customers. I know that sounds hokey, and it is, but it works.

Here’s a quick example of how the messaging of a telecommunication distributor can be modified, and a formula to get the general picture.

Instead of “we sell Products A, B, C at such and such price”

Try something like “We believe communication enriches people’s lives. We streamline the way your company connects with each other and the world. From telecommunication systems to CRM software, we ensure your company’s voice is heard.”

A message like that brands a company as a total solution that adds a lot more Value than a cut-rate distributor.

The formula:

Part 1) Why you’re in business

We believe_____________

Part 2) How we fulfill that belief

We do________________

Part 3) What products or services you offer

With__________ we solve ________

Don’t knock it ‘til you try it. Test it out for yourself.

 

Many of these solutions may seem obvious. We all have a gut feeling of what makes a good business, and if you didn’t have that, you wouldn’t have made it very far.

But business owners are often too close to their business to see it clearly. An outside perspective informs you on what it looks like from the outside. Much like a writer who knows the story in their head, but can’t always understand what is missing on the page.

Greg Davis
Greg Davis
Written by
Founder and CEO of Dolphin Consulting and best-selling business author.