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Distributors in Canada can expect to see new competition from Amazon Business for relatively simple transactions – which tend to make up a disproportionate share of profits because they are generally higher margin while incurring lower service costs.  Amazon Business appears to be focusing on large, e-procurement customers.  The press release about their launch in Canada included testimonials from spokespersons at 3M Canada, Earls, La Clef de Sol and Varidesk.

In light of this development, distributors should consider enhancing their differentiation in the form of value-added services, enhancing their own digital capabilities and developing a strategy for responding to digital marketplaces, which continue to take share from company-specific websites.

Individual companies should weigh the benefits and costs of selling on marketplaces like Amazon Business, Walmart.com, eBay Business & Industrial, Alibaba or Zoro and, when doing so, should establish “rules of engagement.” Last month, the Wall Street Journal claimed that Amazon has used third-party seller data to develop and introduce some of its private label SKUs.  Amazon denies the accusation and has launched an internal investigation, but this is scary news for any distributor considering selling on the Amazon Business marketplace.

If digital marketplaces are going to continue to take share from company-specific websites, then the distribution industry must consider developing a long-term strategy that enables them to sell the way customers want to buy without worrying about a technology partner using sellers’ data against sellers.

For more information contact Ian Heller, Phone: 720 470 0806; e-mail: iheller@distributionstrategy.com

Reproduced from a report by Ian Heller, Founder and Chief Strategist Distribution Strategy Group.  See Press release.