Digital Trends and Amazon's Effect on Distribution Ian Heller President & COO Modern Distribution Management www.mdm.com
What s Driving Unprecedented Amounts of Change in Distribution? B2C Expectations > B2B & Millennials Pure-digital players (esp. Amazon Business) Machine learning & artificial intelligence Technology: cheaper and easier to use
5 Ways Millennials are Changing the Wholesale Distribution Channel 1. Online Research 2. Lead Nurturing 3. Online Transaction 4. B2C User Experience 5. Omnichannel Customer Expectation
Why Distributors Struggle to Succeed in E-Commerce Distributor s culture doesn t support it Sales culture is threatened Sales people undercut online Conflicting messages from management Value proposition is minimized Sellers not compensated for e-commerce sales Attribution challenges http://industrialsupplymagazine.com/file_open.php?id=77
Raising the Bar on Convenience and Availability in B2B Free, two-day shipping Inside Sales Reps Multiple users for a single account Search page tailored to industry Offers from multiple sellers Customer reviews Live Expert button for tech info Pricing/products just for business Email confirmation w/delivery date Open account 55 day, 0% interest Revolving credit: P cards, 12.99% APR Tax exemption Customizable purchasing analytics Punchout support for 70+ systems Integration to ExpenseWatch, etc. Discounts for GPO s, associations, etc. >500M SKU s in the US Advanced filters: women-owned, etc.
eprocurement Today BigCo MRO Distributor Buyer 4 Buyer 5 Buyer 6 Buyer 4 Buyer 5 Buyer 6 eprocurement System with Custom Catalog Fastener Distributor Cutting Tool Distributor Packaging Distributor Office Supplies Distributor ERP Amazon Business Marketplace
eprocurement Future? BigCo MRO Distributor Buyer 4 Buyer 5 Buyer 6 Buyer 4 Buyer 5 Buyer 6 ERP Enhanced Punch-Out Capability eprocurement System with Custom Catalog Amazon Business Marketplace Fastener Distributor Cutting Tool Distributor Packaging Distributor Office Supplies Distributor
Amazon s Unique Value Proposition 500M SKU s in the Amazon Marketplace Superior Logistics Capabilities Software Development Machine Learning and Artificial Intelligence Amazon continuously implements and upgrades AI-driven tech
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Voice search for deck screws"
Amazon has 12,785 jobs open as of March 4th, 2018 They are hiring for jobs such as: 3232 Software Developers 1152 Operations and IT 955 Sales and Account Management 1360 Product Managers 395 Marketing/PR 208 Business Intelligence
Quote from Amazon Job Description Our vision is that Alexa will be the world's most knowledgeable product expert who knows you, in a store that sells everything. We are building a digital product expert that is always available, with super-human knowledge of every product ever made.
Getting Rich on Other Peoples Money Amazon Takes Cash Up Front Seller Central fees (~$500/year) Business Prime fees from buyers (Up to $10,999 for >100 users) Credit card purchases Amazon Uses Third Party Supplier Money Holds purchase payments for 14 days ~12% transaction fees Working Capital Funded by Third Party Sellers SG&A & Capital Funded by Third Party Sellers
Amazon Seller Central Payment Guidelines and Transaction Processing Fees Prior to disbursing funds to you, Amazon or Amazon Payments may combine Sales Revenue held with the funds of other users, invest them, or use them for other purposes permitted by applicable Laws. You will not receive interest or any other earnings on any Sales Revenue. https://sellercentral.amazon.com/gp/help/external/202073180?ref=efph_202073180_cont_202072540&language=en-us
Distributors: Ante to Sell Online Technology Capabilities ecommerce Online catalog and ordering PIM-enabled product data Faceted Search Easy purchasing, incl. mobile Custom catalogs EDI & punchout Product configuration Service & quote requests Demand Generation Marketing automation Sales automation Online: SEO, email, etc. Foundational: A Robust ERP
Types of Moats for Distributors Services Bonded/Dedicated Inventory Fluid Sealing Gasket Svcs. Consignment Inventory Bin Stocking Just-in-Time Kitting Value Stream Analysis Quality Control/Inspection Engineering Services Engineered Products Kanban Assembly Heat Treating Customer Manufacturing Tool Repair & Rental Hazard & risk assessment Hardness Testing Packaging/Labeling
Thank you. ian@mdm.com