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Is AmazonSupply a Threat to the B2B Distribution Market?

Is AmazonSupply a Threat to the B2B Distribution Market?

Supply Chain Digest Blog Entry: October 7, 2014 (here)

Regardless of the where your firm fits within the business to business (B2B) supply chain, chances are that e-commerce is somehow impacting your firm's supply chain.  The level of e-commerce sophistication varies significantly from firm to firm.   Examples below illustrate this point:

  1. Company has a basic web site with limited online product information.
  2. Company provides secure B2B access to an electronic catalog of products with prices but customer cannot place order online.
  3. Company supports ability to place online order but confirmation is sent afterwards because there is no inventory availability confirmation at time of order placement.
  4. Customers place online orders online with immediate confirmation against near real time inventory availability information when an order line is entered.
  5. Company fulfills Internet orders on behalf of retailers such that it is transparent to the end-consumer that company was involved in the transaction.
  6. Online orders flow electronically from the e-commerce engine through to the back office and logistics execution systems with no manual data replication.
  7. Company determines optimal ship-from location to fulfill customer order based on inventory availability, customer delivery requirements, and least-cost shipment methodology.
  8. Strategies are in place to address conflicts that take place when online customers and traditional customers order against the same inventory pool.
  9. Strategies are in place to optimize logistics operations to ensure that Internet orders are fulfilled with efficiency.

For companies that distribute products that can readily be purchased from competitors, B2B e-commerce is now becoming a competitive weapon and it's time to start taking this threat seriously.

According to Forbes magazine, the U.S. retail industry generates about $4 Trillion in revenue whereas some 35,000 U.S. wholesale distributors generate $7.2 Trillion of revenue.  Most of these companies are family-owned businesses with $50 Million or less in annual revenues (only 160 firms are greater than $1 Billion in size).  This largely ignored market may soon undergo a major transformation as AmazonSupply quickly and quietly ramps up its B2B capabilities.

AmazonSupply now has 750,000 products for sale to business and industry.  The company offers competitive prices with a 365 return policy, free 2-day shipping for eligible orders greater than $50, a service team that provides technical help, and access to the Amazon.com corporate credit line.  Amazon's technology capabilities are quite simply decades ahead of the competition and the company is clearly willing to sacrifice short term profitability in exchange for market share and revenue growth.

With this in mind, visit amazonsupply.com where there is wide open access to product offering, product specifications, pricing, product availability, shipment terms, and payment terms. Any buyer with a need can obtain immediate real time information without any delay whatsoever.

Does your business currently compete with Amazon? Is there is a chance of this happening in the future? What is your company's e-commerce supply chain strategy to ensure successful growth in the world of tomorrow?

Marc Wulfraat is the President of MWPVL International Inc.  He can be reached by clicking hereMWPVL International provides supply chain / logistics network strategy consulting services. Our services include: supply chain network strategy; distribution center design; material handling and automation design;  supply chain technology consulting; product sourcing; 3PL Outsourcing; and purchasing; transportation consulting; and operational assessments.

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MWPVL International Inc. is a full-service global Supply Chain, Logistics and Distribution Consulting firm. Our consulting services include Supply Chain Network Strategy, 3PL Outsourcing Strategy, Distribution Center Design, Material Handling Systems, Supply Chain Technology Advisory Services (WMS, TMS, LMS, YMS, OMS, DMS, Purchasing, Slotting),  Lean Distribution, Transportation Management, Distribution Operations Assessments, Warehouse Operations Consulting and much more.