Nearly half of business-to-business (B2B) buyers have used Amazon Supply to make a company purchase and Acquity Group, a brand e-commerce and digital marketing company, has the data to prove it. The 2013 State of B2B Procurement Study found that 45 percent of respondents have used Amazon Supply to make a purchase in the last year, and 25 percent of those use Amazon Supply frequently.

“Many people in our industry do not seem to be concerned with Amazon Supply, thinking that they will somehow be immune to this newcomer in the market,” said Griff Ennis, sales manager at Remsco Inc., Panama City Beach, Fla. “I think Amazon Supply is a threat to the traditional way distributors have always done business.”


Loyalty Not Guaranteed

The study conducted by Acquity Group surveyed corporate buyers with annual budgets in excess of $100,000. Some of the questions focused closely on what a customer is looking for from the distributor. The results showed that loyalty didn’t always play a factor in their purchase choices. When compared at the same price, 71 percent said they would buy from a website with a more convenient and efficient purchase process, even over loyalty to their current supplier. 

“Amazon Supply has over 750,000 items online,” pointed out Ennis. “This offering of products combined with the convenience of online shopping, 30 day return policies, two-day delivery, etc., is going to be an issue that independent distributors will have to address. This will be a bigger issue for smaller to mid-size distributors than larger ones, but even the larger ones will not be immune.”

Ennis knows that his company has lost some sales to Amazon Supply, but he noted that a real challenge for distributors is measuring what sales have actually been lost because of online sales.

“There is no real way to account for lost sales due to online merchants,” he said. “The Internet is changing the landscape of our industry and while many manufacturers, distributors, and contractors are fighting that change, it is inevitably coming.”

As for future trends, Ennis is concerned that what was once customer loyalty has simply become customer habit for some.

“Today we seem to be moving away from habit, as a trend towards customer convenience seems to be developing,” he warned. “While relationships are still strong selling points in this industry, the move towards convenience seems to be taking a stronger hold, especially among the younger contractors.”


Online Buying Expectations

Also found in the 2013 State of B2B Procurement Study was a warning about the growing importance of e-commerce to the younger generations.

“Buyers under the age of 35 are 131 percent more likely to make online corporate purchases than those over 35,” noted the study. “Of those making purchases online, 90 percent of buyers are age 18-35, 68 percent are 36-45, 45 percent are 46-60, and 29 percent are 60 and over.”

It is reported that the younger generations have a tendency to spend more time researching their purchases and are interested in the amount of information that is easily accessed and readily available.

“B2B distributors must be aware of the revenue threat from the third-party B2B e-commerce websites,” said Robert Barr, senior vice president at Acquity Group. “This is particularly important since many buyers do not visit distributors’ physical stores, but rely on catalogs and websites to research products. Unfortunately, many of these websites are outdated and lack capabilities to meet customer expectations.”


Google Jumps In

Amazon Supply isn’t the only new competitor online. Google introduced the beta version of Google Shopping for Suppliers this year. The program operates as an extension of Google’s shopping site and allows users to interact and negotiate prices, terms, and shipping with sellers. Each seller goes through a vetting process to become a certified seller. There are currently only two categories listed for offering — Electrical & Electronics and Test & Measurement. The HVAC product inventory on Google Shopping for Suppliers is not as expansive as Amazon Supply, but upon a quick search for different HVAC keywords, users will find an array of components, controls, thermostats, and other HVAC products.

Even with Amazon and Google at play in the HVAC distribution market, some distributors feel that the two online sellers will not push far enough into the HVAC distribution industry to be a major concern.

“Online sales of HVAC equipment hasn’t affected our business much at all,” said Eddie Anderson, CEO of M&A Supply Co. Inc., Brentwood, Tenn. “Our customer base is structured around a level of service features that these ‘big box’ retailers can’t provide.”

He explained that, to his knowledge, M&A Supply’s current customer base is not doing business with Amazon Supply and that if the customers did become interested he was not that concerned.

“Our company is large enough to generate our own buying advantages in order to compete,” noted Anderson. “We will bundle our products with service items that they can’t match.”


Making a Plan

Just as Anderson has a plan to deal with the changing marketplace, so does Ennis.

“We are adjusting our inventory levels and product offerings as well as aligning ourselves with some different suppliers; some traditional, some non-traditional,” said Ennis. “Either way, we do have a plan in place to address the coming changes in our market.”

One thing’s for sure, they are both expecting and planning for future market changes.

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