From the Editor: Amazon Supply Will Change the Market
Call me a geek if you like, but after finishing watching all seven seasons of “Star Trek: Deep Space Nine” on Amazon Prime, I wanted the story to continue. In my search for the possibility of a reunion or made-for-TV movie deal, I found that the story was carried on in a list of different Star Trek books. Of course I had to have them and since I have an Amazon account, I looked there first. While shopping I found that procuring these old novels was rather simple and relatively inexpensive. That is until I came to the second book of the series and the price point on every copy I found was either high or astronomical. Figuring Amazon wasn’t the only book game in town, I began to search elsewhere in hopes to find an old copy hidden in a mom-and-pop shop that was less expensive. I couldn’t find anything but e-book offers and then, I found one. The price wasn’t listed, but it was an actual, physical book. Excited, I clicked the link, and you will never guess where I found myself — staring at the small company’s item description, astronomical price, and ordering instructions on Amazon.
Amazon’s selling success is not limited to books and video. The company continues to try new selling strategies as it pushes into different markets. Its latest business foray, Amazon Supply, is making progress in the distribution industry and has experienced some early success. The company even offers HVAC supplies and represents a new sector of competition for the HVAC distributor.
I have talked with some distributors about this, and despite Amazon Supply’s play for HVAC distribution market share, it doesn’t seem that too many of them are all that concerned.
Having been lumped in with the irritation that is the big-box store, it seems that a fair amount of distributors have relegated Amazon Supply to play the role of a minor inconvenience that is to be watched, but not necessarily feared. I’ll admit that fear is really too strong of an emotion to assign to how distributors could be approaching Amazon Supply’s growing presence, but I think it is definitely time to raise the alarm.
Why be Alarmed?
There are a few reasons that Amazon Supply would make me a little more than concerned if I were a distributor. The first is its adaptation to the evolution of technology. Amazon has embraced the changes in technology and adapted its selling strategies to move within and stretch beyond some of technology’s parameters. Look what this attitude did to the bookstore industry. Yes, there are bookstores still around, but how much market share has been lost to the e-reader and tablets? How many stores closed their doors because they couldn’t compete? Amazon has used the Kindle to not only dictate market behavior on the selling and reading of books, but it has adapted the technology to create the Kindle Fire HD and pushed into new revenue models of media consumption. The company is now giving media market players such as Barnes & Noble, Apple, and Netflix direct competition for what was once their market to dominate.
The second reason I would be concerned about Amazon Supply can be summed up in three letters — DVR. The letters stand for digital video recorder, and upon its initial introduction there were plenty of scoffers when someone suggested that one day the DVR could jeopardize the position standard and cable television had in the home. I would be inclined to agree that the DVR didn’t actually cause as many problems as were predicted, however, it changed the way people consumed television. Commercials were no longer something to sit through and the weekly TV schedule became irrelevant as consumers could watch the shows they had recorded whenever they wanted. The DVR ushered in the era of on-demand television programming and opened the door for Internet television, Hulu, smart TVs, etc. All of these items have become competition for the cable company and although cable companies are still around and making quite a bit of money, they have had to adapt and change their strategies to remain in business.
Amazon Supply has the potential to do the same to the HVAC distribution industry. Just because Amazon Supply might not put the HVAC distributor out of business, doesn’t mean that it won’t find success and push into HVAC distribution market share or completely reshape the market. The company has done it before, and it is possible it could do it again.
Be careful not to be caught off guard because you dismissed Amazon Supply as a potentially serious competitor. It would be a shame if a future contractor was looking for that small HVAC distributor with great prices and ended up buying from Amazon Supply because he had no other choice.