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Disruption is Everywhere: Amazon at the Gates Webcast Q&A Digest

By Mitch Lee
June 4, 2018

Our recent webcast Amazon at the Gates: Preparing for eCommerce Armageddon (which you can watch on-demand now) with Stephan Liozu, Founder of Value Innoruption Advisors, spurred questions across our attendees from all industries – it was a fantastic discussion! Check out the Q&A below. Fight or flight? We’ve got the tools to help you fight head-on today, tomorrow, and in the future. Read on below:

VIEW ON-DEMAND WEBCAST:

Amazon at the Gates: Preparing for eCommerce Armageddon

MICHAEL: Hi, I was invited to “Amazon at The Gates” – apparently this is another presentation…?!

Hi Michael – yes, you are at the right presentation! Stephan is discussion how AMZ is setting new heights for customer experience, and how that impacts B2B commercial processes.

 

BUSINESS MODELS

Salih T: My company has a distribution arm – set up as a BU.  We also have channels that are served strictly by distributors.  Are there business model considerations that fall one one side or the other?

Hi Salih – Certainly what Stephan is reviewing is directed at distributors that are independent businesses, but many manufacturing organizations have internal distribution functions – and many manufacturers have both internal and external distribution. Sometimes the business situation allows a choice of one or the other – but often organizations find themselves in situations where one channel-to-market has both internal and external distribution capabilities.  

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The bottom line is: no matter what your situation, you have to think about your business model from the point of view of your customer’s experience: are your channels easier to do business with – do you bring more value to the table – than the eventual competitive landscape that is based on Amazon’s business model?

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Don’t forget that (if) some of your customers are being served by an independent distributor – they are still your customer, and their experience has a huge bearing on whether they’ll buy your products. As a manufacturer, think about how best to meet heightened requirements for customer experience across all your channels to market.

Stephan makes a great point here – make complexity work to your advantage! 

Stephan also notes: internal distributors might have more control over supply and pass-through cost. The fact that they are internal might influence their ability to develop dffierentiated offers i.e when you need to carry competing products.

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THE B2C IMPACT ON B2B

 

YOLANDA S: B2B v B2C – am I in the right webcast?

Hi Yolanda – Yes – though many things in the B2B world don’t often have a direct connection to happenings in B2C, trends in eCommerce are definitely impacting commercial processes in B2B.  Stephan will lay out the framework… 

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 “Speed is the new currency of business” says the CEO of Salesforce. Speed in pricing changes is key as well.

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One of the assets distributors have is the access to customer data.

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PAUL: Accuracy with analytics is key. One thing I find both amusing and annoying is how, after I buy something online, I get all kinds of ads for the same product – analytic fail!

Hi Paul, great observation.  Obviously, analytics are involved here, but the observations around your potential as a customer (context, if you will) are not integrated into the commercial side (knowing that you’ve purchased). The analytics OUGHT to lead to suggestions that are appropriate for you – enhancing your experience as a customer, and making it likely that you do more business.

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MARKETPLACES

KELLEY K – I’ve heard of non-Amazon marketplaces – is this really a viable option?

Hi Kelley – yes, there are many examples of suppliers and distributors joining together – with several of both in a marketplace – to form a unique space offering exceptional customer experience in the form of solutions – combinations of products and services. Vendavo has helped several sets of manufacturers and distributors come together to make environments that offer value far exceeding the closest option available compared to “doing it all yourself” – or conversely – giving it “all to Amazon”…

TERRY – Perhaps service marketplaces.

Hi Terry – yes, the service aspect (and knowledge of a customer’s business) is a key component – something that the AMZ model struggles to put into the “offer”.

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Change is the new status quo.

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MARC: Amazon is also a Distributor in their own right… how do you differentiate from their offer to both the supplier and the market… as they have the money and resources to invest that many Distributors do not?

Hi Marc – absolutely – AMZ is a distributor that is actively entering the B2B space.  We view them as great at commodity items that don’t need “high touch” – meaning, there isn’t a need to help the buyer select, and then help the buyer apply the solution correctly in the long term.  It’s a very different – and very B2B – type of customer relationship.  So, yes AMZ certainly has the resources to stand up very sophisticated eCommerce websites – but that model focuses on buyers that have a rather simplistic buying cycle: they self-educate before and after the sale.  Complicated sales cycles required more abstract / ad hoc knowledge that is difficult to code, but it’s a basis part of being a good sales person: understand your customer’s business model.  And understand how what you are selling fits into that model to make your customer more successful.

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RENATO: What are the opportunities from an entrant doing B2B via ecommerce?

Hi Renato – we’ve helped B2B distributors form marketplaces – areas where they have unique capabilities – the key is to find things that you do that are not easily duplicated.

Develop a unique business model with lots of WOW differentiators. The opportunity is going to be as good as your value prop. It is a huge market to consider.

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COMPLEXITY 

JIT H: We have a tremendous number of SKUs and customers and regional sales organizations – isn’t it more straightforward to address this complexity with simple rules?

Hi Jit – Simple rules are good for instances where you are relying strictly on the skills of people to address varying circumstances – within the limits of your ability to anticipate all the variations.  And it’s a great place to start if your first objective is to regain control of your pricing (and revenue, and margin). But software driven by algorithms is much faster – and more consistent – in assessing dynamic situations.  This allows you to not only apply the rules quickly and broadly but also identify the instances that justify exceptional handling.

 

 

  • Amazon , commerical excellence , Disruption

    Mitch Lee

    Mitch is a Profit Evangelist at Vendavo with 25+ years of experience in the technical, operational, marketing, and commercial arenas of the process industry. Prior to Vendavo, Mitch was with BASF and Orica in product marketing and business management, driving operational optimization, pricing excellence, and margin improvement, as well as personal engagement in high value sales negotiations. Mitch also has deep experience with raw materials supplier portfolio management having negotiated large scale and long-term agreements with global suppliers.