Going up Against the Web’s 800-Pound Gorilla: Part II

By Bridget McCrea

In AmazonSupply Steps into Commercial Lighting, tED Magazine let readers know how Pittsburgh-based decorative lighting OEM sales rep agency Lighting Solution Development had posted a call for new lighting vendors on AmazonSupply’s behalf. On the AmazonSupply Seeking Commercial Lighting Vendors page, the company stated that the lighting and electrical buyer at AmazonSupply recently challenged Lighting Solution Development to bring it commercial lighting and electrical lines.

The article caught the interest of tED Magazine readers and ranked as one of the site’s most read articles for several days. This level of interest begged the question:  What can independent electrical distributors do to effectively compete against this web behemoth without slashing prices? In this 2-part series we’ll explore the options and show how firms can hone their business strategies and outpace larger competitors.

Prepping for Battle
Henry Ford once said, “If you think you can do a thing or think you can’t do a thing, you’re right.” According to Curtis Alexander, a digital marketing consultant in Billings, Mont., industrial distributors need to take Ford’s quote to heart when it comes to leveraging the Internet and especially when it comes to AmazonSupply.

“I don’t care where you are at right now or what you’re situation is. If you’re an industrial distributor there is a place for you online,” writes Alexander in Distributors: Can You Beat AmazonSupply? “I can’t tell you where that is or how best you can go about exploiting your strengths and Amazon’s weaknesses. That requires really digging into your situation. But I can tell you small businesses of every shape and color compete – and win – everyday online versus much larger competitors.”

Alexander says independent electrical distributors are well positioned to play up their strengths and effectively overcome threats from large online retailers like AmazonSupply. “When Amazon enters a new industry vertical the knee jerk reaction is for smaller firms to start dropping prices in order to compete,” says Alexander. “This is the wrong approach.” So what should distributors be doing instead? Alexander offers these five tips for successfully beating AmazonSupply:

1. Refuse to compete on price. Many times the assumption is that customers only care about getting the lowest possible price, but Alexander says this isn’t necessarily accurate. By coming from a position of not competing on price, he says distributors can position themselves as the go-to supplier without having to undermine already thin margins. “You have to think about your strategy and how you can differentiate yourself in the marketplace,” says Alexander. Electrical distributors, for example, tend to be tightly focused on the categories of products and services that they sell. Amazon, on the other hand, “sells everything under the sun and they try to do it at the lowest price point possible,” says Alexander. “In the electrical industry, distributors can stand out on things like follow up after the sale and expertise – two details that AmazonSupply may not be able to provide efficiently or effectively.”
2. Become an “object of interest” for your customers. Help customers focus on what’s important – your firm, versus all of those shiny objects that are dangling around out there on the web. “Look at how you can draw electrical contractors to you without just undercutting prices,” Alexander advises. One fairly simple strategy is to begin developing white papers, special reports, fact sheets, customer success stories (to “show” how you’ve helped other clients achieve their goals), and other materials that can be published online and accessed whenever customers want them. “The Internet itself is a unique and powerful force,” says Alexander, “that helps even the smallest firms position themselves as objects of interest for their customers.”
3. Use Web 2.0 tools to your advantage. Online videos posted on YouTube (to demonstrate new product applications, for example), webinars (to educate customers on new concepts and trends), and email marketing campaigns (using a platform like Constant Contact), and online survey mechanisms (like SurveyMonkey), can all help distributors raise their web presences without having to invest a fortune in the process. Other good options include blogs (on industry trends or news events) and social media posts that keep customers in the loop. “All of these avenues are out there, but from what I’ve seen most distributors aren’t fully leveraging them,” says Alexander. “If you have the focus and the expertise, using these mechanisms to keep everyone informed and up to speed on what your firm offers is fairly simple.”
4. Hone your value-added strategy – but don’t give it away. Offering training, support, and other services to go along with the products that you sell is a fairly natural tendency for today’s distributors. Unfortunately, too many firms wind up “giving away” or completely undervaluing these value-added services. “As long as you’re valuing these additional services properly, they can definitely work in your favor when it comes to fighting competitors like AmazonSupply,” says Alexander, who recently worked with an industrial distributor who was able to overcome a similar challenge by guaranteeing overnight delivery and charging a premium ($400 versus the typical $100 shipping charge versus the $80 charged by Amazon) for that value-added service. “It completely changed the company’s profit picture,” says Alexander, “and allowed the distributor to charge $320 more than Amazon was charging for non-guaranteed overnight delivery.”
5. Look beyond the electrical distribution category. Before shaping your distributorship’s plan of attack, take a good look at what firms in other industries are doing (or, what they have already done) to combat large online retail outlets. Cabela’s is a good example of a company that refused to be overcome by AmazonSupply’s advances, for example. According to Alexander, this direct marketer and specialty retailer of hunting, fishing, camping, shooting, and related outdoor recreation merchandise, isn’t always the low-price leader online, but it has effectively positioned itself as an “object of interest” for loyal customers. “Many times you can pull up the same product on Amazon and Cabela’s and the latter is not the cheaper option,” says Alexander. “However, because Cabela’s has moved beyond price and really focused on the categories that its sells, offered value-added services, and introduced private label options, it’s still thriving.”

In the end, Alexander says the best step that distributors can take right now is to “not try to out-Amazon Amazon.” Take the 35,000-foot view of the issue, he advises, and understand that your firm probably isn’t going to be able to go head-to-head with the 800-pound gorilla solely on price. “Instead,” says Alexander, “use your firm’s strengths and the power of the Internet to automatically draw customers in and keep them there.” 

—

McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.