How Distributors Can Compete Against Amazon

Amazon sells a little bit of everything — from clothing to groceries to out-of-stock novelties. The online retailer even sells goods banned in some countries, such as foie gras. They truly have something for everyone. Now the e-commerce giant is taking aim at a new category of products — the B2B office supplies category.  

The effort targets businesses of any size that buy supplies, including cleaning products from multiple vendors. It’s a solution that is causing some in the jan/san distribution market to say Amazon may be too difficult to compete with.  

Keith Schneringer, senior director of merchandising and sustainability for WAXIE Sanitary Supply, an Envoy Solutions Company, San Diego, isn’t one of them. His company sells some products on Amazon and says distributors may want to consider operating B2B platforms via the online marketplace. 

Louie Davis, vice president of sales for Central Paper Co., Birmingham, Alabama, agrees and admits that partnering with Amazon can make sense sometimes. But he recommends distributors exercise caution when entering these relationships. He points out that Amazon sends partners orders to fulfill, but also often accepts smaller orders with miniscule margins.  

“I don’t want to be in the business of shipping a case of this or a case of that at excessively low prices,” says Davis.  

Amazon also places regulatory demands and shipping terms on business partners. Often selling through Amazon can violate the distribution agreements that companies enter to carry certain product lines. For these reasons and others, Central Paper Co. does not work with Amazon.  

“We don’t feel like there are enough advantages,” says Davis.  

Why should jan/san distributors step into this territory, Schneringer asks. The answer is because Amazon can assist with pushing products and driving revenue. Distributors shouldn't feel threatened by the help in sales because most distributors offer value that Amazon cannot. 

The Threat 

Although Amazon poses a sales threat to jan/san distribution — how big of a threat remains up for debate.  

Schneringer says, “We like to tell ourselves that Amazon is not a threat to our businesses. But for many customers, Amazon is a good place to transact some business.” 

Ryan Banks, executive vice president-central region for BradyIFS, Las Vegas, agrees and says, “Amazon will have its place in the market. Some customers will migrate to their e-commerce platform for ease of ordering and delivery speed. But those are not our primary customers.”  

True jan/san customers, he says, are companies concerned with regulatory compliance and service after the sale. These customers want to avoid pitfalls and understand the products they use.  

“It’s our job to remind them that only a jan/san distributor can help them select the right products and mitigate their budgets,” he says.  

Davis views the threat posed by Amazon differently, seeing the e-commerce giant as just another competitor in a vast sea of competitors. He explains that jan/san distribution experienced tremendous disruption during the pandemic that now continues because of inflation. Consolidation among distributors, he says, also poses a threat — as independent distributors now must compete against multi-billion-dollar organizations.  

Davis believes smaller customers who need towels and tissues, and a small amount of cleaning supplies might go to Amazon, or big box stores like Sam’s Club and Costco. But, he adds, there’s still a steady supply of customers who need more service than these companies can provide.  

But as competitors like Amazon continue their growth, Charles Moody, president of Solutex Inc., Sterling, Virginia, suggests distributors must play their A-game.  

“More competition will push stagnant distributors out of the marketplace. Those who do not change will become dinosaurs,” he says. “Distributors need to improve their technology and search engine optimization so people can search and also order online. They need to strengthen relationships with their customers as trusted advisors and experts. Just waiting for the phone to ring isn't going to cut it." 

next page of this article:
Creating Customer Loyalty Through Product Consulting