The Amazon Effect Pushes Wholesale Distributors into New Territory

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Wholesale distribution e-commerce sites that offer buyers a seamless user experience are rapidly gaining market share. You need a plan to compete – or risk lower margins. Or even worse.

The Amazon Effect Pushes Wholesale Distributors into New Territory

You’re facing increased competition from e-commerce sites that make it easy for business customers to buy anything that they need online.

In particular, Amazon Business is rapidly gaining market share. The marketplace now has hundreds of thousands of sellers and is set to hit $10 billion in sales – up from $1 billion just three years ago. Some analysts believe that Amazon’s business sales will soon surpass its consumer sales.

As Amazon expands into more markets, you may feel the crunch. In 2016, revenue in the wholesale industry segment fell by 3.7 percent. Meanwhile, a leading distributor saw its Q2 2017 earnings per share drop more than 40 percent from a year earlier, which it attributed to price reductions and online sales pressures.

Analysts predict that through 2022, “The business-to-business (B2B) e-commerce market will continue to dampen industry revenue by enabling suppliers and buyers to engage in wholesaler bypass.”

"30% of B2B buyers finished their purchases on distributor websites in 2015. In 2017, this number dropped to just 16%. 40% of B2B buyers finished their purchases on Amazon in 2017."
– Forrester Research

Business customers may bypass you in favor of Amazon’s frictionless and immediate experience. The retail giant offers fast delivery, lower prices, and greater convenience.

Amazon Business also gives customers transparency into purchasing patterns. It provides analytics that allow financial teams to track spending by individuals or business units and it integrates with popular procurement and enterprise resource planning (ERP) systems.

To stay competitive, you must offer customers a similar level of convenience.

To learn more about the trends shaping the future of wholesale distribution, grab a copy of our ebook.