Amazon : A Threat to Wholesale Distributors?



Wholesale distributors face a new threat with the entry of Amazon into Australia with low prices, vast selection and fast delivery.  Wholesale distributors should be prepared to face this new challenge as consumers becomes more value focused than brand loyal.
 
Amazon's growth strategy focuses on building market share ahead of profits.  It is expected that Amazon's entry into Australia will prompt widespread discounting and erode margins of established retailers and wholesale distributors.
 
Why is Amazon popular with buyers?
Amazon is constantly responding to what buyers wants by providing them with sufficient information and education to enable better decision making.  They also provide a reliable means of delivery which is what buyers are looking for.  Besides that buyers also get detailed information on where their shipment is, competitors of the same product, reviews from other buyers and end-to-end customer support.  
 
How will this affect wholesale distributors?
Consumers now have higher expectations and expect the same level of information, customer service and heavily discounted prices provided by large online retailers like Amazon and the likes.  The shift in consumer preferences will sway customers away from normal brick and mortar businesses and affect the entire supply chain, including the wholesale distributors.  Wholesale distributors in Australia might also face pressure from the manufacturers and distributors of products going directly to Amazon, thus cutting them out of the supply chain.
 
How can wholesale distributors differentiate?
To survive this new threat, wholesale distributors have to exceed customer's expectation by knowing the customer, providing knowledge and support that is not available from the online giants.  Wholesale distributors can reduce cost and improve profitability by streamlining operations, upgrading business solutions and IT infrastructure.  Real time information, improved supply chain management and improved logistics are all possible with robust business solutions and ERP systems.
 
The ability of wholesale distributors to provide the same level of purchasing experience will provide wholesale distributors a chance to compete with Amazon and possibily differentiate their services and offerings.  For more information on how ERP can help wholesale distributors, contact us.


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