How Distributors Can Compete Against the Amazon Effect

ITA Group
ITA Group

distributor wearing boxing gloves

Asking anyone today if they know what Amazon is can be likened to asking them if they know the world is round. Not only does the online megastore have its own effect, it also has an entire day dedicated to hyping its colossal empire.

The online fiesta of all things retail, also known as Amazon Prime Day, features slashed prices on just about anything that can fit in a box, from books to cat food to clothing.

Amazon announced that the July 2017 sales event was its "biggest day ever," turning an otherwise slow time of year into a profitable heyday. And more new members joined $99-per-year Amazon Prime on July 11, 2017, than on any other single day in the membership program’s 12-year history.

When an online retailer with enough money to rival the GDP of Poland has the clout to 1.) Invent its own holiday and 2.) Make that holiday successful enough to rake in millions during a traditional seasonal lull, it’s safe to say competing distributors, at a minimum, take notice.

"For retailing [this] is hilarious and scary, both," retail consultant Jan Kniffen of J. Rogers Kniffen told CNBC's Worldwide Exchange. "Nobody does any business in July … Amazon intends to take over the world, and they're doing a pretty darn good job of it."

But does Amazon’s success mean competing distributors should throw in the towel? Hardly.

Continuing to compete—and to compete well—is really just a matter of shifting focus and zeroing in on the trademarks that make their business successful.

The Distributor’s Model Versus Amazon’s Approach

If you’ve been one of Amazon’s millions of customers over the years, you have a general idea of how purchasing works:

  • You find something you like
  • You click “buy”
  • It shows up on your doorstep

For many transactions, such as a book, it’s a suitable process. There’s little variation, and consumers generally know what they’re going to get.

But it’s not as simple for more complex goods like electric componentry or industrial machinery, where the potential for variance is greater. For this type of transaction, being able to examine the product is crucial to verifying the quality of its intricacies and, ultimately, to customer satisfaction.

What sets distributors and brick-and-mortar retailers apart is the high-touch retail experience, argues Crate & Barrel Co-Founder Gordon Segal in a CNBC interview.

“Amazon is about convenience and speed…but [it] doesn’t let you touch or feel or understand the quality of a product,” he said. “People have to be careful when they’re shopping on the internet. There are many different qualities of product, and you should always go to the place where they offer it to understand the quality.”

In a nutshell, Amazon has carved its niche by focusing on convenience and speed, but can lack the attention required for a more value-based sale, particularly for more sophisticated products.

Therein lies distributors’ opportunity to disrupt the Amazon Effect.

How Distributors Can Differentiate

So you don’t have the exhaustive catalog or ecommerce capabilities of Amazon. That’s OK.

As a distributor, you can differentiate yourself by focusing on the best aspects of your business and leading with the premier treatment you’re capable of giving to your customers—the treatment Amazon doesn’t typically provide.

Your employees are the single most critical component of this strategy, and there is a direct correlation between how you treat them and the experience your customers have. After all, research suggests a company’s customer service levels go up by 5%, and profits by 2%, for every 10% increase in employee engagement levels.

To ensure you’re providing the foundation your employees need to provide great service to your customers, here are four tips for retaining, engaging and incentivizing your team to rise to the challenge.

1. Focus On Retaining Your Talent

While business might be booming, Amazon has room to grow in the context of turnover—it ranks second on a list of how quickly employees jump ship, with a median tenure of just one year.

Does that mean employees are burning out more quickly than other industries? With Amazon’s historically secretive mindset, it’s hard to tell definitively.

But one thing’s for sure: building a culture that puts employees first (ahead of customers, even) creates a bottom-line benefit for your company by reducing churn, and it drives a second-to-none customer experience.

Related: Are you doing all you can to build a culture your team wants to remain part of? Take our interactive culture assessment to find out.

2. Be Clear in Your Objectives

Telling your people to “create a better customer experience” won’t get you very far.

Why? It’s too vague, and “customer experience” means something different for everyone. Take the initiative and dive deep into the objectives that matter the most to customer experience (e.g. location professionalism or an employee code of conduct).

Then, break those elements down further and outline the steps leading up to each (e.g. proper store signage or vehicle branding, branded attire and phone etiquette).

3. Incentivize Performance and Participation

Asking your people to go above and beyond to perform a new task—or elevate the level of tasks they are already doing—isn’t always met with the best reception. By nature, people can be resistant to change.

But that doesn’t mean you can’t motivate them to overcome their hesitation. For example, the same concept behind this six-part approach sales leaders can use to inspire CRM participation among their teams can be used to encourage people to transform customer service levels.

4. Create a Simplistic, User-Friendly Experience for Your Customers

If you think juggling a fistful of customer loyalty cards from the different retailers you frequent is a hassle, think about your customers who are likely managing participation in a host of incentive programs.

The customer experience is about more than just the way your customers interact with your team members. It’s also about how your customers interact with your brand and the offers you bring their way.

That’s where a centralized incentive platform can differentiate you from the crowd. 

A single platform offers clarity and alignment of goals, simplified messaging to capture increased mindshare among your customers, and a way to consolidate earning opportunities across a variety of manufacturers and budget centers.

Plus, you’ll be able to get business-building intelligence through relevant reporting on data that may never have been available to you.