How to develop a business strategy that outwits Amazon Business at its own game.
In this two-part article series, we explore Amazon Business’ push into the building product manufacturing world, assess the risk landscape that this disruption is creating, and highlight several paths building product manufacturers and their distributors are taking to address the opportunity. In the last segment, we took an in-depth look at how this B2B seller is making inroads across various industries, Building Product Manufacturers (BPMs) included.
5 Success Strategies That Work
FMI’s recent work with BPMs and those companies’ sales and distribution channels uncovered several paths to success. So, whether you sell through Amazon Business (AB) or not, the e-tailer’s obsession with the customer’s experience creates a high bar for distributors and manufacturers.
This can be turned into a competitive advantage for your company. In fact, as building product manufacturers and distributors build, test and implement their own new ideas to develop e-commerce capabilities to fill in the gaps in Amazon Business’ model, we are confident that the e-tailer can serve as a reference point not for an “imitator” value proposition, but instead as a useful tool for finding value gaps that exist and then leveraging them for growth and expansion outside of any of the giant online retailers.
Here’s where we’re spending significant time helping building product distribution firms get started:
Strategy #1: First and foremost, get the right people on board and give them the reins to accomplish the mission. Make space for nontraditional employees. Hear all the voices and create a safe place to learn from each other’s mistakes. Short-cutting on team and people development never pays off. FMI’s work with construction leaders has uncovered four skills most critical to hire and train for in a volatile, uncertain, complex and ambiguous world:
- Leading people through organizational change
- Building consensus and commitment
- Inspiring others toward a challenging future vision
- Cross-generational leadership
Strategy #2: Define, score and raise the visibility of your exposure to Amazon Business by identifying your products’ and services’ value proposition that mega online retailers can’t master. For example, you can use any or all of these value-added offerings:
- Private labels
- Kits, modularization and fabrication
- Bundled product systems and service offerings
- Services with significant technical expertise and operational training
- Software and software systems
- Preventive / predictive maintenance
- Equipment support
- Rentals and leasing with favorable terms and financing
- Offering requiring startup and commissioning assistance
- Exclusive distribution deals with manufacturers that do not allow selling on AB type platforms
Once you’ve reviewed each product offering and captured the results, the scorecard tells you what revenue streams are at the highest levels of risk relative to AB as well as helps you launch the conversation around building the deepest competitive moats.
Strategy #3: Passionately build out your own e-commerce capabilities with both a desktop and a mobile interface focus. Make sure your initiative includes:
- E-commerce and mobile apps that provide deep data and focus on design, engineering and technology advice that drive loyalty. “Build the app for that.” With more than half of all internet traffic coming from a mobile device, it is extremely important to make sure your e-commerce engine is primed for mobile viewing.
- Business intelligence software designed to help better plan production and meet customers’ needs with depth and personalization is a must-have component. You can’t sell online against the behemoths without robust product analytics.
- Operational efficiencies that continuously improve the speed and efficiency of warehousing and supply chain operations by upgrading warehouses with software designed to help pick, pack and ship orders quickly.
Strategy #4: Reward and plan for loyalty from your customers. Take advantage of new technologies and an abundance of available talent to accelerate your plan. Don’t rely on Amazon Business or anyone else to operate this fast-growing and vital channel. Own it yourself, even if you choose to partner with Amazon Business. Smaller B2B e-commerce sites can go deeper on content, products and a more specific user experience than current Amazon offerings. And remember that:
- BPMs can learn a lot about how to make things easy by brainstorming emerging tech tools in new and innovative ways. Consider taking a page out of the Tinder playbook. Just look at Tinder’s new “Swipe the Vote” campaign. Designed to get people to the polls this November, the social dating app may not be an obvious choice for building products, but it’s an ingenious way of driving engagement and educating voters (or buyers in our case). Look for technology outside of construction that is built to influence large groups of stakeholders and apply it within your distribution channels.
- Buyers crave detailed specifications, including 3D, 4D and 5D models and the associated experience around choosing your products and services. Specifiers like to describe their products with drawings, not just words. They want depth and not just breadth in their product choices. Constantly work to understand what gets specified, purchased and installed and why. Don’t be afraid to pull product that isn’t moving or find another sales channel to move it.
Strategy #5: Improve sales force effectiveness by developing more operationally efficient go-to-market sales and marketing strategies, market segments and sales processes that support your customer focus. Do this by:
- Evaluating your internal and external sales organizations.
- Embracing the value they bring and create incentives that drive and pay for intentional performance results (Note: Amazon Business has not invested in a field sales organization).
- Create incentives that reinforce and reward the right behaviors.
- Focus on new customer conversions and existing customer penetration and retention behaviors.
- Make investments in travel and entertainment that are commensurate with customer value and/or potential.
- Invest time and money with organizations that want partners, not just vendors.
- Align the various sales force structures with the right channel partners and leverage internal firm expertise to improve performance.
- Find, develop and reward channel partner champions.
- Deploy critical success factors that focus individuals and teams on daily behaviors that reinforce sales objectives, such as increasing face time with decision- makers, collaborating with marketing to develop account-based marketing (ABM) plans, and developing industry persona through speaking, writing and conferences.
With an effective combination of strategy, people, processes, rewards and technology, many building product organizations find that average performers beat expectations, and already strong sales organizations achieve extraordinary results.
Looking Ahead and Beyond
We must acknowledge that Amazon Business’ unique value proposition, made up of a breathtaking assortment of product choices, cutting-edge technology and terrific supply chain capabilities, is unprecedented and that it delivers real value to customers. Amazon has built another amazing company, and Bezos is proving to be one of the most significant business leaders in history. He truly sees the world differently – some would say more accurately – when he makes statements like, “We don’t think our profitability is our customers’ problem.” Bezos’ vision on how to use emerging technologies to drive innovation and cash flow is unprecedented; he will no doubt continue to create value in new ways for customers.
Ignore Bezos and Amazon Business to your own detriment. It’s much better to develop and implement a plan now that recognizes and responds to this new threat for the simple reason that the value Amazon Business provides is real. Now is the time to think through your strategy and tactics, while sales are strong and before the cycle peaks.
In return for these efforts, your business will bring innovation and leadership to your market niche. As you make your customers happy, your own obsession with your customer will deliver better products and services across the value chain that can’t be met and exceeded by an online e-retailer like Amazon Business—or the next big disruption being dreamed of in some college dorm room right now.
Connect with our Building Product Manufacturing Team