How the Amazon Effect is Changing the game for distributors
31 Jul 2019

The Amazon Effect Pushes Wholesale Distributors into New Territory

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

You’re facing increased competition from distribution 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. According to the IBISWorld Industry Report, revenue in the wholesale industry segment fell by 3.7 percent in 2016. 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%.


Forrester Research

Business customers may bypass you in favor of Amazon’s friction-less and immediate experience considering the retail giant offers fast delivery, lower prices, and greater convenience.

Additionally, 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.

40% of B2B buyers finished their purchases on Amazon in 2017.”

Forrester Research

In order to stay competitive, you must offer customers a similar level of convenience as other distribution e-commerce sites. 

By fully understanding the challenges preventing wholesale distributors from achieving financial goals, you can begin to address them – helping you improve your customer experience, gain a competitive advantage, and optimize your cash flow. Click the link below to download our e-book.