How can you compete with Amazon?

fN neceur YEARS. we've seen many Ibrick-and-mortar bookstores, office supply stores, and music stores either drastically change their business model or become obsolete in the face of online retailing.

Amazon.com has become so dominant in the e-commerce space that the term "Amazon effect" has become synonymous with the heightened expectations consumers have developed as a result of their shopping experience with Amazon. The customer is used to selecting from a broad range of goods and services, and having purchases delivered to them quickly-all at a low price. The ease of "checking out" in a few seconds, and even on your mobile device, has made shopping on Amazon very convenient.

In a recent article titled "Amazon's Wholesale Slaughter: Jeff Bezos' $S-Trillion B2B Bet," Forbes profiled AmazonSupply.com, an ecommerce site launched in 2012 focused on the wholesale and distribution market. In the last two years, the number of products available for purchase there has grown from 500,000 to more than 2.2 million.

These products include tools, home improvement materials, and janitorial supplies. (www.forbes.com/sites/ clareoconnor I 20 | 4 I 05 lOl /amazonswholesale-slaughter-jeff-bezos-8-trillion-b2b-bet/)

The article argues that because the business-to-business (B28) world is likely to be more profitable for Amazon than its "sexier" services. like TV shows and drone delivery, and it has great capital to leverage, it poses a significant threat to the $8trillion distribution industry. For America's 35,000 smaller distributors, in particular, Amazon can out- compete in the areas of online inventory. fulfillment and logistics. customer data. and. of course. price.

There is a great deal of specula- tion and disagreement about AmazonSupply's potential impact, particularly with hazardous materials. products that require on-site support or installation, and similar goods. It's worth noting that transporting lumber and building products to construction sites doesn't usually fall into those categories, but hasn't been ruled out by Amazon's vice president of B2B and AmazonSupply, Prentis Wilson. For this reason alone, the article has sparked great debate at my company. I'm sure we're not the only ones interested in this issue.

According to a 2013 survey by Modern Distribution Management and Baird, only l%o of independent distributors and manufacturers had seen an impact on their business from AmazonSupply at that time, and 93Vo indicated no impact one year ago. More distributors than manufacturers cited an impact, and those in plumbing, HVAC and janitorial and sanitation were feeling it more so than companies in roofing and building materials. (www.mdm. com/blogs/ I -management-strategy/ post/ 30 1 32-management-strategy20 | 3 -04- I 9-survey-amazonsupplysi mpact-on -di stributors- low- butcuriosity-still-high)

Multichannel Merchant, a publication serving catalog companies and online merchants including wholesale/distributors, inquired about Amazon's impact on those businesses in its recent MCM Outlook 2014 survey. While it is encouraging to see that 29Vo of those respondents also indicated no business impact from Amazon this year, 367o cited an effect on their shipping offers. They feel more pressure to offer free ship-

North American Wholesale Lumber Association

ping and ship orders faster. (multichannelmerchant.com/opsandful fillment/warehou se/amazon-effect-overrated-080420141)

At a 201 2 conference, W.W. Grainger. the distribution powerhouse cited in the Forbes article as a company that can prevent wholesale slaughter by AmazonSupply, indicated that Amazon does pose a threat to its business. Ron Jadin, senior vice president and c.f.o., indicated that its smaller customers are at risk because they do behave more like a consumer, but those customers only make up about 5Vo of its business. Jadin indicated that its multichannel model, employing a combination of online sales, a sales force, branches and mobile sales, provide it with relevancy Amazon can't match. (www.mdm.com/blogs/ I -management-strategy I postl 2999 4-management-strategy -2O 1 3 -03 - 1 9 -grai ngerstake-on-amazon-the-latest-on-thedistributors-growth-drivers)

National Association of Wholesaler-Distributors president Dirk Van Dongen reminds us that distributors have proven their resiliency in the face of other challenges and can adapt to retain their edge in the face of this one as well. Proactively embracing technology and online sales, expanding into new markets, strengthening brand recognition and delivering truly valuable products and services are all ways to retain relevancy in this new reality. (www.tedmag.com/news/features/ naw-president-dirk-van-dongentalks-amazonsupply-threat-with-tedmagazine.aspx)

It's also important to remember the role relationships play in distinguishing us from competitorswhether that's in the online world or in our local markets. We bring an expertise and depth of knowledge that Amazon can't match. The more we can establish ourselves as trusted advisors, not simply a vendor, the greater our bond with customers becomes and the less we have to compete on price and other factors that are more difficult for us to control. Continuing to prove our value in the supply chain is imperative, and nothing new to us in the changing economy. Even if AmazonSupply doesn't expand into the lumber industry, we should also make sure that we keep the "Amazon Effect" in mind when we interact with our customers and our suppliers. If speed and selection are the expectation, we have to respond accordingly as well.

If you're interested in hearing other lumber manufacturers' and wholesalers' perspectives on this topic and others that are impacting our industry, join me and other NAWLA members at the NAWLA 2014 Traders Market, Nov. 12-14 at the Hyatt Regency Chicago. You'll also have the chance to build relationships with current and prospective business partners from across North America-in one convenient location. Register now or see who's attending at www.nawlatradersmarket.com.

And, for those already affiliated with NAWLA, I encourage you to join or start a l0 Group so that you can continue to build relationships and host conversations with peers about trends and challenges that face lumber suppliers and wholesalers. While these groups meet in-person at NAWLA events such as the Traders Market and Leadership Summit, you can reach out to another l0 Group member whenever you need his or her counsel.

- Bethany West is business manager at Capital Lumber, Healdsburg, Ca., and a director of the North American Wholesa I e Lu mber Assoc iat ion.