On Friday, April 7, Applico CEO Alex Moazed appeared on Bloomberg Technology, hosted by Caroline Hyde, to explain the threat Amazon Business poses to the entire B2B distribution space and how B2B can capitalize on the marketplace opportunity.
Companies like Grainger and MSC Industrial Direct are under direct threat from Amazon Business because the marketplace model Amazon employs will erode these companies’ traditional competitive advantages and devour their margins on commoditized products, particularly MROs. Watch the clip below to hear Alex talk about B2B distributors’ vulnerabilities with “pack-and-ship” products, spot buys, and centralized linear distribution.
While B2B distributors face an existential threat from Amazon, there is a path to survival and, potentially, victory: embracing the same marketplace model as Amazon and listing third party suppliers. The platform business model, as defined in Alex’s book, Modern Monopolies, has a winner take all dynamic: two companies will control the large majority of an industry.
In order to become a dominant marketplace platform, Grainger, MSC Direct, and other large distributors need to create an open marketplace letting 3rd parties to sell the same products, compete on price and provide pricing transparency to customers.
To understand the threat in specific financial terms, check out our white paper,“Disruption at the Gates: Monitoring The Threat of Amazon Business.”
And for an exploration of how established distributors should approach building a marketplace to rival Amazon Business, read Applico’s latest white paper, “The Best Defense Is Offense: How B2B Distributors Can Dominate With a Marketplace.”