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How and Why Amazon Drives Change for Catalog Operators

Bruce Merrifield, President — Merrifield Consulting

•Amazon Supply •pricing strategies •AmazonSupply.com •distribution industry trends •eCommerceHow and Why Amazon Drives Change for Catalog Operators

Catalogs still exist, but they have gone online. In this video, Randy MacLean and Bruce Merrifield outline the changing reality of catalog operators.

E-commerce has moved catalogs into the new millennium providing tremendous reach without the expense of a physical catalog. The biggest and best example of this is, of course, Amazon.

A customer-specific experience is central to Amazon's online catalog. Their modern infrastructure is very different from a traditional catalog operator such as Grainger. This infrastructure allows Amazon unparalleled insight into buying habits. When considering traditional operators, Bruce asserts that "they don't know the product that I'm going to buy tomorrow like Amazon does."

Whether it is their website, the efficiency of their warehouses, or their delivery options, Amazon focuses first always on the customers' experience. Amazon is the medium millennials prefer, and more and more millennials are moving into management positions. By 2020, 50% of the workforce will be millennials, and Amazon has pioneered the e-commerce model that defines their buying preferences.

A millennial does not want to pay for and will not see value in an outside sales representative.

E-commerce represents a different model for retailers as well. A physical retail space - rent and staff - mandates a high fixed cost. Furthermore, in the retail model, you don't know who your customers are. Anyone who walks in the door with money is a potential customer, but you won't necessarily collect data on them or have a way to interact with them again. A distribution company builds and maintains a database of customers that they can remember and return to.

Amazon can be a model for distribution companies. You don't need Amazon's expansive and exhaustive catalog, but for specific customers and specific items, you can build a tailored experience based on their purchasing habits. However, you need to know those habits to make that experience work. You need to know the profit and loss on every item to satisfy every question about cost, value, and convenience.

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