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Defending Your Distribution Business Against Amazon

Bruce Merrifield, President — Merrifield Consulting

•Amazon Supply •customer service •sales practices •AmazonSupply.com •distribution industry trendsDefending Your Business Against Amazon

In the distribution world, Amazon casts a long shadow. In this video, Bruce Merrifield discusses the realities of living in that shadow and how you can get out from under it. Together with Randy MacLean, they outline five elements that define the relationship between Amazon and a customer. Understanding these five elements is critical to ensuring you don't lose business to Amazon.

The first of the five elements is order entry. The customer's experience must be your focus – think about their wants and needs and how you can deliver on those. Too many distributors fixate on product-volume. They don't ask whether they have or could have a competitive advantage in how they sell their product. Look for that perfect fit for you and your customers.

Exceptional accuracy is the second element. You need a high fill rate operating at high efficiency. Amazon is very good at this but any company can achieve this if they are disciplined and reward performance. To start, you can use data to improve your fill rates by identifying the 2% or 200 products that are the most compelling to your most important customers. If you always have the product the customer needs, you become their first choice. They know you have it, and they come back to you.

A variety of delivery options is also critically important. Distributors often have only one service model. Moreover, your sales team might give it away by offering free shipping. That might increase the margin sales makes, but it does so at your expense. Amazon experiments with different models and you should, too.

The fourth element is satisfaction. Resolving customer issues quickly and painlessly must be a top priority throughout your company. If your staff can take responsibility and are encouraged and empowered to solve a problem immediately, it is enough to secure a customer's instant loyalty. This style of service is called "heroic recovery," and you can implement it just as Amazon does.

The last safeguard against losing business to Amazon is pricing. Amazon isn't the best price in town. You can work hard and find better, but they hold onto customers because of benefits that go beyond the price. Invest in customer relationship management analytics – data! - to tailor your pricing to your customers.

The best way to defend your company against Amazon is to make sure they cannot beat you on any of these five elements: order entry, order accuracy, delivery options, problem resolution, and pricing. You must provide your customers with the things that matter most to them. This requires thought, effort, and, ultimately, change.

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For more information about Bruce Merrifield, visit: www.merrifieldact2.com

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