Delivering for Best-in-Class Wholesaler-Distributors
July 3, 2018  |  ByMark Dancer, NAW Institute for Distribution Excellence Fellow

You may remember that Amazon was in the news a couple months back regarding its new partnering arrangements with Best Buy. Are there ideas or lessons for distributors in this new arrangement?

Amazon and Best Buy are members of competing channels. Amazon is an online marketplace and hyper-aggressive disruptor. Best Buy is an incumbent retailer operating a big-box format. One might think that the two companies would be locked in a death match for market dominance or survival, but they are, in fact, partners that sometimes compete and at other times collaborate. Their partnership is an example of channel innovation, one that distributors may be able to examine for creating their own new ideas for collaborative solutions.

Here are six ideas for distributors to consider:

  • Collaborate with complementary channels. Distributors with complementary or noncompeting product portfolios may be able to gain incremental sales by marketing to each other’s customer base. For example, a plumbing distributor could make electrical products available to its customer base and vice versa. Products could be tailored to each distributor’s unique needs and marketed as a one-time promotion, or bundled with traditional products, or offered as an ongoing fulfillment option … whichever approach leads to incremental sales and strengthening each other’s brands.
  • Double your omnichannel presence. For the best possible targeting of opportunities, collaborating distributors should tailor their offering, marketing programs and sales methods to each other’s channels. That means, a coordinated omnichannel approach that delivers unique customer experiences through webstores, field sales, inside sales, customer service, technical support and more.
  • Sell collaborative services. Distributors with complementary product offerings should consider offering collaborative services. If one company offers kitting, customized delivery, user or technician training, audits or assessments or any other service, can a combined offering create new value for customers? New value might include a one-stop shop for services, technical solutions that involve each distributor’s knowledge, assessments that lead to larger gains across a customer’s operations and more.
  • Become a product company. Innovative distributors may want to consider offering their own products to customers. Some may go beyond offering private-label products that are essentially “me too” copies of popular or profitable products that already exist in the market place. Others may go further to design, develop and launch products that are new to the market with game-changing features or benefits. Either way, new ideas for product offerings might be identified by exploring the needs of each other’s customer base.
  • Become a data company. All distributors should be developing plans to design and lead a data-driven value chain. In part, data can come from a distributor’s own execution of order fulfilment and delivery. However, data plans should also include machine data associated with the Internet of Things. Often, distributors are left out of this discussion as machine data are created, shared and acted on through partnerships between manufacturers and customers. Distributors may be able to carve out a role by offering data analytics that span multiple products and brands, and even larger benefits by leveraging data across the offerings of complementary distributor partners.
  • Build trust from the top down, over time. One of the most important aspects of the collaboration between Amazon and Best Buy is that their partnership is not new. They have been working together for years. Long-term relationships are necessary to build trust that each partner will follow through on promises and commitments. Moreover, trust starts from the top down. Each partner’s CEO must have a strong relationship with the other as a basis for partnering strategies and for signaling that each company’s teams and employees should make the partnership work.

 

If you have other ideas about lessons from the Amazon / Best Buy partnership or the ideas in this post, reach out to me at mark.dancer@channelvation.com.

And, if you haven’t yet heard, the NAW Institute for Distribution Excellence has kicked off its 12th Facing the Forces of Change® wholesale distribution trends study … a continuing project that has charted the most important industry trends since 1982. I am privileged to be the lead researcher of this report. The key to a quality project outcome is PARTICIPATION by industry executives, including you. Please help us make this latest Facing the Forces of Change® report the most reliable, helpful and accurate one ever by giving us your feedback about industry trends. Your insight will help shape this important report. Please use this survey link and thanks in advance for your participation: https://www.surveymonkey.com/r/TM6PFZR

Read these other posts on innovation:

What Is Your Approach to Distributor-led Innovation? – Distributors in the Digital Era #41

Involve Your Staff in Creating a Culture of Innovation – Distributors in the Digital Era #38

Going Beyond the Basics of Digital Innovation – Distributors in the Digital Era #36

Innovation Turns the Table on Amazon – Distributors in the Digital Era #17

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Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer founded the Network for Business Innovation to drive awareness, advocacy and excellence for B2B innovation, and to enable an exchange of ideas between leaders on business transformation, technology adoption, social impact and community engagement. For more than 30 years, Mark has worked with leading companies to achieve go-to-market excellence across a wide range of industries in developed and emerging markets.
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