How B2B Distributors can Compete with Amazon Business
While platform businesses have been a Silicon Valley game over the past two decades (I.e, Amazon, Google, FB, Uber, AirBnb etc.), the next wave of platforms won’t just consist of tech startups.
Large, legacy brands have a significant advantage to grow by creating, partnering with, investing in or buying a platform.
Building A Platform
Adopting a platform business model could protect and increase B2B distributors’ value.
For example, last year, Klöckner & Co, a leading steel and metal distributor in Europe and the United States, established XOM platform, a marketplace for metal buyers.
Partnering To Create A Platform
Traditional B2B distributors can also partner with other B2B distributors in order to build a platform that competes with Amazon Business.
We already witnessed this sort of collaboration game plan in the finance industry, when the P2P platform Zelle was founded through a partnership of more than 60 banks in the U.S. to compete against PayPal and Venmo.
B2B distributors have an opportunity to do the same.
Buying A Platform
There are success stories like Walmart leveraging its acquisition of Jet. Instead of fighting against Amazon’s model, Walmart studied its approach and found a marketplace that would benefit from an acquisition. It gave them access to a previously untapped demographic (in this case, millennials).
The Advantage For B2Bs
Whichever approach they choose, B2B distributors have many advantages working in their favor. They have direct access to user acquisition through their close relationships with their existing consumers and across the supply chain. This will help them to overcome the “chicken and the egg problem” that most platforms have when launching in a multisided market. They have deep industry knowledge, access to funding and established brands that new entrants typically lack. They also have access to enterprise-grade logistics, infrastructure and tools that they can provide to their suppliers to attract them to the platform.
The bottom line here is that companies fail when they are not adapting to change in today’s economy. They can no longer operate using an outdated business model that originated in the Industrial Era. They must leverage all the technological advancements achieved in the past two decades.
More information on this topic in the full version of this article on Forbes.