Blog

Blog

How Suppliers are adapting to compete with Amazon

How Suppliers are adapting to compete with Amazon

It seems that with every revolution of the sun, online giant Amazon grows a new set of horns.  Their recent acquisition of Whole Foods is a recent example. The current scuttlebutt is that they’re about to get into the medical supply industry and that has traditional suppliers knitting their brows.

What was once a welcome alternative to getting in the car and going to the mall is now a seven-headed Hydra, covering numerous sectors, from fashion to office supplies, to kitchen items and custom packaging.  The list is almost endless, as Amazon evolves into a formidable and somewhat intransigent market force.

Now selling over 120 million different items, it’s now true that Amazon is exactly what Jeff Bezos intended it to become – “the everything store”.

Adaptation

Today, 92% of wholesale suppliers consider Amazon to be a competitor.  But 64% consider the online retailer a partner. Because of disruption in traditional retail as online commerce continues to ascend, wholesalers are adapting and moving more of their business online and that includes partnering with Amazon.

No fewer than 21 publicly-traded companies now derive at least 10% of their revenue from sales on Amazon.  Lifetime Brands is just one high profile example of the trend.

Famed for their KitchenAid and Farber cooking appliance lines, Lifetime believes Amazon will be its top customer in a scant three years.  That’s rather remarkable, considering that only 4 years ago, it wasn’t even in the top 25.

But Amazon’s massive orders in the runup to the 2017 Holidays moved Lifetime’s product, so it was a win-win.  But Lifetime hasn’t yet cracked the 10% of revenue made with Amazon that those 21 retailers we just mentioned have.  Companies like FitBit and United Whole Foods have.

These aren’t independent mom and pops.  These are large-scale concerns. Lifetime, for example, has annual revenues of about $600 million.

Static

When you’re as heavily-muscled as Amazon is, you’re positioned to be a hard-nosed, almost merciless negotiator, putting downward pricing pressure on retailers.  While they bridle, they play by Amazon’s rules, because they’re forced to.

Even battery manufacturer Duracel is discovering that it can be replaced if Amazon decides it can manufacture a product that’s less expensive.  Amazon batteries have now supplanted Duracel as the top brand.

But none of the above is enough to make Amazon a reliable alternative to a GPO like CenterPoint.

Service and customization

The problem with being a 400-pound online retail gorilla is that your size precludes the kind of relational service and customized programming CenterPoint Group provides its members.

At CenterPoint, we give our members the power of numbers, leveraging $850 million of indirect, collective spend to create the kind of buying heft usually only enjoyed by big brands.  And what’s even more attractive is that we stabilize pricing with our supplier agreements, so you can budget with confidence.

We offer our customers continuous account management that delivers superior results.  Our analysts ensure you’re getting the contract price, every time.

CenterPoint is a trusted procurement advisor, offering a personal touch.  Contact us.

© Centerpoint Group LLC | All Rights Reserved