I had the pleasure to be interviewed by tED Magazine to respond to their recent article Amazon Business Vs. Large Distributors—What’s the Threat?. In this article, I talk about how distributors can compete with behemoths like Amazon Business.
Along with my colleague Jason Hein at B2X Partners, we talk through the challenges Amazon faces in acquiring new businesses:
For example, Hein says it may be harder for Amazon to simply ‘acquire companies’ to enter a market, particularly for targets that are service providers…[Hein continues,] ‘Amazon’s strategy of always ‘raising the bar’ when it comes to hiring makes it hard to envision an acquisition in which all (or even most) of the company employees would meet Amazon’s standards….Amazon isn’t looking to buy a company, only to lay off most of the staff because of culture fit,’ Hein says. ‘This applies even more so for service firms, where the people are the company’s biggest asset. Therefore, the hypothesis that Amazon could buy up a few small distributors and cobble them together into an Amazon-style ‘mega-distributor’ is unlikely at best.’
Seeing this challenge for Amazon/opportunity for others, I used one of my favorite metaphors for creating an agile and customer-focused team: building a SWAT team. This case study comes from an unlikely company – Kellogg:
‘Kellogg realized that it needed to build a different culture, and that doing that as part of the larger brand would take too long. They needed to move faster, and they wanted to do that online through testing,’ says [Justin] King. ‘To do that, Kellogg created an internal innovation team that reported directly to the CEO. By taking this step, the manufacturer was able to do things like offer “customize your granola” options online without having to work through the typical bureaucracy and red tape of a large corporation.
King says distributors can borrow a page from Kellogg’s playbook and explore different ways to get e-commerce, digital, and/or mobile strategies up and running quickly, but without disrupting the current business model….Acknowledging that there’s no “one size fits all” approach to the culture issue[,] in some cases, the answer may be to follow in Kellogg’s footsteps by “spinning up” a new department or organization that can serve as an innovation arm for the broader distributorship. Create a SWAT team that has the autonomy to act on your customers’ behalves, says King, and that attracts the new talent while also staying accountable to the firm’s executive team ‘while operating outside the purview of all the processes and restrictions that a distributorship itself is under.’