Disties tell indies ‘you don’t need to try and compete with Amazon’

Amazon has been in the news recently, with distributor Smithie UK attempting to unite suppliers against the site in order to resolve unpaid invoices.

The etailer has also outlined plans to open more physical stores in the US, and sign up more paying Amazon Prime customers.

While Amazon UK has told PCR it doesn’t comment on specific supplier relationships, disties shared their views on Amazon, eBay and other etailers pricing low at a panel session during PCR Boot Camp in May.

“Amazon has a fascinating business model,” said Target Components MD Paul Cubbage. “It’s a business set up without the need to make money – it effectively attacks the retail channel and destroys the competition. It’s done that for so long but hasn’t managed to capitalise on the dominance it has in the retail sector.

“Where it makes money is the things it’s doing off the back of that, like its cloud services. There’s a lot of talk about how to deal with Amazon, but it doesn’t play by normal business rules. It’s part of the world now.

“There’s an important differential between people who want to buy a product from Amazon and people who want to walk into an independent retailer. It’s a completely different mindset and a completely different solution. Don’t worry about it – let Amazon do what Amazon does.”

VIP Computers MD Rich Marsden added: “I think we have to move off the Amazon discussion because Amazon is here and we’ve been dealing with it as a business for the best part of ten or 12 years. It’s here and whether we like it or not it’s going to continue to grow.

“But lots of IT dealers are still doing fantastically well. It is what it is. Whether it’s Dixons, Amazon, Maplin, an indie PC shop… there is a market out there for everyone. It’s there – we’ve just got to deal with it.”

On indies buying from Amazon direct for less, and low pricing potentially preventing indie retailers from making stronger margins, Marsden pointed out that vendors have a part to play too.

He said: “The vendors have an immense amount of responsibility for the independent channel. It is very easy for a vendor to do a 10,000-unit deal into the likes of Tesco or another large retailer, but the distributor sometimes gets the blame.

“If a distributor can’t fulfill that business, someone else will. But ultimately the pricing stems from the vendor. The vendor has a responsibility to the independent – and the channel needs to do more for independents.

“My argument is to give the indie the price upfront and let them have that additional margin. There aren’t enough vendors prepared to stick their neck out on the line for the independent channel, and that’s a fact. It’s something we need to change as an industry.

“There are many examples of hugely successful independents who offer a fantastic service and don’t necessarily have to compete on the lowest possible price.”

Cubbage said Amazon pricing consistently lower across the board is a myth.

“We do a lot of price comparisons between our prices and other disties’ prices,” he explained. “I think there’s an exaggerated threat of pricing. On one-off items sometimes there are big price gains with Amazon, but if you’re fulfilling big orders, you won’t save money with Amazon in the long run, not in our experience anyway.”

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