Guest Post by Mark Tomalonis
Principal, WarehouseTWO, LLC
Chances are that every one of your customers has purchased something from Amazon.com ("Amazon"). If you are a manufacturer or a wholesaler-distributor of industrial products, this is a problem. But not because Amazon might be a direct competitor.
Rather, it is a problem because Amazon has seduced your customers into expecting everything to be available from stock for immediate shipment.
How can you meet this expectation of next-day product availability on a wide variety of products, without investing in more inventory?
Amazon’s Strength: Product Variety
What makes Amazon so attractive to your customers? Product variety. In 2017, Amazon sold over 350 million unique items. With such a variety of products available for immediate shipment, no wonder Amazon is a first choice for on-line shopping. (In a 2016 survey, over half of survey takers responded that they search at Amazon first when looking for something on-line.) But Amazon typically owns only about 12 million unique items. Who is providing the other 340-million-plus items?
Amazon’s Winning Strategy: Leveraging Third-Party Vendors
To offer such a wide variety of items when it owns only a small fraction of what it sells, Amazon relies on third-party vendors. Of the 350 million unique items sold at the Amazon website in 2017, over 340 million were sold by third-party vendors.
During Amazon’s most recent fiscal quarter, over 50% of units sold through Amazon’s website were sold by third-party vendors. Amazon stocks the high volume, fast movers, while it leverages the inventories of thousands of third party vendors to provide hundreds of millions of unique items.
The Amazon website identifies which items are sold by Amazon and which are sold by third-party vendors.
How can you emulate Amazon’s formula for successful customer loyalty? By collaborating with peer wholesaler-distributors in your industry. It’s called “inventory-sharing”.
Click link to read the complete article in which Tomalonis explains how to emulate Amazon's Product Demand Strategy with "Inventory-Sharing".
WarehouseTWO, LLC is an independent “inventory-sharing” service created exclusively for durable goods manufacturers and their authorized distributors, and for any group of durable goods “peer” wholesaler-distributors, such as members of a buying/marketing group or cooperative. To learn how inventory-sharing with WarehouseTWO can help your business, visit the WarehouseTWO website, or email email@example.com.
Tribute, Inc. provides ERP business management software, TrulinX, for industrial distributors and fabricators in the fluid power, motion control, and automation industry and is integrated with WarehouseTWO to facilitate excellent servicing of your customer's inventory needs.