Competing in the Age of Amazon
Chicago -- A fishing trip to Canada led indirectly to a discussion on the potential impact of Amazon.com on the LBM Industry.
During a presentation here at the ProDealer Industry Summit, John Maiuri, a 35-year industry veteran and president of ECi Software Solutions building and construction division, explained how. And in doing so, he examined the potential impact of Amazon.com on the lumber and building material industry.
It all began with the search for a hitch insert for a new truck, that Maiuri intended to use on a fishing trip. Maiuri spent all day on a weekend shopping for the part. That fruitless experience was followed by a successful 7-minute customer journey on Amazon – a few moments that included search, reviews, payment, confirmation and delivery information.
“That experience bothered me because I always prided myself on trying to shop locally,” he said. “It bothered me to spend my money outside the community.”
Amazon is not going to drop plywood off at job sites with drones, at least not any time soon. But the company’s size and growth demand attention. Sales were $177.9 billion in 2017 sales, up from $6.9 billion in 2004, when it sold books only.
Maiuir pointed to research that showed a concerning percentage of consumers prefer to shop digitally for kitchen and bath products -- 31%. The tools and hardware saw a 23% preference to digital shopping, as opposed to shopping in store. Only you know, but hardlines, consumables convenience items and special order items are likely suspects to be susceptible to online sales.
Third party resellers are growing substantially year over year, he said; and at least one tool manufacturer is examining Amazon as a channel for distribution of its product. Some of his customers sell products on Amazon.
“I can’t believe we’re not going to see a market impact in the next 5 or 10 years,” Maiuri said.
Meanwhile, spending on technology in the LBM industry is dramatically behind Amazon’s IT spending, which was described as $22.6 billion. In the LBM industry, tech spending numbers are difficult to come by, but Maiuri pointed to an historical estimate of 1.5% to 2% of revenues.
“Many companies use a surge strategy then look for multi-year return,” he said. “Amazon is ahead of all of us by a significant margin.”
Maiuri provided a checklist of software considerations. Does it:
Amazon does all of those things very well. A sound approach for dealers is to focus on things that Amazon and others like them currently do not do very well. These include hiring quality people, educating staff and fostering a culture of service.
During a presentation here at the ProDealer Industry Summit, John Maiuri, a 35-year industry veteran and president of ECi Software Solutions building and construction division, explained how. And in doing so, he examined the potential impact of Amazon.com on the lumber and building material industry.
It all began with the search for a hitch insert for a new truck, that Maiuri intended to use on a fishing trip. Maiuri spent all day on a weekend shopping for the part. That fruitless experience was followed by a successful 7-minute customer journey on Amazon – a few moments that included search, reviews, payment, confirmation and delivery information.
“That experience bothered me because I always prided myself on trying to shop locally,” he said. “It bothered me to spend my money outside the community.”
Amazon is not going to drop plywood off at job sites with drones, at least not any time soon. But the company’s size and growth demand attention. Sales were $177.9 billion in 2017 sales, up from $6.9 billion in 2004, when it sold books only.
Maiuir pointed to research that showed a concerning percentage of consumers prefer to shop digitally for kitchen and bath products -- 31%. The tools and hardware saw a 23% preference to digital shopping, as opposed to shopping in store. Only you know, but hardlines, consumables convenience items and special order items are likely suspects to be susceptible to online sales.
Third party resellers are growing substantially year over year, he said; and at least one tool manufacturer is examining Amazon as a channel for distribution of its product. Some of his customers sell products on Amazon.
“I can’t believe we’re not going to see a market impact in the next 5 or 10 years,” Maiuri said.
Meanwhile, spending on technology in the LBM industry is dramatically behind Amazon’s IT spending, which was described as $22.6 billion. In the LBM industry, tech spending numbers are difficult to come by, but Maiuri pointed to an historical estimate of 1.5% to 2% of revenues.
“Many companies use a surge strategy then look for multi-year return,” he said. “Amazon is ahead of all of us by a significant margin.”
Maiuri provided a checklist of software considerations. Does it:
- Let you sell on line;
- Accept online payments;
- Provide advanced description/product information;
- Promote top seller and favored item status;
- Provide also purchased suggestions to your customers;
- Track purchases and suggest reorders;
- Create marketing content based on prior purchases, or predictions.
Amazon does all of those things very well. A sound approach for dealers is to focus on things that Amazon and others like them currently do not do very well. These include hiring quality people, educating staff and fostering a culture of service.