EkaLore defines Aliens as Category Killers, enterprises that invade from a completely different marketplace and upend short-circuiting end the traditional order of a market. They possess assets, knowledge resources, and technology from their current market which they can apply to a completely new market and vacuum the profit from the other market players.
Distributors may face substantial challenges from an Alien invasion. Disruption or short circuiting of purchasing processes can lessen the value Distributors have traditionally provided manufacturers or suppliers.
Distributors help small manufacturers (and not so small) reach business buyers at large institutions that have formalized and complicated business procurement policies and procedures. New entrants are eroding or removing benefits of distribution. Amazon did this with a huge industry (publishing/media distribution) while fending off competitors (as small as Apple and Walmart). Amazon Business (and other initiatives such as the HyperLedger/Trust Your Supplier initiative) provide instant visibility for those manufacturers to possible customers. Amazon’s logistic system and warehousing remove concerns over product availability and fulfillment. A fully transparent listing of the product (via the ASIN code) along with competitive pricing from different sources removes concerns about best pricing.
Distributors also represented the human face and the number that could be called in the event of a problem or need of an explanation about the product. Amazon, as an example, provides a direct link back to the manufacturer or supplier. The manufacturer has direct contact instead of being held at arm’s length by a distributor that wishes to handle everything directly with the end buyer. Manufacturers hear directly about prospective customer “wants” and can immediately put resources on possible “big deals”.
It’s true that Amazon may not be a good solution for highly specialized products that need configuration or expert help, but those are a much smaller portion of the procurement marketplace. After-market installation or service used to be the domain of distributors (and profits). Amazon offers installation ordering, extended-warranty mechanisms, and rapid response to changed supply requirements. The products previously sold at a margin without the need for discovery or explanation are now in a competitive bid situation every time.
All is not lost; Distributors can change the way they deal with manufacturers and offer logistics.
If you’d like to read the whole Aliens in Your Systems series - https://www.ekalore.com/alien-invaders
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