reputation as a supply chain practi-
tioner extraordinaire. Like Wal-Mart
Stores Inc. founder Sam Walton
before him, Bezos hit the ground
knowing that the power rests not
with the products themselves, but
with the knack of getting them to the
right place, at the right time, and at
the lowest price.
Amazon enters a field populated by seasoned intermediaries known as “
distributors.” These firms add value through a
deep knowledge of their customer base
and its product needs, and by offering
industrial inventory management and
transportation service options Amazon
isn’t accustomed to providing.
The leader of the pack is arguably
Grainger Industrial Supply, the Chicago-based colossus with 86 years of experience, more than 1 million parts and repair
parts online, and 400,000 more in its catalogue (Amazon currently has about
600,000 online stock-keeping units, or
SKUs). Grainger also has 711 local
branches—more than 400 in the U.S.—
where customers can pick up their orders
on the same day or have them shipped.
Online transactions accounted for
about one-quarter of Grainger’s $9 billion
in annual 2012 sales, according to Raleigh,
N.C.-based consulting firm Tompkins
International. That percentage is expected
to rise to as high as 50 percent by 2015,
the firm says.
BUILDING ON CONSUMER SUCCESS
Yet Amazon is Amazon. And it brings to
the B2B game many of the unique characteristics that powered it to B2C online
dominance. Amazon has 233 million
products on its core website, and
Tompkins estimates it is the launching
pad for between 30 and 35 percent of all
online shopping queries. A number of the
SKUs available on Amazon’s site for B2C
transactions are applicable to B2B purchases as well.
Amazon has a base of 173 million users,
many of which visit its site multiple times
a week. This “familiarity footprint,” as
Taddonio calls it, could give Amazon
Supply a leg up over its rivals, especially
among younger procurement executives
whose use of Amazon in their personal
lives could be a marker in driving their
business decisions.
Amazon will continue to beef up its DC
density as the inexorable shortening of
product cycles compresses delivery times
to hours instead of days. It will add 47
million square feet of domestic DC capacity through 2016, bringing its U.S. network to more than 80 facilities, according
