The Industrial Supplies that keep business moving have been served by a few well known players and thousands of small companies. These suppliers distribute everything from hoses and pipes to screws and motors, serving customers big and small. This industry-wide fragmentation left it vulnerable to disruption. Originally, Amazon Business targeted small and medium-sized companies, but it was met with unexpected enthusiasm by its large customers as well. The Industrial Supplies listed on this page represent a sample of Amazon’s offerings. “If you use it in your industry, it’s likely readily available at a competitive price”
An analysis of industrial supply reveals that while there are some large players, no company has a dominant share of the market. The Census Bureau reports some five thousand firms operating in this sector, all vying for their slice of approximately $85 billion per annum. The top 50 companies generate about half of that revenue. A large number of smaller suppliers generate annual revenues below $10 million.
Such conditions make the market incredibly ripe for disruption in the form of a digital marketplace that facilitates the transactions between all of these industrial suppliers and the buyers of their goods.
Unfortunately for these companies that have stuck around for decades, it may be too late to react to this threat thanks to Amazon Business, the B2B-facing segment of global e-commerce giant Amazon. Born from the repurposed carcass of Amazon Supply, the division earned $1 billion in revenue in the first year of operation and continues with month-over-month growth.
Originally, Amazon Business targeted small and medium-sized companies, but it was met with unexpected enthusiasm by its large customers. The unit offers custom pricing as a differentiator from large industrial supply companies like Grainger, who use an older, much more opaque process. And more than 80 new features are on the docket to ease buying and selling flows.
Amazon can bring transformative disruption to an industry that hasn’t significantly innovated in more than a generation. In the process, it would turn many established firms into commoditized merchants relying on Amazon for order fulfillment.
No matter the value-add provided with a purchase, a screw is a screw and a drill press is a drill press. As long as the product quality doesn’t suffer, industrial supply customers will gladly click a different button if it means cost reduction and convenience.
Amazon’s Material Handling Category may be Industries Best Kept Secret Click to Learn More
Ps. Porcellato Engineering, (aka porcellato.com) is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for website owners to earn advertising fees by advertising and linking to amazon.com.