Will Amazon Dominate the Building Material Sales Market?
“Alexa, add 1,200 square feet of mold resistant gypsum board to my shopping list.”
Utter that sentence 10 years ago, and people would be scratching their heads trying to figure out who in the heck this Alexa figure is. Jump ahead 10 years from now, and it might be a regular thing you hear on the jobsite. Only time will tell. What we do know is Amazon--and its influence on the building materials industry--isn’t going away. In fact, it’s growing.
Back in 2012, Amazon jumped into the B2B realm with AmazonSupply. After a few years, they were listing millions of products on their marketplace. By 2015, AmazonSupply was folded into Amazon Business, the company’s platform that offers business purchasers the same convenience that it extends to its every day customers. Two years after that in 2017, Amazon Business is proving to be a thorn in the side of major suppliers by, in some cases, listing more products at cheaper prices than traditional suppliers, not to mention having many of the same distributors dipping their toes into the direct sales market themselves.
While it’s doubtful that Amazon will completely outrun traditional distributors and be the lone champion on top of a mountain of building materials with contractors placing large, commercial-grade orders, they will almost certainly continue to challenge the market with their ability to make small, one-off purchases, or more general purchases affordable and efficient. What this does present is an opportunity for building material companies to create their own marketplace.
Large, well-established companies in the industry need to start innovating in terms of how they deliver their products in the digital age. Their expertise not only in the products, but in adjacent services like project management and best practices will put them at a greater advantage in terms of quality of service over Amazon. Nonetheless, Amazon’s mere presence in the market will disrupt how traditional distribution channels for building materials operate. Fabricators, although they may covet relationships with traditional distributor channels, will always try to increase their profits and cut costs in a capitalist economy. If Amazon is able to undercut on price, it could be a tough go for many distributors.
If you’re a building materials company, the time is now to not just start thinking about how you can stay competitive in a changing market, but to actually take action to do so. Technology and automation isn’t coming soon. It’s already here. Its’ best to find out how to operate with these new tools rather than fighting against or completely ignoring them. It’s imperative that distributors take a long, hard look at how they plan to compete in the future of their businesses, whether its by investing in technology to drive them forward or by investing in their people to be invaluable resources amidst technological change and logistical challenges.