Commentary: What Got You Here Won’t Get You There

If you hit the “snooze” button on the pandemic alarm 12 months ago as far as working on your core business model, the alarm just went off again. The news this week that Amazon Business 2020 revenues were $25 billion was not shocking or unexpected. That they openly announced it was. From my perspective, it’s the wake-up call (or cattle prod) of the decade to plan and build a more agile business to deal with pandemic- and marketplace-induced disruption.

For context, the last time Amazon Business revealed revenue figures was in September 2018, reporting that it was on a run rate to surpass $10 billion in 2018. That’s a two-year growth rate of 150% from 2018-2020. That’s a small piece of the $6-trillion U.S. wholesale distribution sector, but there are few other distributors as innovative in their use of data and a customer-centric obsession to slow their continued targeting of specific customer and product sectors.

On a more positive note, we’re at a point going into the second quarter of 2021 where it’s tempting to focus on the positive outlooks for vaccination rates, re-opening and economic rebound. There are even pockets of exuberance, a commodity in short supply the past year.

I’m not going to throw cold water on that, but if ever there was a window of opportunity to make structural changes in your business, it’s hard to think of a better time than now. In fact, a set of distributors pivoted quickly in 2020 from survival to either growth or reset mode. We profiled many examples throughout 2020, and those companies continue to leverage the shifts they made to their business models.

Of course, there is no right answer. For some, it’s a case of blowing up core parts of the business model, the critical constraints (outdated technology) or sacred cows (outside sales) that have held back growth but weren’t painful enough to address until now. For others, it’s refining or prioritizing investments into updating ERP or logistics systems, bringing in new talent, or redefining company culture to upgrade productivity, efficiency and customer connection.

As we move through this critical transition period in the first part of 2021, you have a once-in-a-generation opportunity to accelerate growth and strengthen market share by adapting and leveraging the new market conditions and competitive realities. This will define your continued success in spite of the threats, but only if you adapt.

Future of Distribution Summit

To challenge your thinking and provide new ideas for how to rethink the best path forward that’s less vulnerable to the disruptions of Amazon Business or the next disruptors to emerge, MDM is hosting a one-day virtual Future of Distribution Summit on April 13 (and on-demand for 90 days viewing). Over six hours of presentations and panels, our core theme is innovation and how you can stay relevant to your customers in this decade of acceleration.

Our speakers and panels will share the latest on business model transformation, productivity in the new workplace, culture shift and talent management. I hope you’ll join me to think hard about what success looks like for your company in the future.