The Future Influence of AI: Distributors

By Michel Safi

Nov 16, 2017

Heads up, industrial distributors, the frontal assault from Amazon Business is here.

Per Seeking Alpha, titans like W.W. Grainger and Fastenal “slumped 5.3 percent and 3.6 percent, respectively, on October 25 in response to Amazon's launch of Business Prime Shipping, an annual membership for business customers in the U.S. and Germany.”

In addition, look at this Amazon Business infographic courtesy of Fortna:

  • 250 million industrial supply items on the marketplace 400,000 customers (2x growth) since January 2016 
  • Forecasted to account for 12 percent of U.S. B2B sales by 2020

This video from our friends at Industrial Distribution highlights another disturbing fact: While Amazon Business has recently grown more than 250 percent, the current Industrial Distribution leaders have lost more than $8 billion in market value in that same period.Ouch.

Steal a Page from the Playbook

Yet, all is not lost. It is possible to combat Amazon Business from encroaching on your market share. In fact, you can steal a page from the playbook of Amazon CEO Jeff Bezos on the future transformative influence of artificial intelligence (AI):

“I think it's gigantic. It's probably hard to overstate how big of an impact AI is going to have on society over the next 20 years. It has been a dream since the early days of science fiction to have a computer that you can talk to in a natural way and actually ask it to have a conversation with you and ask it to do things for you. And that is coming true.”

Talking robots, very cool. But what about business impact? A glimpse into Bezos’ plans to use AI:

“Amazon has revealed plans to build another new AI research hub in Barcelona, Spain, which will be in the city's 22@ start-up district, and plans to hire more than 100 scientists and software engineers to staff the facility over time. Facilities such as these are key to Amazon's plans to evolve its use of the technology. Using software models, algorithms sift through large amounts of data and extract patterns in order to make more accurate predictions or assessments. Amazon uses AI and machine learning as the foundation of many of its customer recommendations, logistics capabilities, and smart speakers, so expanding on its AI capability is a key competitive advantage.”

Amazon is expanding on its AI capability, and you can too. Only, you don’t need to hire 100 scientists and ask them to boil an ocean of data, hoping for a golden ticket. Apply AI to existing transactional data that’s fine-tuned to solve relevant business problems in a way that increases profits and revenue. By doing so, you can supercharge all levels of the organization and activate the most predictable, reliable and actionable source of company growth, your existing customer base.

Is uncaptured revenue and profit hiding in your business today?

Download the Zilliant B2B Benchmark Report: Distribution Edition and learn where B2B manufacturers and distributors leave money on the table.

About the Author

As Zilliant EMEA VP, Michel Safi leads the Zilliant international teams, primarily in charge of further developing the markets for Zilliant. Michel was most recently leading the IBM Merchandising Solutions global sales organization. At DemandTec, acquired by IBM in 2012, Michel was responsible for making sure the company’s unique value proposition was aligned with its customer’s strategic priorities, business needs and financial requirements. Michel played an instrumental role in launching the international business of DemandTec, broadening its reach and deepening its client relationships when he joined the company in 2005. Michel has deep expertise in Cloud Computing & SaaS, Analytics, Enterprise Software, Business Intelligence, and Business Strategy. Michel holds a Master’s degree in Finance from ESCP Europe and an Engineering degree in Computer Science. He currently resides in Paris, France.

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