How To Deal With The "Amazon Mentality"

Almost every day, we read about another retailer being crushed by Amazon. For Coffee Service, Vending and Micro-Market Operators, Amazon itself is not a major threat. In fact, Amazon will be so busy trying to figure out what to do with Whole Foods, pursuing your office environment business will not be high on their priority list.

What we need to fear is the "Amazon Mentality."

Many of your clients have the Amazon Mentality

The Amazon Mentality is a state of mind that lives among some office managers, facility managers and purchasing agents, characterized by the following:

· The belief that every product and service is a commodity. The only thing that matters is price.

· The belief that all products are available for immediate delivery.

· The inability to understand the value-added aspects of a service, such as free equipment, inventory control, free emergency service, scheduled route and product support.

· The mistaken impression that all service providers offer the same level of service.

· The belief that a business relationship is not a partnership, but just a series of transactions that can be terminated without hesitation.

Does this client belief system sound familiar? This was a popular topic at the 2017 OneShow. It would be easy to point to Millennials as the leaders of the Amazon Mentality, but if you have been in this business for a while, you know that the concept got legs with the emergence of Price Club, Sam's Club, Costco and other discounters, long before the Millennials moved into positions of authority.

Who has not been asked the question, "Are your prices better than Costco?" by a prospective client. The response we would like to make is, "Be sure to call Costco when your coffee brewer is out of order on Monday morning, or when you think the brewer caused water damage or when you really want that $5,000 bean to cup machine." Instead, we simply explain the difference (often to a glazed expression) between a coffee service and a company that simply dumps product into your kitchen.

Strategies for overcoming the Amazon Mentality

There are 7 ways to deal with the Amazon Mentality.

1. Accept it - If you do, you will see erosion of your profit margins and the number of products on your invoice.
2. Try to match pricing - Seriously? Unfortunately, some operators are doing just that, at least initially.
3. Make the right deal on day one - Do not let your reps sell a refreshment program without a contract; one that clearly defines the product categories that your company will be selling to the client exclusively. Be sure that the client understands this: The pricing structure is contingent upon the amount of product categories being sold.
4. Pound home the added value message - Are you providing: Free installation? Free service calls? Inventory control? Customer service reps evaluating quality control? Make sure the client knows what a tremendous value they are receiving throughout the relationship. Why do you think you are being asked to rate the level of service almost every time you deal with a phone support person? From AT&T to American Express, it is more about reinforcing the value than evaluating the level of phone support.
5. Offer eclectic options - What products do you offer that Amazon or other online retailers are unable to deliver? It could be the latest Third Wave Coffee, farm fresh produce, cold brew or the hottest new organic teas. Stay one step ahead of the competition when it comes to product offerings. It is challenging, but it can be done and clients are expecting it.
6. Entertain and engage - Clients enjoy TLC. A simple lunch, client service visits or sports tickets are a small price to pay to help cement your relationship. Amazon and Costco cannot do that. Bring in samples, develop personal relationships, find out what the client's interests are and reap the rewards by setting yourself apart. Online engagement (Constant Contact and Facebook) is great, but personal contact is unbeatable. Go “old school.”
7. Adopt an Amazon Model - Online ordering. It is the best practice, right? I don't think so. In my experience watching affiliate suppliers offer online ordering to clients, I witnessed the following: Sales shrunk, the delivery frequency increased and the client mindset switched to "I can order online from anyone." Online ordering will not maximize your sales or profitability. Don't drink the online ordering Kool-Aid.

While Operators (especially the big guys) are lining up for an online ordering solution, at the core, we are a route service business. An online ordering program requires ongoing and costly logistics/database management – a concept that many traditional retailers are struggling to deal with. Walmart is setting up a program to have associates deliver products on their way home from work. Why? Because the "last mile" of delivery in e-commerce is brutally expensive.

Think twice before you enter Amazon’s playing field. Instead, set your company apart from Amazon and show your clients that in the B2B space, a full-service program has value.

-Bob

I welcome your feedback.

Cell 818 261-1758 - [email protected]

About the Author

Over the last 37 years, Bob has sold video games, cigarette machines, cranes and juke boxes to bars and amusement centers, full line vending to public locations and office environments, pay telephones to retailers, OCS to thousands of office locations and of course, micro-markets. He has a very successful track record as key strategist, sales trainer and media manager under the title, "Director of Business Development" for World Wide Vending and Gourmet Coffee Service.