Amazon Has an HVACR Distribution Problem

Amazon is on pace to become the largest company in the U.S. and eventually the world.

According to emarkerter.com, the Seattle-based conglomerate’s sales ($258 billion) are expected to account for more than 49 percent of all e-commerce transactions conducted in the U.S. this year.

In February, Amazon made headlines again through the creation of its Shipping with Amazon (SWA) delivery program. Not only will Amazon be manufacturing and warehousing products, it will soon be shipping them as well.

A Changing Marketplace

HVACR distribution absolutely has an Amazon problem; however, on the flip side, I believe Amazon has an HVACR distribution problem. Despite its apparent eminence, Amazon still lacks the knowledge necessary to size, install, and distribute mechanical equipment. It’s deficient when it comes to offering industry advice, holding personal relationships, connecting with manufacturers, offering warranties, and more.

That said, the walls seem to be cracking. While HVACR distributors currently man the channel’s joystick, they must be willing to adapt, or else. Here are a few areas to focus on.

Online sales: As online sales continue to soar, HVACR distributors must improve upon their online storefronts.

Watsco Inc. is a shining example of how distributors can utilize e-commerce, as nearly 30 percent of its 2018 sales occurred online.

“E-commerce is not just on the app,” said Albert Nahmad, CEO, Watsco, during a Q1 2018 earnings conference call. “E-commerce occurs on any device, including web domains. It’s getting close to 30 percent, which means customers are not only using it but enjoy using it and find value in it. We’re seeing that in the numbers as well.”

Shipping upgrades: While two-day shipping may seem like a pipe dream in the wholesale sector, it is attainable. Master distributor Neuco Inc.’s N2G program has guaranteed two-day shipping for more than 15 years.

“When we started the program, we considered how we could extend our reach beyond specific areas,” said Paul Neustadt, president, Neuco Inc. “Eventually, we elected to guarantee two-day shipping anywhere in the continental U.S. There is a sense of immediacy in today’s day and age, and our delivery time is crucial.”

Band together: There’s power in numbers. Trade organizations, such as HARDI, are designed to unite wholesalers by helping them identify mutual advantages, expound upon the value of two-step distribution, reinvent supplier incentives, etc.

HARDI’s Annual Conference is set for Dec. 1-4 in Austin, Texas. This is a great opportunity to bounce ideas off your peers. If you catch a Watsco or Neuco rep, ask them any e-commerce or shipping questions you may have. With enough willingness, courage, and fortitude, David can beat Goliath. As the saying goes, the bigger they are, the harder they fall.