Industrial distribution: a scary prediction!

17 March 2025

I have a hunch that Amazon will wreak havoc within industrial distribution in the not-too-distant future.

My theory is that they will shortly be able to combine the web smarts and the product range of McMaster-Carr with the availability of Grainger’s and Fastenol’s vendor-managed inventory (VMI) installations.

Obviously, web smarts and range are easy problems for Amazon to solve, but how can they compete with the instant availability that VMI offers?

I think it comes down to a simple question: Do industrial customers actually need a component instantly, or is a 3-hour delivery lead time sufficient? Before you answer, consider that VMI customers pay a premium for this service (probably in the 20-50% range, depending on size).

Amazon has essentially built an in-house jobber network (jobbers are the last-mile distributors who provide the auto industry with same-day parts). My guess is that they will soon offer 3-4 deliveries a day for industrial customers, meaning 2-3 hour delivery lead times.

Would you swap instant availability for a 2.5-hour lead time if the latter resulted in a 34% cost reduction?