It's starting to look as if the current economy will be the new normal, forcing executives throughout the country to look outside the box to stay relevant and profitable. Alliances between companies will have to be formed to meet the competitive pressures. The quest for a dwindling consumer dollar will not get easier.
Upfront, the following scenario is not based on any actual facts, but rather an exercise in possibilities. Amazon is the world’s largest online retailer, with sales of more than $75 billion. The company sells just about everything to everyone; however, they haven’t mastered the market of larger, heavier structural construction products. Delivery and logistic concerns compounded with expertise issues are probably Amazon’s biggest challenge in becoming a dominant building material supplier. The national big-box retailers pose a formidable challenge for any online retailer—including Amazon.
Independent building material dealers are spread across the country. Over the last decade, many have been purchased or consolidated with national suppliers, because the business environment has proven to be difficult for small businesses. Most independent dealers have limited resources and expertise when it comes to online retailing. They struggle in their competition with the national big-box locations because of their inability to reach the masses. These smaller, independent dealers need strong online marketing in order to cut through the noise of their well-funded competitors.
Imagine what would happen if the biggest company formed an alliance with the smallest companies. What would the possibilities be? For Amazon, the company would immediately pick up hundreds of brick-and-mortar shipping locations without spending a dime while independent dealers would gain immediate the online credibility and the resources to dramatically expand their customer base. The endless possibilities of product supply channels, beneath the Amazon umbrella, to local home services and local consumer financing has the potential to open up new markets for both independent dealers and Amazon. The challenge would be the willingness of executives to be creative and form an alliance. The reward would be an even playing field.
Business alliances in the future may be the way in which two companies, at different levels of the supply chain, compete to gain additional market share. Isn't it just as important for the wholesale distributor or manufacturer to sell building materials in Jackson, Miss., as it is for the dealer in Jackson? If both companies truly believe that selling products is just as important, then alliances and partnerships will have to be created to compete with the bigger and more established competition.
Many executives thrive on the "lone wolf" approach; however, as a practical matter they may have to adopt the “pack” mentality. I predict that business alliances in the future will be forged to win market share—and to survive.
