How Traditional Distributors Can Compete With Amazon and Other Online Providers

Amazon and other online providers continue to expand their reach into B2B marketplaces. In just a few short years, the landscape has shifted dramatically. Today, customers have access to an unprecedented assortment of in-stock inventory, highly competitive pricing, and guaranteed next-day delivery—all available at the click of a button.

For traditional distributors, this creates significant pressure. Competing on price alone often means eroding margins to unsustainable levels. The reality is clear: this competitive threat is not going away. Distributors must proactively adopt new strategies to protect—and grow—their business.



Doing more of the same is no longer a viable option. To remain relevant and profitable, you need to implement responsive, customer-centric tactics that leverage your unique advantages and create meaningful differentiation in the marketplace.

A strategic action plan to compete — and win

Leverage your customer relationships

One critical advantage you have over online competitors is the strength of your individual customer relationships. The time and effort spent cultivating these business relationships should not be overlooked or allowed to diminish. Unlike transactional online marketplaces, you have invested years in building trust and providing personalized service to your B2B customers. Your company sales reps understand the local market dynamics, individual customer needs, and the business challenges faced by each customer. This knowledge allows you to provide value-added services that Amazon can’t replicate—such as on-site consultations, product training clinics, business-building workshops, and highly customized solutions. “Lunch & Learn” clinics (online or on-site) can provide a valuable customer relationship-building opportunity.

And there is one additional tool you should consider adding to your arsenal—a B2B customer rewards program. 

The power of a B2B loyalty program

A well-designed and executed B2B rewards program can fundamentally change customer purchasing behavior while creating long-term loyalty. Rather than simply selling products, a loyalty program helps position you as a business partner that rewards customers for growing their purchases, expanding product category usage, and deepening the business relationship.

Unlike discounting, which quickly erodes margins and can foster price-based entitlement, a B2B rewards program is performance-based. They deliver exceptional ROI by only rewarding actual sales behavior and driving incremental revenue growth.

Unlock the value of customer data

Online competitors like Amazon are masters of data mining—using customer data to target buyers with highly personalized offers to maximize profitability. You can do the same by leveraging your own historical purchase data to create targeted, customized incentive offers for individual customers and segments. Your customer transaction data is quite literally a goldmine, and a customer reward program is the perfect way to help unlock its value.



With the right B2B loyalty platform and data analytics services, historical purchasing data becomes a powerful sales tool. You can identify gaps in purchasing patterns, tailor promotions to specific buying behaviors, and optimize incentive offers for maximum impact—ultimately driving higher sales and stronger customer loyalty.

Move beyond discounting

Discounts and rebates are often seen as a quick fix to secure sales, but over time they erode profitability and undermine product value and aren’t effective in supporting your key sales and marketing goals. Loyalty and incentive programs allow you to deliver added value without permanent price reductions. More importantly, these programs can support a wide variety of strategic sales goals, including:

• Driving adoption of new product lines
• Encouraging customers to purchase across more product categories
• Clearing slow-moving or obsolete inventory
• Promoting online ordering
• Increasing average order sizes
• Building long-term customer retention

A couple of real-world case studies

1. How one distributor delivered impressive results with data-driven offers based on historical sales

A home-building industry wholesale distributor and installer was having challenges with soft quarterly sales. They were looking for ways to drive incremental sales across their customer groups. The distributor needed data and analytics expertise to help them identify unrealized sales opportunities and increase the lifetime value of their customers. 

Participants in each segment achieved and exceeded their growth targets. There was no risk to the client with this promotion, as the bonus points were only realized if thresholds were achieved. 

• Customer sales growth: The program drove over $2.5 million in customer sales growth vs reward costs of only $10,000.
• Impressive ROI: The program had an ROI of over $75 in additional gross profit for every $1 in rewards earned by participating customers.

With buyers being exposed to more options than ever before, especially online, a large U.S. distributor in the automotive aftermarket wanted to raise the profile of its four in-house brands and add stickiness to their customer relationships. The distributor already had a tiered growth incentive program for key customers in place. 

Key program features:

• Exclusive brand purchase offer: Lift & Shift created a three-month campaign to drive the incremental sales of our client's four in-house brand products with an accelerated earn rate to motivate customers to purchase more than they did last year. The desired spend stretch was +15%.

• Distributor Data Direct: Our client quickly and efficiently built sales and market share with downstream customers using Lift & Shift's proprietary Distributor Data Direct platform, which enabled the in-house brands to leverage the distributors’ data to reward and influence downstream customers. 

The results: Higher incremental sales among program members 

• Program loyalty: Throughout the promotion, reward members consistently outspent non-members.
• Increased customer purchasing: As noted above, top-quartile members spent 7%-21% more than non-members.
• High participation: Participation by reward members was consistently high. Approximately 50% of reward members participated in the bonus offer.
• Significant ROI: Our client enjoyed a fantastic return on investment using this tactic, with over $300 in brand sales for each $1 invested in the bonus offers.

The time to act is now

Amazon and other online providers aren’t going anywhere. They will continue to evolve as the strength of AI improves. Distributors that leverage their relationship strengths, customer data, and targeted B2B loyalty programs are better positioned to thrive—even as online marketplaces grow.



By combining channel incentives, customer loyalty strategies, and B2B sales incentives, you can protect your market share, drive sustainable growth, and strengthen your customer relationships for the long term.

(NOTE: This post has been updated from a post originally published June 25, 2020.)

Lift & Shift™ offers a powerful B2B reward platform that can help your company leverage its sales data to drive incremental purchases with customers and channel partners or motivate sales staff. We work with manufacturers, distributors, and service providers to analyze sales data, identifying purchasing gaps and other valuable targeting opportunities. 

We create and deliver highly relevant offers to customers, in-house sales staff, or sales associates, motivating your target audience to respond using a wide array of appealing reward options as influencers. Our performance-based reward structures deliver an unparalleled return on investment with absolutely no wasted budget. 

Our customizable reward platform enables clients to easily benefit from a robust loyalty reward program. It's affordable and includes Lift & Shift’s turnkey professional program administration. We take care of everything so you can focus on your key initiatives.