Distributors worry that Fulfillment by Amazon (FBA) is assuming key distributor roles and erasing them from the equation. The service picks, packs, ships and even manages returns for retailers and distributors, as well as holds inventory in Amazon fulfillment centers.

More manufacturers are also leveraging ecommerce to go direct to the end-user, rather than through the distributor.

How concerned should distributors be? And how can you avoid being eclipsed?

Distributors add a great deal of value in the supply chain between suppliers and customers.

With these functions in mind, let’s take a look at why distributors’ traditional roles in the channel may be at risk of being replaced entirely.

Distributors selling through marketplaces.  In this scenario, distributors surrender much of their value-add and openly share data that Amazon could use to replace them. This is an especially significant risk if the marketplace is also a merchant.

Manufacturers selling through marketplaces. Many manufacturers are prepared for this because distributors have demanded more drop-shipping over the years.

Manufacturers selling direct. Many manufacturers are selling directly through their own websites. 

Fulfillment by Amazon. In this scenario, it would easy for Amazon to go directly to your supplier and cut you out entirely.

By outsourcing distribution functions to marketplaces, distributors are heading down a slippery slope toward extinction.