Luke Powers

In Part 1 of this series, I discussed how Amazon Business has its sights set on competing with the construction equipment and parts industry.

If it does, it will have a significant advantage in resources, distribution, and ecommerce platform capabilities over the current ways that equipment and parts manufacturers do business.

Based on how Amazon has operated in the past, including entering the maintenance, repair and operations (MRO) supply market, it almost seems inevitable.

So what can be done?

A Better Way: An Online Marketplace for Construction

Imagine a world where the top equipment manufacturers, aftermarket parts suppliers, and equipment rental companies joined forces to offer their parts and equipment for sale through a platform built just for them.

Wouldn’t this make a much more compelling platform to customers? The combined selection of inventory and outstanding customer support of the top companies in the equipment industry would be, in aggregate, more valuable to equipment owners than any one company (albeit that Amazon is a massive company).

Equipment owners would have an easy way to manage their fleet on the platform, generate parts reports per machine, and communicate with the suppliers they trust.

They would be able to acquire the best value on their parts transactions. Not necessarily the lowest cost, but the best value in terms of availability, shipment speed, quality, warranty, and price. To repair any given machine in their fleet, they could source from as many suppliers as they would like through the platform.

An online marketplace designed for the construction industry and by the construction industry has the power to do this.

Hard-working, trustworthy companies that make up the equipment industry should be celebrated, and barriers to doing business with them online need to be removed.

The customer pain points of having to spend hours on the phone calling around for parts and not knowing who to trust are very real, and they are likely key reasons for thousands of hours in down equipment each year. Down equipment leads to upset subcontractors, general contractors, site managers, and investors.

This niche online marketplace can also increase the productivity of equipment owners. Roofing contractors should be able to discover attachments to help their telehandlers lift more shingles to the roof. Demolition contractors should be able to discover tools and attachments to break up and remove concrete faster.

These are examples of the platform freeing up time for contractors to do more of what they are best at while making jobs more efficient and profitable.

Let Walmart Serve as a Lesson

The construction equipment and parts industry is defined by competitiveness which, overall, has been a very useful instinct.

This competitiveness has driven engineering teams to build previously unimaginable machines. Snorkel manufactures the largest boom lift in the world at 210 feet, Palfinger manufactures the largest boom truck at 336 feet, and Belaz manufactures the largest rock truck at a gross operating weight of 359,000 pounds. Engineering breakthroughs have allowed us to create bigger infrastructure and buildings while being safer and more efficient.

All of this incredible engineering has enabled the sales and business development teams at manufacturers, dealers, and rental companies to produce $55 billion in equipment rental revenue in 2019, according to the American Rental Association, and $113 billion in global new construction equipment demand in 2020, according to Statista.

These huge volumes of sales are virtually all done offline and through personal relationships.

The companies in the equipment industry are locked in a battle for customers, talent, financing, and share value. Hundreds of thousands of employees’ sole purpose is to figure out what the “other guys” are doing and try to outdo them incrementally to gain market share. Hence, ecommerce was always a task for “next year.”

In the year 2000, the dot-com bubble burst, and Walmart was by far the world’s largest retailer. The company even launched Walmart.com in January 2000. Given the company’s market dominance, they saw ecommerce as a means to an end—supporting their core business.

Hindsight being 20/20, those executives did not appreciate the significance of ecommerce and allowed Amazon to zoom past them. The dot-com craze of 1999 was not wrong—just 20 years too early on share valuations.

Is the equipment industry in 2020 like the retail industry of 2000?

Many executives may think that market share is a birthright, growth is ensured, and the only competition is from known entities and business models. So did Walmart.

Pandemic Pandemonium: The Brave New Online World

As compared to 2019’s boundless optimism and bustling economy, 2020 has been a year defined by fear, scandals, and anxiety.

In construction industry businesses, we have kept to ourselves, observed where others are standing, and obsessed over news coverage. Most of our economy effectively shut down in Q2.

As “essential businesses,” those in the construction industry still showed up to work every day and have met this pandemic with more healthy skepticism than fear. Nevertheless, the industry finds itself in a world where an ecommerce presence is now vital to doing business.

The digital transformation has arrived.

In this new ecommerce world, Amazon holds by far the most powerful position. Amazon Prime members get such an abundance of value for their annual membership that it’s a fool’s errand to believe that will go away any time in the next couple of decades.

The only way to compete with Amazon online is not as a single entity, but as an aggregate industry platform.

In fact, industry-focused platforms have been making great strides in developing communities where the best suppliers can grow and customers can explore. A few examples:

• Etsy is the world’s largest marketplace community of home goods crafters;
• Everest is a marketplace of the shooting and outdoor sports communities;
• Bookshop is a marketplace community for independent booksellers.

There are 7.3 million employees in the construction industry in October 2020, according to the Bureau of Labor Statistics. They all want the best parts, tools, and equipment from the best suppliers.

It is only by banding together on one industry platform that it is possible to create a more compelling experience for contractors than Amazon.

The aggregate value of the tens of thousands of parts and equipment suppliers can ultimately win with ecommerce.

Luke Powers is the co-founder and CEO of Gearflow.com, an online marketplace built for the construction equipment and parts industry. He can be reached at [email protected] and on LinkedIn. This article, the second of a two-part series, was excerpted from a blog posted on Gearflow.com.