Professional Courtesy: Market Disruption by Dr. Thomas Giacobbi

Dentaltown Magazine

by Thomas Giacobbi, DDS, FAGD, editorial director, Dentaltown magazine

Chances are, in the past five years you’ve purchased something from Amazon. The company has everything you could possibly need from clothes to cosmetics to furniture. As consumers began using Amazon to make business purchases in addition to personal ones, the company created Amazon Business, a version tailored to the needs of businesses. This new offering also made it possible to create accounts that had the additional information needed to sell dental materials to licensed dentists.

I recently interviewed Chris Holt, leader of global healthcare for Amazon Business, and gained some interesting insights into the company’s approach to dental supply sales and distribution. Its early strategy has focused on growing its marketplace of suppliers and increasing its customer base of Amazon Business accounts. It stands to reason that with a deep catalog of products and an army of customers, every manufacturer of dental materials will want to serve the needs and wants of this customer army.

This is a transcript of our conversation, edited for length.

Dr. Tom Giacobbi: Amazon is the quintessential example of a “long-tail company,” which provides deep selection. Would you describe yourselves in the dental space as trying to reach that level of offering?

Chris Holt: When we started Amazon Business we didn’t have much dental selection, and we’ve been growing that quickly. We like to say here that it’s “Day One,” which is an expression our founder uses. Whatever we’ve done so far is Day One, so now what can we do next to increase our relevance to dental customers?

The core strength we have is bringing great tail-spend selection to the dental office in a few clicks; we’ll build off that to continue to expand that selection to address more of the dental office spend. Our goal is not to be like anything that’s already there—our goal is to start with our customer, who’s the dentist, to reimagine their purchasing experience and then work backward from there. That’s what we’ve been doing.

TG: When I search for Dentsply on Amazon, that comes up with more than 10,000 results. That’s probably the first major household brand, if you will, within the dental space that has had products on Amazon in a big way. Are products being supplied directly by Dentsply, or are they coming from the manufacturer through a third party to Amazon?

CH: A very important construct for us is that we are a marketplace—a marketplace brings buyers and sellers together and allows them to find the ability to trade with one another. That’s very different from trying to shape demands. If we can make all the options available to all of the customers, and we can make a wide range of customers available to all of the suppliers, things will shake out from there. For us that includes all suppliers, so whether you’re a manufacturer or distributor or some other kind of model, there’s a place for you on Amazon Business.

TG: Is there a resistance in the dental space for large manufacturers to embrace this marketplace model? Or what do you see is the path moving forward to get more of those big-name products listed on the website in one way or another?

CH: Our goal is to make all sellers and suppliers aware of the toolkit that we have. They’ll each use it in their own way, but there are a number of new business practices that a supplier has to learn to be a good supplier on Amazon. If they are not used to selling online, that can be a challenge; it can take them some time to get their senior leadership comfortable with our concepts, our language and our model for how we bring their products to market.

TG: It seems like a lot of the fears come from not wanting to upset existing partnerships with the dental distributors, more so than a fear of technology. How do you persuade the manufacturers to change that relationship, because they are protecting their distributor relationship over selling things through the marketplace?

CH: What we’ve learned in all of Amazon’s history is that if you delight your customer, most of these other complications will sort themselves out. So everything we do here is focused on: How do we delight the customer?

One of the customers we’ve really learned about in the dental space, and in health care more broadly, is what we call “Mary the Millennial,” which is just a persona that we use to describe the new worker in health care. What we hear from our customers and our suppliers alike is that it’s getting harder and harder to engage with Mary the Millennial through traditional channels, and that Mary is expecting to be able to find what she wants in online channels, apps and on her mobile phone, and if she can’t find it there in a minute or less, she’s just going to choose something else. That’s very much a guiding principle for us: If we make Mary happy, the rest will take care of itself.

TG: So, in other words, if you get enough people in Amazon Business from dental practices buying something through that channel—once you’ve got enough of them plugged in—then you’ve got an audience that the manufacturers can’t ignore. Would that be a fair way to say that?

CH: Yes, what we hear from customers is they want to purchase more and more on Amazon Business because they love the experience, the convenience and some of the features that we’ve introduced. We think that creates an opportunity for new suppliers to be there and be relevant. There are a lot of products out there where maybe there’s a traditional brand leader, but there are alternative products that are just as good but haven’t had as much exposure to customers. So there’s a big opportunity to redefine those “critical products” that a dental office needs. Our goal is, simply, to provide all of the choices out there so that customers can make an informed and transparent choice among all the options.

TG: There are basically two major categories of supplies—consumables and equipment. Would it be practical for Amazon to sell large pieces of equipment, or is that really just outside your strength of logistics and distributions and getting things from A to B?

CH: It’s a great question. We always start with our customers and experiment and learn from them, but it might surprise you to know that we do have pieces of capital equipment for sale on Amazon Business today that cost hundreds of thousands of dollars. Now, we don’t sell a lot of them yet, but what suppliers find is that just making that product available on Amazon Business so that customers can read about the product—understand and learn about the product, even if they might not quite yet be comfortable making a $300,000 purchase of that product on Amazon Business—that’s a big marketing lift for the supplier to start with that visibility.

Over time, customers will actually buy those things. So we let the marketplace find its way, and we’re always surprised by what our customers will do. That’s why we encourage suppliers to experiment with us—to make those kinds of capital items available and see what happens.

TG: The Amazon Business marketplace: Is it more of a collection of other suppliers than it is a warehousing of product directly from manufacturers, then?

CH: Yes. The way to think about it is if the marketplace just brings buyers and sellers together, that’s the main thing that we’re driving. Be they distributors or be they manufacturers, it doesn’t matter.

There are two main models that suppliers sell on Amazon. And briefly that’s the retail vendor model, where we buy inventory, hold it and resell it, or the 3P seller model, where we take the order from the customer, give it to the supplier and the supplier drop-ships straight to the customer. We don’t have a preference; we want the customer to make that decision, and we find that it’s probably 50/50 in terms of the mix of those two models.

TG: Is there any concern with distributors that are selling gray market items?

CH: Yes. For the health care supply chain, concern about the quality of a product or the reliability of the supplier is a top concern for anybody, including us. We are thinking very much in the long run about how we make the supply chain safe and secure, how we leverage what we do in other industries to make sure their products are safe and secure, and that we really build upon our customers’ trust.

They trust us when they make a purchase through Amazon Business; we take that trust very seriously. They know that coming through us is getting them access to millions of third-party suppliers, direct suppliers, and they’re expecting us to make sure that they’re going to receive authentic products manufactured by the true brand that’s on the box. So we strictly prohibit the sale of counterfeit products. We have a number of powerful technologies to identify and stop the sale of a product very quickly. It’s a big focus for us—not just in health care but across all of the industries that we serve.



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