The specialized wholesaler is still going strong.
The construction market is a rather traditional market, which is also visible in our results. So before looking closer at the position of Amazon in the electrical installation market, first a rundown of the position of the specialized electrical wholesale. Traditionally, a manufacturer would sell its products to a wholesaler, either general or specialized, who in turn would sell it to the installers. For decades, this model reigned, mainly because of the important role of the specialized wholesalers. These wholesalers had a lot of in-house knowledge, so besides distributing the products they distributed information and advice on them as well. Additionally, the specialized wholesalers acted as financiers in the chain, meaning that they invested capital in stock, to make sure products were in stock for installers to buy at any moment, and they sold them with certain payment terms, offering installers to pay them off at a later date, for instance.
Aside from also selling their products online now, this traditional role of the specialized wholesalers has not changed much and, as can be seen from the purchase behavior of electrical installers, that role is still very much appreciated. Nearly all electrical installers in all seven countries still buy electrical installation products at specialized wholesalers. Even in Spain, where this percentage was lowest, 93% of the installers still buy at specialized wholesalers. As for the amount they spend there, the share of wallet spent at specialized wholesalers lies around 80% in all seven countries. This shows that the electrical installation products market is indeed a traditional one, as the specialized wholesaler is still going strong.
Amazon dominates the pure online player market
The market being traditional does not mean nothing is changing, however. Due to the internet and faster and cheaper ways of delivery, new players have entered the game. One of them is the pure online player, that sells electrical installation products mainly online and often does not have a physical store.
When looking at the share of wallet, the influence of these pure online players on the electrical installation products market is still relatively low. Be that as it may, a substantial amount of installers do find and use these channels already. In Europe, about one in four electrical installers mention to also buy at pure online shops. Their main reasons are either necessity, because a certain installation product is unavailable at other channels, or cheaper prices.
These attitudes provide opportunities for pure online players, and our research shows that especially big players in the pure online market grasp these opportunities. In four of the seven countries, for instance, a substantial amount of installers that buy at pure online stores mention Amazon as the shop they mostly use for online purchases, as can be seen in the graph. This illustrates the dominant position Amazon already has on the electrical installation market when it comes to pure online sales. Only in the Netherlands, Belgium and Poland Amazon lacks traction, mainly not due the fact of strong local competitors and the limited footprint Amazon has in these countries.
Although traditional specialized wholesalers still dominate the market, new players like pure online shops are on the rise. The share of wallet is not yet that high for pure online channels, but their usage is growing and we see that major players like Amazon, by grasping opportunities in the market, can quickly gain ground. On the other hand, the traditional market makes this shift harder because of the strong role the wholesaler still plays. For more detailed information on the development of all players in the game of purchase channels of the electrical installation products market, we refer you to the Q4 2018 European Electrical Installation Monitor