Amazon is making my business harder, but complaining won't do any good

It's no secret that Amazon is flat-out murdering brick-and-mortar retailers with low prices and killer convenience. Amazon's market capitalization has now eclipsed the combined valuations of Wal-Mart Stores, Target, Costco, Macy's and Kohl's. And then there are the former greats clinging to their last scraps of market cap, like J.C. Penney and Sears, more victims of Jeff Bezos' online retail juggernaut.

But the downward pricing pressure from Amazon has massive ripple effects to upstream manufacturing vendors like my company, GMM Nonstick Coatings. GMM is one of the world's largest suppliers of nonstick coatings to the $9 billion American housewares industry. GMM's clients are iconic brands like Calphalon, Farberware, KitchenAid, Oster, Wilton and George Foreman, all of whom previously sold most of their goods to brick-and-mortar retailers like Wal-Mart. However, these days sales are exponentially moving online and to Amazon.

The big impact to GMM is obviously on pricing. GMM's raw materials are driven by the prices of commodities like oil, silicon and other polymers. In the past, when raw-material prices spiked, we raised prices. But with the rise of Amazon, any price increase risks elimination as a vendor because of crushing algorithmic competition. So what does it take to succeed in the Amazon era of unbelievably low prices that are only headed down?

Below are the tactics that GMM has used to continue to thrive:

1. No matter where you are in the supply chain, you better innovate like Bezos.

GMM employs 50 highly educated R&D scientists who are phenomenal at creating innovative ways to push costs down while bringing quality up. To pull off this magic trick, GMM invests in the best and brightest people, a decision that gives us a clear edge versus some other competitors, who are "me too" suppliers that only try to copy existing technology.

Our largest clients (all multibillion-dollar conglomerates who have sophisticated purchasing departments) don't just require low prices today; they want to see three-year plans promising further reductions so they know they won't be eliminated by Amazon's relentless pricing algorithms.

2. Know that last year's low-cost manufacturing information is worthless.

Most American housewares companies source their cookware, bakeware and appliances from overseas factories in China and Mexico because of price arbitrage. As a result, GMM has a number of overseas factories so we can make fast, local deliveries. However, in the Amazon era, our clients consistently come to us asking what countries are emerging as high-quality, low-cost locations — and you better have smart answers.

For instance, GMM proactively built a multimillion-dollar factory in India in 2012, because we knew how much intellectual capital was available locally. At the time, competitors thought we were crazy because India had infrastructure problems and was not seen as a credible alternative to China. But we knew these issues would be solved, and they were.

"Is Amazon making business harder? Of course. Am I complaining? Not a chance. Business is supposed to be difficult, and competitors who can't evolve will be selected for extinction by a beautiful force called capitalism."

Today GMM's India plant is growing by more than 100 percent annually because (believe it or not) China has been priced out by many American manufacturers and because GMM's technology is designed to solve client problems.

3. Creative marketing is a necessity.

Ten years ago components like nonstick coatings were almost invisible to the consumer because of the power of the client brand (i.e. consumers trusted Calphalon or KitchenAid and didn't really care who supplied the coating as long as it worked well).

However, in the Amazon era, competition in every niche category has exploded, and clients want their coatings to be platforms that hook consumers with short bullet points about differentiation.

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As a result, GMM designs and markets our coatings around key performance attributes that help our clients win at retail (i.e. longer lasting, better warranty, cooler colors, etc). This "claims- based" marketing strategy allows us to further enhance our competitive advantage in a tough landscape that's only getting harder.

4. A speedy response to client needs will keep you from being killed.

Wal-Mart's dominance was analog; Amazon's ascendance is wholly digital.

Communication moves instantly, and sophisticated purchasing managers need speed like they need oxygen. If they don't get it, their organization will die. Product quality, precision, service and cost is just the ante; if you want to win the game today, you have to be fast.

GMM has evolved into an organization that can respond to the most complex client requests in a short period of time, which helps our customers iterate and get new goods to retail faster than slower competitors. In business, as in sports, speed kills.

5. To survive, you need massive scale.

Even though GMM is one of the largest companies in our industry, winning in the Amazon era requires true global reach. As an entrepreneur, it's hard to compete with multinationals who have almost limitless resources. In order to jump-start global expansion, six months ago I sold GMM Nonstick Coatings to a $7 billion Japanese conglomerate, SDK, who views the company as a platform for further acquisitions. Was it a hard decision to sell the business I founded 10 years ago? Sure, but this deal actually makes my life as a CEO easier because GMM can extract huge synergy, leveraging multibillion-dollar resources.

Is Amazon making business harder? Of course. Am I complaining? Not a chance. Business is supposed to be difficult, and competitors who can't evolve will be selected for extinction by a beautiful force called capitalism.

My family purchases almost everything we need from the Amazon mobile app (on average, we receive 10 to 15 shipments per week). My kids (who are six and four) think Amazon is a magic button on your phone that causes whatever you want to be instantly delivered to your door. But the reality is, it takes a heck of a lot of work behind the scenes to meet the low prices and high-quality standards that American consumers demand.

By Ravin Gandhi, CEO of GMM Nonstick Coatings and a member of the CNBC-YPO Chief Executive Network. Gandhi is also a VC investor and has invested in technology companies KeyMe, Ampsy, Tred, Lettrs and Hester Biosciences.

About YPO

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