Envista CEO Opines On Traditional Retailers vs. Amazon

Jim Barnes, CEO of Envista, on how you compete against Amazon.
Jim Barnes, CEO of Envista

Jim Barnes started Envista with his partner, John Stitz, back in 2002—and at the time, it was the two of them and a few subcontractors. Today, the supply chain consulting and e-commerce services company has more than 600 associates and $100 million in revenue.

“We [received] no equity. No venture capital. we’ve done it through, quite frankly, with a lot of grit, a lot of passion, a lot of effort for the business, and we have continued just to reinvest in ourselves and expand the business beyond just our core supply chain services and systems integration business,” says Barnes.

Barnes spoke with Chief Executive about challenges companies in the retail sector are facing with supply chain, how to compete against Amazon, and more. Below are excerpts from that interview.

What are the big challenges your clients are facing in the supply chain today?

What’s happening is that for many, many years, brands and manufacturers controlled the experience of that the consumer had, right? So they influenced the consumer and they drove the consumer behavior. What’s happening now is obviously mobile devices, the speed of information, the speed of data, the information overload that we have, is [control has] moved from the brand to the consumer.

The consumer’s much smarter today about how they buy and how they acquire products. There are a number of searches you could do in terms of educating yourself to become a smart, educated buyer, both on price, product, performance, [and various feedback]. We’re going to this personalization model where most supply chains have been, right or wrong, developed in a linear fashion of one to many. So it’s a one-to-many, so I pick one and I push it out. Well now what’s happening, from a supply chain perspective, is that we’re moving more to one-to-one.

Back in my days at Johnson and Johnson, we were trying to move to a just-in-time approach, where I could actually make one product… I’d have the demand signal for one and I made one. Now did we ever get there? No. But the mindset was, “How do you go to a one-to-one relationship?” And so that’s what retailers and distributors need to be thinking, “How do I create a one-to-one relationship with the consumer, but my supply chain also has to be optimized and has to be effective to also support that one-to-one relationship?”

We’re going to see, regardless of what Trump does from a tariff perspective, you’re starting to see people trying to compress time. And so by compressing time, it allows you to move to more that one-to-one relationship. Now if I’ve got lead times of 90 to 180 days, it’s very, very difficult. The reality is that we need to compress time. And so retailers are sort of starting to wake up saying, “Wow, how do I compress time?”

It seems like a Herculean task to compete against Amazon because it’s like everything, anywhere anytime, and you can get it in about two days. What do you say to your clients who are trying to win that battle?

I gave a speech on “How to Compete Against Amazon,” at a conference in Nashville. Look, you’re not going to beat Amazon. You’re not going to go pop up 50 distribution centers, you’re not going to go bring up AWS. But the reality is that Amazon today, their e-commerce business, it’s a loss. They’re not making money on retail, they’re making money on AWS versus really making money on e-commerce fulfillment. But what they’re doing is, their AWS, they’re creating brand adapters. I mean, the reality is that Amazon today has… look, let’s just call it rough-and-tough, a $6 billion Prime business. And for what? They haven’t sold you anything yet. They’ve just set an expectation that they’re going to deliver to you in two days, and they’ve got your money. Think about it. That’s a $6 billion business. That ranks Amazon in the top 100 retailer in the world, and they haven’t yet done anything. They just managed an expectation, or they created an expectation for you.

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