Many of you in the distribution industry are still wondering how much more change and future technology will impact your company. Will major producers, large chains and group alliances use the net as a weapon to replace you, the small to medium size manufacturer? Will you become road kill consumed by the vultures of platform roll-ups? Or perhaps the Internet will administer a slow, withering death, painful and extended.
Forget it. Banish that thought. When the dust settles you will still be around. The magic of the Internet is not really magic. Emerging technologies behind e-commerce are not going to kill your company tomorrow or the next day, or the next day after that. But, they are also not going to go away. However, E-commerce with regard to wholesale distribution has predominantly been hype and it is overrated, which is the case with most great technological revolutions. The impact of E-commerce has been overrated in the short-term and will probably be underestimated in the long run.
Undoubtedly technology has changed the way we think. The Internet has created a new channel to market but consider the failure of dot coms. The e-tailers of the world have suffered dramatic stock downgrades in spite of overall unprecedented growth rates. One of the major enlightenments realized by many dot.com companies who no longer exist (besides having a poor business model) is the fact that they lacked distribution experience
Don’t fear E-commerce
Fundamentally, the emerging technologies supporting it are nothing more than tools that have the potential to improve your business processes. You have to learn to use them to your advantage. Get in the game and E-commerce will no longer look like a threat. Industry experts proclaim that various instruments of E-commerce represent a broad paradigm shift. The reality is that a large number of complex systems must be implemented successfully to fulfill even a portion of their grand vision. This doesn’t mean that new technologies adopted by E-commerce can’t have a revolutionary effect on your business, but this effect will be limited by how much improvement evolves in the basic business process.
People still like to do business with people
That won’t change in our lifetime and it may never change. Learn to deal with it. The way to deal with it is to broaden your understanding of E-business and use technology to your advantage. As a wholesale distributor with the level of margins available in your industry, you can’t afford to be on “the bleeding edge of technology;” however, you are going to have to be in the game. An E-business strategy is actually a subset, or subordinate to, the company business strategy.
Don’t make the mistake of confusing E-commerce with E-business Zilch Pay In Installments
E-commerce is selling product via the Internet as many of the dot coms have done; E-business is utilizing the technology of the Internet to improve your processes and take costs out of the supply chain. Many distributors don’t really have an E-business strategy. Their value propositions to their customers and suppliers are unclear with little or no hard data. Most are limited to talking about the quality of their people (unqualified) and promoting service (unmeasured externally) mistakenly as a core competency.
From an E-business perspective it is critical that distributors have facts and data to answer the following questions. If you are going to build an E-business strategy out of fear, based on long standing perceptions and opinions, the market will expose these assumptions in an expensive or painful fashion.
o What are your key value propositions to your customers?
o What do your customers think of you as a supplier, compared to their competitive alternatives?
o What are the key sources of pain or frustration for your customers?
With answers to the above questions, combined with a real business strategy, an E-business strategy can be completed.
So – have no fear
Customers will continue to choose you in the future if it is to their advantage, just like in the past. Today, however, a lot more thought goes into deciding whether or not what you provide is to their advantage. Are you taking away their pain and frustration? How do you compare to their competitive alternatives? In spite of what many of your salesmen tell you, price is clearly NOT the only determinant of advantage.
Most of the distributor salesmen have some fear of the Internet:
“Will my role stay the same based on new technology and the web?”
” Will I be replaced or become obsolete?”
“Will E-commerce replace the need for distributors?”
“Should I buy an orange grove and move to Florida?”
The answer to all those questions, except, perhaps, the last one, is NO! There is no doubt that market dynamics will change. However, the most resilient will survive. E-business technology will replace or improve transaction activities currently performed by sales representatives. Sale force automation, customer management packages and new communications tools will allow sales representatives to be much more effective in their pursuit of new business.
These technologies are not a threat to you!
They are your weapons, your defense used to battle E-commerce. They will assist you in maintaining competitive advantage. The new E-business sales rep will focus on growth and new business prospecting and penetrating existing accounts in a different fashion than they did in the past. Analytical tools will become commonplace used to assess potential and targeting based on ideal customer criteria. Laptops and palm pilots will become standard equipment. E-business technology is the way to manage multiple customer complexity, multiple product complexity and provide value by reducing cost in the supply chain. Use the technology tools available as a sales representative.