E-commerce: A strategic weapon
By John J Keough -- Industrial Distribution, 12/1/1998
The latest "Facing the Forces of Change" study by the Arthur Andersen Co. shows that the wholesale distribution industry continues to be in the midst of turbulent change. This year's study focused on four trends that are reshaping wholesale distribution: electronic commerce, strategic alliances, supply chain integration and globalization. We'll be examining those industry trends in upcoming issues of Industrial Distribution.Certainly, electronic commerce will have a major impact on the distribution channel, says Arthur Andersen's Rick Prohammer, one of the authors of the report. Prohammer, during a presentation at the Power Transmission Distributors Assn. annual meeting in October, said that 50 percent of distributors' customers will be online within the next five years. "Early adopters of electronic commerce will gain market share,'' he said.
Prohammer mentioned the following points regarding electronic commerce:
* Overall impact of e-commerce has been minimal, but will have a tremendous impact over the next five years.
* Wholesaler-distributor sales and purchases over the Internet will increase dramatically.
* E-commerce will quickly shift from a competitive advantage to a requirement over the next five years.
* E-commerce will increase competition and consolidation.
* E-commerce will change the wholesaler-distributor's role in the channel.
* Wholesaler-distributors report that lack of resources and knowledge are primary barriers to electronic commerce.
There is much confusion about electronic commerce. Some industry experts believed at first that the Internet (and ultimately electronic commerce) would mean the end of industrial distribution. That hasn't happened. In fact, the explosion of the Internet has had an important effect on the way the industry does business.
A recent poll taken by ID shows that 69 percent of the responding distributors who do not currently take orders over the Internet plan on doing so in the future. Most plan on having systems in place by the end of the year. And more and more distributors are creating home pages on the Web to promote their company and products. Can e-commerce be far behind?
Putting a home page on the Internet won't guarantee an increase in sales, but it could establish a presence in markets you wouldn't otherwise reach. The old days of your geographical market being limited to neighboring states are long gone. Now, through the presence of the , you can become a global player in the marketplace -- today and in the next millennium.
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