Virtual vs. reality
Distributors can use the Web to add value
By Sara Procknow -- Industrial Distribution, 3/1/1999
VIRTUAL DISTRIBUTION CHANNEL. Those three words may sound pretty intimidating, but those three words may change your business and your life as a distributor. The Internet in all its gloryis taking the MRO industry by storm. Buyers are zipping around online looking for parts, better prices, and maybe even a better distributor.
Don't believe me? Then believe Purchasing magazine. A recent survey revealed that 73 percent of buyers use the Internet to do their job. Your customers are online and they are hungry for information. What have you done on the Web for them lately? The onus is on the distributor to educate customers about the value in value-added distribution. What better way than using the Internet as a path?
Take Grainger's alliance with Perot Systems, or WESCO, Applied Industrial and Fastenal's partnership with Datastream's e-MRO product. Even Prophet 21 and IBM are getting together -- all to offer e-commerce to customers, your customers included. It isn't enough that business-to-business electronic commerce is expected to grow by leaps and bounds in the next year. The question is what are you going to do about it?
The way I see it, distributors have a few choices when it comes to the Internet:
1. Jump on the Web, create a site, add a little e-commerce, market and position yourself as the value-added online distributor and start taking online orders.
2. Partner with some like-minded distributors and offer customers a one-stop Web experience with competitive pricing.
3. Sign-up with an established e-commerce company, like Perot, IBM's Supply Chain or NetBuy, but look before you leap, lest you become another Industry.Net statistic.
4. Do nothing, refuse to use the Internet to your advantage, and reap what you sow.
Then there are the manufacturers. The virtual distribution channel is a buzzword in their world as well. They may put on a front that they would never in a million years sell direct, but that's a promise they made before the word "Internet" was even in the dictionary.
You see, virtual distribution means manufacturers don't really need distributors, or do they? Again, it's up to the distributor to make sure manufacturers know that the real value -- even in Internet transactions -- is in the distributor who handles all the after-the-sale service, repair and questions from customers, and it's not always the almighty manufacturer. It's simple: if a distributor doesn't add value to the supply chain, then that distributor will end up being part of the food chain. The Internet will do to distribution what integrated supply did for customers: provide a power shift.
The reality is this: purchasing professionals are becoming increasingly proficient using the Internet. Besides providing them with a nice Web site to experience, why not adopt an electronic commerce strategy to take your customers and your business to the next level?
Ask yourself these two questions with the Internet in mind: Do your customers need you? Do your manufacturers need you? If you're not sure, you'd better figure it -- and the Internet -- out.
Send your comments to Sara Procknow at sprocknow@cahners.com or call (617) 558-4289.
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