Many of you in the retail industry are still wondering how much future change and technology will affect your business. Will the major producers, the big chains and the group alliances use the network as a weapon to replace you, the small and medium manufacturer? Will you become a road kill consumed by the vultures of the roller platforms? Or perhaps the Internet administers a slow, sudden, painful and prolonged death.
Forget it. Banish that thought. When the dust settles, you’ll still be around. The magic of the Internet is not really magic. The emerging technologies behind e-commerce are not going to kill your business tomorrow, or the day after, or the day after. But they won’t go away either. However, e-commerce as it relates to wholesale distribution has been highly hyped and overhyped, as is the case with most great technological revolutions. The impact of e-commerce has been overestimated in the short term and will likely be underestimated in the long term.
Without a doubt, technology has changed our way of thinking. The Internet has created a new marketing channel, but consider the failure of the dot com. The world’s e-retailers have suffered drastic declines in their shares despite unprecedented overall growth rates. One of the biggest clarifications made by many dot.com companies that no longer exist (besides having a poor business model) is the fact that they lacked distribution experience.
Don’t be afraid of e-commerce
Fundamentally, the emerging technologies that support 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 seem like a threat. Industry experts proclaim that various e-commerce instruments represent a vast paradigm shift. The reality is that a lot of complex systems need to be successfully implemented to fulfill even one part of your grand vision. This does not mean that the new technologies adopted by e-commerce cannot have a revolutionary effect on your business, but this effect will be limited by the amount of improvement that evolves in the basic business process.
People still like to do business with people.
That will not change in our lifetime and may never change. Learn to deal with it. The way to deal with this is to broaden your understanding of eCommerce and use technology to your advantage. As a wholesale distributor with the level of margins available in your industry, you cannot afford to be “on the cutting edge of technology”; however, you will need to be in the game. An eCommerce strategy is actually a subset or subservient to the company’s business strategy.
Do not make the mistake of confusing E-commerce with E-business
E-commerce is selling products over the Internet as many of the dot com companies have done; E-commerce is using Internet technology to improve its processes and remove costs from the supply chain. Many distributors don’t really have an eCommerce strategy. Your value propositions to your customers and suppliers are unclear and have little to no hard data. Most simply talk about the quality of their people (not qualified) and mistakenly promote service (not externally measured) as a core competency.
From an eCommerce perspective, it is critical that distributors have facts and data to answer the following questions. If you’re going to build an eCommerce strategy out of fear, based on long-standing perceptions and opinions, the market will expose these assumptions in a costly or painful way.
o What are your key value propositions for your customers?
o What do your customers think of you as a supplier, compared to your competitive alternatives?
o What are the main sources of pain or frustration for your clients?
With the answers to the above questions, combined with a real business strategy, an eCommerce strategy can be completed.
So – don’t be afraid
Customers will continue to choose you in the future if it suits them, just like in the past. Today, however, much more thought is put into deciding whether or not what you provide is to their advantage. Are you taking away the pain and frustration? How does it compare to its competitive alternatives? Despite what many of your sellers tell you, price is clearly NOT the only determinant of advantage.
Most distributor sellers have a certain fear of the Internet:
“Will my role remain the same based on new technology and the web?”
“Will I be superseded or will I be obsolete?”
“Will e-commerce replace the need for distributors?”
“Should I buy an orange grove and move to Florida?”
The answer to all of those questions, except perhaps the last one, is NO! There is no doubt that the market dynamics will change. However, the most resistant will survive. E-commerce technology will replace or enhance the transaction activities currently performed by sales representatives. Sales force automation, customer management packages, and new communication tools will allow sales reps to be much more effective in their search for new business.
These technologies are not a threat to you!
They are your weapons, your defense to combat electronic commerce. They will help you maintain a competitive edge. The new eCommerce sales rep will focus on growing and prospecting for new business and penetrating existing accounts in a different way than they have in the past. Analytical tools will become commonplace to assess potential and target based on ideal customer criteria. Laptops and palm pilots will become standard equipment. E-commerce technology is the way to manage the complexity of multiple customers, the complexity of multiple products, and provide value by reducing costs in the supply chain. Use the technological tools available as a sales representative.
E-commerce is not the perceived threat and e-commerce is your ally
Silver bullet — knowledge management
What comes next will be presented as if by magic, the “silver bullet” to solve all your organizational problems. In a few years, e-commerce will be old news, with some distributors wasting millions of thousands of dollars, while others will have reaped significant benefits from e-commerce technology as the industry undergoes major changes.
“Knowledge management will be the next wave of why you need to spend money now.” For all the “Trekkies”, think of the old Star Trek TV series. Captain Kirk could ask the Enterprise computer anything and he would get exactly the right answer.”
“This ‘Silver Bullet’ of the new millennium will capture all the wisdom and experience of your employees. Your customers, suppliers and employees will benefit from having the right information at their fingertips to make the right decision.”
IBM, Oracle, Microsoft, Sun, and many others have invested heavily in knowledge management in recent years. Last year’s announcement on Microsoft’s digital dashboard represents the first in a series of new products. During the next year many new solutions will appear on the market.
Like e-commerce and most emerging technologies, the hype in the short term will be far greater than the reality.
The blood leech transition level
If you compare where we are today in ‘Knowledge Management’ to medicine, you would conclude that we are at the leech solution level.
It will be many years before there is anything to buy that will provide that silver bullet. Having said all of that, knowledge management is going to become very powerful and real world impacts can now be achieved for much less money than the cost of an eCommerce catalogue. It’s not really a problem of technology availability; it is a job design problem. The technology requirement is minimal and many organizations have at least part of it in place now. It requires some form of Intranet or Extranet on a network of client server with employee station PCs providing high-speed access to the web. Basically all tech tools can be purchased at Staples or Office Depot.
So how does this relate to the threat of e-commerce to distribution? The bottom line is that you can circumvent any threat (real or imagined) posed by e-commerce by using e-commerce strategy to your advantage.
Do not panic
The secret to e-commerce is quite easy. It lies in the fact that you will always feel somewhat overwhelmed by new technology, feel behind the times, and be unsure of your next step. If you sit there and do nothing, you have in fact made a decision; a decision that paralyzes you in total inaction. It’s also just as deadly to overreact and be on the “bleeding edge of the technological revolution.” Many tech service providers promise that if you spend “tons of money” and put their package on, they’ll catch you overnight and hit a home run. This is not a cosmic truth. The fact is that you will never be “caught”. As soon as your solution is available, a better one will appear.
A more balanced approach is to recognize that you need an ecommerce strategy that complements and integrates with your overall business plan. The first and most important requirement for the evolution of e-business is effective participation and leadership. Now is not the time to complain about e-commerce, multiple channels, and margin erosion. The time has come to act and use e-commerce as a resource and asset.
Become a Lead Web Evangelist
Create a competitive advantage with ecommerce strategy and your fear of ecommerce will be subsidized. Any senior executive who downloads his E-business strategy to an IT (Information Technology) department is making a mistake and will not achieve the desired objectives. You must come to the critical understanding that this is a process, or a journey and not a destination. This process must be led from the first line where the senior executive understands and develops the strategy to the point of qualifying himself as a “Web Head Evangelist”.
The bottom line
The bottom line is that e-commerce technology will continue to progress at an almost unbelievable rate. Each advance dwarfs the one that precedes it. As microprocessors become more powerful and less expensive, they are becoming more common in everyday use. You need to grow your business with an eCommerce strategy that takes advantage of these advances, gaining capabilities in time and scale. The world is creating a technological advantage that knows no borders.
You can’t be afraid of him!
You can’t ignore it!
You must be part of it.
You must use it to your advantage to retain or create a competitive advantage.
