With an 800 lb. gorilla like Amazon, once they come into your playground, things will certainly have to change. Big online giants are not new to this market. We’re used to the Grainger, McMaster Carr and MSC’s of the world. The difference in my mind is that while price is important to them, they are selling more of a convenience. The Amazon model is a bit different and price points are more critical.
AmazonSupply has been up and running for about a year now. I wrote a post last summer and asked how they might be influencing your business. Back then it might have been too early to tell. (I sure would like your input now.) I assume many manufacturers are using them as another outlet for their products. The trends are indicating that the traditional distribution models are declining.
I recently read an article by Scott Benfield in Industrial Supply, Trials and Tribulations of Sales Growth in an AmazonSupply World that outlined the difference and suggested ways traditional distribution can effectively deal with them. According to Scott, it comes down to the way traditional distribution goes to market. He calls it the bundle approach (full service) as opposed to a transactional model with a much lower cost base.
He also recommends strategies moving forward for the “new normal.” In my mind, I’d hate to see the traditional distribution model go away. There’s lots of value in their expertise, but if they are not willing to change, then the future might be dim for some of them.
Manufacturers, what are your thoughts on the different distribution models and where is your sales staff spending their time and efforts? Better yet, what can Associations like ISA do to help their members?
I know there’s been lots of discussions on the pros and cons of buying groups over the years, and I’m not here to try to sway you one way or the other.
I recently came back from STAFDA, which for those who don’t know, is an association of construction distributors and the manufacturers that sell into that market. What struck me at the trade show part of the event was it was obvious which manufacturers didn’t belong to a group. You saw plenty of Evergreen, Sphere 1 and NetPlus badges there, but they were concentrating mostly on seeing the manufacturing members of their respective groups. (I’m using STAFDA as an example and I’m not trying to pick on them.)
So my question is for those who don’t belong to a group (and don’t have a unique product), how do you justify going to one of these meetings? Should the association try to incentivize distributors to stop by new member booths? I feel sorry for those folks who ponied up the cash but not very many distributors stopped by.
Another interesting issue is that most of these buying groups have their own annual meetings and some are incorporating trade shows along with these get-togethers. From a manufacturing point of view, which shows do you go to? Obviously it’s the ones where you get the most bang for your buck.
Associations/buying groups may want to look at their model as things have changed over the past several years. They need to ask about the value proposition of getting these distributors and manufacturers together. Instead of trade shows (whoever introduces a new product at one of these), maybe there should be a series of round table discussions on how to improve the supply chain for everyone involved.
There are some really smart people out there (on both sides), and I believe a lot more could come out of these kinds of meetings and they could include all members.
Any of you belong to other type groups that have changed the model? I’d like to hear from you.
Now that the election is over, I’d like to see what you are anticipating 2013 to be like. I know a lot of you were waiting to see the election results, and they are what they are and we need to deal with the fiscal cliff, Obamacare and more.
I know we’re looking at a pretty fair year coming up. Most of our manufacturing clients have been doing well over the past 18 months, and those that are tied to the construction industry (especially housing) have positive signs that that segment is coming back.
I’d like to know what your thoughts are for 2013. Is it going to be a good, poor or flat year for you? Would you mind clicking on this quick survey and giving us your answer?
What surprised me in this world of “Post PC Era” where mobile seems to be taking over the world, that the old standbys of direct mail and emails are still alive and well.
Email is by far the most acceptable due in part to the channel’s familiarity, flexibility and universality with 91% using it on a daily basis. The key to success today is audience segmentation, data-driven insights and relevant content.
Direct mail – in an online world, the fact that 65% of consumers have made purchases as a result of a direct mail piece validates the channel. Interestingly, direct mail is the only unsolicited message that isn’t viewed as inappropriate by consumers.
So from a B-to-B point of view, what are you doing to capitalize on these two channels?
Here are some tips:
Keep your message targeted and to the point.
Give them a solution to a problem and don’t necessarily try to sell them something.
Use a list that is focused. More is not necessarily better.
Make an offer clear.
Give them an easy way to respond.
Those are some suggestions from me. What are you doing to capitalize on these two channels?
