But Joel Becker, Torrington Supply's chief executive officer, addresses the accusations of manufacturers with sound reasoning. He has yet to see the Internet and other e-commerce initiatives add bottom-line income to his company. He talks candidly with Supply House Times about his views on doing business in cyberspace.
Supply House Times: What do you believe is the biggest drawback to placing orders online?
Joel Becker: Our Web site (www.torringtonsupply.com) is a lot like other distributor sites. We have promoted the site heavily with our customers because we see the value of shifting order entry, price and availability inquiries to our customers. But even after numerous training sessions, it is still used by only a couple of dozen customers routinely.
The most common complaint is that the process takes too much time for routine ordering. Contractors are not shopping. Time is money for them and to think that they're going to spend 20 minutes placing an order on the Web may be unrealistic. It's faster and more expedient for the customer to just call on the phone.
We have not spent a lot of money on Web site development because we don't see it as an additional source of significant revenue at this time.
Supply House Times: How does the Internet influence pricing?
Becker: Anyone who's shopping on the Internet is doing so to maximize convenience and price. We do offer a Web order discount, but it is small and only meaningful if the customer shifts a large percentage of his business to direct Web ordering.
One of the odd twists that might come out of this is that companies doing business on the Web are going to have to clean up their pricing policies. It will force the contractor to choose between convenience and price, and that should be interesting.
If our industry is trying to get out of the bidding wars - boy, that's going against type. That's going to be hard to do, even though e-commerce somehow mitigates that situation.
Supply House Times: What are your views on EDI and the work that the American Supply Association is doing to encourage its members to use e-commerce?
Becker: I talk to our vendors and customers about EDI relationships all the time. We have a limited number of such relationships. However, we have encountered three rather significant hurdles in implementing EDI. First, when sending an EDI transaction set, it has to be 100% correct or it doesn't work. Second, the beneficiary is the recipient, so the incentive to promote an outbound program is minimal. And third, very few of our suppliers or customers currently have the capability to electronically partner with us.
If our suppliers are willing to share cost savings, I think we'll see more participants from the wholesaler community.
As for ASA's initiative, I am in awe of the foresight of ASA's leadership to commit the resources to get this technology effort off the ground. It is the best way with the most tangible benefits to our industry that we can spend our association dues. Visionaries like Kevin Price (director of ASA's Center for Advancing Technology) and the other volunteers understand what's needed is one unified industry database. I believe very strongly in this.
I may be shortsighted on this issue, but until we as an industry tackle the common database barrier, I think this type of e-commerce will be expensive to implement with a negative return for some time to come.
One place where I see the Internet as a great tool for distributors today is in communicating with customers and suppliers. The opportunities are almost limitless and can be of enormous value for everyone now.