Executives from all areas of the supply chain - manufacturers, distributors and end users - interviewed for the study agreed that the Internet is not a fad. But distributors need to ask themselves how they can use the Internet and other technologies to meet customer needs.
By 2006, distributors that sell to industrial customers expect to sell 37% of their orders online, up from 10% in 2000, much at the expense of phone and fax orders. "Either customers will not be placing all of their orders online, or there will be a split among customers," Fein said. "Traditional methods of ordering will remain despite the Internet and new technologies."
The greatest impact of Internet ordering will be realized with point-and-click items; those items that are purchased frequently and require minimal-to-no customer support.
Manufacturers, distributors and customers all expect the Internet to be the most common way on which customers find new suppliers by 2006, Fein said. As for product information, distributors may become a "less critical" resource in identifying and selecting products as some customers may be willing to surf the Net themselves.
"We don't yet know if customers will be accustomed to viewing and receiving product information online," Fein said. "Despite widely shared expectations that customers will use the Internet as a tool, there is also great uncertainty about how the technology will actually be used by customers.
"It is also not clear whether an Internet site used for product information will be hosted by an existing channel member or by a new entity. The location selected by a customer will determine the role of distributors."
In order to regain the channel initiative in the future, distributors should take these steps:
- Use the Internet as a marketing tool. As customers use the Internet to search for new suppliers, make sure you are using it to reach those customers, Fein said. Identify sites and search engines that customers are using to locate suppliers, as well as which ones your competitors are using.
- Provide online ordering as an additional order option. Understand your customers' ordering preferences and typical purchase occasions. Not all customers want to order online all the time, he said. Distributors must be equally agile with phone, fax, in-person and Internet sales, and build an infrastructure to allow information to move freely between the different sales channels.
- Train your sales force to leverage online product and technical information. A distributor's sales force must be comfortable selling through new technology as well as able to teach customers how to use the company's Web site for product data and marketing promotions.
- Connect customer order system to warehouse management system. Synchronize your order systems with your warehouse management system to cut the time between ordering and fulfillment, reduce mistakes and restrict the need for human order takers, Fein stated.
- Place product information on the Internet. Customers will use the Web to obtain product data, Fein said. Provide general product specs, technical data and standard pricing information. "If you don't, be prepared to direct your customers to a site that does provide this information," he added.
The sixth edition of the DREF "Facing the Forces of Change" series, "Future Scenarios for Wholesale Distribution," can be ordered from the National Association of Wholesale-Distributors at www.nawpubs.org/ftf.html. The expected publication date is October 2001.