In the October issue of tED magazine, we gave you the results of our current Baird Research/tED magazine outlook for the industry. You can see the entire story beginning on page 22, but two answers in the survey definitely stood out.
We asked manufacturers and distributors the following question: “Are you considering participating as a seller on the Amazon Business B2B marketplace?” Just 5% of the distributors who answered the survey say they will definitely participate, and another 4% say they are leaning toward participating. 48% say they have not even considered participating and another 33% say they definitely will not participate.
Some of the quotes from the respondents tell the whole story. They include:
- “What happens when Amazon has all of our customer information? Don’t trust them.”
- “Amazon will directly compete with us in the future. Why would any distributor support them getting started.”
- “At the present time we do not wish to participate in supporting a competitive channel. We prefer to develop our own on line presence.”
- “We are developing our own B2B and B2C web based marketplace.”
- “Amazon Business is viewed as a competitor, not an additional channel to market. We have no intention of being a seller with this site.”
While it is interesting to see distributors are paying attention to e-commerce avenues, and are fully aware of the wide variety of on-line competition that is threatening our traditional supply chain, the answers for the next question raises some concern. We asked, “In the next five years, do you believe there will be a significant increase in manufacturers using e-commerce to sell directly to end users?” We phrased it that way because we wanted our respondents to answer either “yes” or “no”.
69% of manufacturers who responded said yes, they believe they will be selling a significant amount of their products directly to end users in 5 years. But equally alarming, 60% of distributors believe manufacturers will be skipping their services to sell directly to end-users. This news comes just weeks after IDEA announced that it has more than one million SKUs in its data warehouse for distributors to use in their e-commerce efforts.
“Distributors must understand that if they don’t break the sameness trap, if they do not develop new value propositions that add new significant value to the end user, the availability of this new digital information will allow for new partners and new competition to emerge,” Dirk Beveridge, Founder of UnleashWD, told me after he learned of the tED magazine research results. “Your study clearly shows that 69% of manufacturers see the possibility of more direct selling to the end user through e-commerce in the next five years.”
Beveridge adds that online content will only increase in strength and relevance over the next 5 years, so it is essential that our supply chain begins work now to keep their customers in the future. “I’m optimistic, that distributors and manufacturers can raise the level of communication, planning, strategizing, and ultimately trust to continue to work as true partners in the future,” Beveridge added. “Our NAED sponsored research will be providing very important insights in the next few months. In the end, this milestone of 1 million SKUs will accelerate the change in how we interface with the customer. The traditional methods must be adapted – transformed sooner rather than later.”
The fact is, while we like to think of the second “B” in B2B transactions as a “Business”, it’s still “people” who are making buying decisions. And people want to buy products from you in the ways that they feel most comfortable. Linda Taddonio with Insight Software explains that means you will have to build up your e-commerce offerings to keep your customers. “How do my customers want to interact with me? We think the sales rep is doing all of the work, so there is no need for e-commerce in order placing,” Taddonio says. “But they don’t have to be in conflict with each other. Right now, our customers might not be asking for this. But I don’t recall asking Apple for an iPhone. I don’t recall my bank asking if I wanted online banking. But, I can’t live without those services and I am glad they are available to me.”
The results of the survey on the future of e-commerce have Beveridge believing it will not be going away any time soon. “This is a complex issue that is worthy of on-going, serious conversations.”
*Make sure you check out the rest of the findings of our quarterly Baird Research/tED magazine study beginning on page 22 of the October issue of tED magazine.
Tagged with B2B, Baird, eCommerce, research, tED