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Impact of Internet on distribution

Impact of Internet on distribution

There can be no doubt the Internet has significantly altered the way distributors do business and view their future opportunities. Nonetheless, many channel players would argue that the full capabilities of the Internet are not being utilised and that most distributors are limiting its use to advertising and product information, rather than offering a full complement of B2B capabilities.

While most distributors' sites provide information on their products and prices, the industry has been slow to provide online ordering and other B2B facilities. Renato Catalan, sales and marketing manager at Sydney-based distributor Achieva, accounts the slow e-commerce uptake to continued security concerns.

According to Catalan, Achieva is trying to get its customers accustomed to navigating its Web site by referring them to the Internet for product information and pricing. He is hoping this will help customers become comfortable with conducting business online before Achieva launches e-commerce functionality six months from now.

Distribution giant Tech Pacific, which recently initiated its B2B online presence, believes the true value of the Internet lies in its ability to provide improvements to customer service. Tech Pacific's ERP and e-commerce director, Anne Mossman, was not lured into speeding through the implementation process of full Internet offerings and understands that initiating e-commerce functionality is time-consuming, complex and expensive.

"The costly investment and arduous implementation involved in automating trading transactions literally turns your business upside down and it requires enormous change," says Mossman. Nonetheless she is enthusiastic about the opportunities for distributors.

Achieva's Catalan shares Mossman's enthusiasm and believes the Internet is critical for distributors if they want to survive as it has the ability to quickly reach the channel. However Catalan believes the lack of industry standardisation in online business models is what has deterred many distributors from making the move to B2B transactions.

"There is no perfect model for e-commerce and we don't know who is going to take what model," explains Catalan. "It is very important to know that as we have to integrate with our vendors and resellers, and resellers want to integrate with their customers. At the moment each industry is thinking for themselves."

And just when you think you have this B2B thing beat, there is the problem of vendors taking up e-commerce transactions, allowing them to sell direct to customers through their own Web sites, thereby cutting out the distributor.

But so far it hasn't really affected the distribution channel. Achieva says it hasn't registered a decrease in sales even though some of its vendor partners are selling online. The feeling is mutual for ACA Pacific. Deborah Papworth, ACA Pacific's marketing manager, says vendors selling direct hasn't affected them because most storage solutions are too technical to sell online.

"The people who have gone direct are the tier-one vendors such as HP and Dell. They offer PCs and servers, but you can't buy SAN over the Internet," says Papworth. "The Internet is good for Web-based distributors who work on volume but, as a specialist distributor, we value the personalised service of our sales team over online purchasing."

Papworth believes one of the significant changes to business made by the Internet is the increased competition between businesses. Online pricing makes it easy keep up with exactly what competitors are offering and for how much.

You can be forgiven for thinking that shifting to include e-commerce capabilities sounds like too much trouble but, with most distributors either planning its implementation or embarking on the early stages of e-commerce strategies, it won't be long before an online presence is mandatory.


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