Amazon Business slower-moving , non-commodity products , impacting retailers and distributors that specialize in non-commodities and squeezing those that sell a broad line of both commodities and non-commodities .
Many traditional retailers and distributors are finding it almost impossible to profitably compete with the alternate channels ’ low prices and logistics capabilities , and are wondering what to do . This article contains some ideas for investigating different e-commerce strategies , and some for thriving regardless of e-commerce .
But whatever strategy is pursued , a retailer and distributor needs real-time Enterprise Resource Planning ( ERP ) tracking of the quantity of each item in each storage location , including on receiving docks , and on the floor and in any yard . The ERP system must also track the quantity available to sell , not just on hand , and a company must have enough stock on hand to avoid shortships to both traditional and e-commerce customers . Also required is a very low rate of mistakes in the warehouse and by any delivery drivers .
Own E-commerce Capability
Retailers and distributors worried about the impact of AB and other alternate channels , as well as competitors who have their own e-commerce sites , and who do not have a true e-commerce site , should investigate whether to establish their own e-commerce capability . Start with an estimate of product and customer growth / change ; then use that estimate to determine if e-commerce software or a marketplace would accommodate the future business “ mix .” If so , the next step is to determine the source and cost of data and pictures that would appear on a site . Another cost to estimate is for marketing to promote e-commerce , and a cost to obtain from providers of commerce software and marketplaces is their charges . “ Guesstimating ” is the word that describes estimating the increase in sales from using e-commerce .
But the decision is not all about money , so it ’ s important to contact a few users of the software and services about their experiences , then create a list of non-financial factors ( e . g ., the time to implement ). Finally , calculate life-cycle savings less costs , then use dollar and non-dollar metrics to determine whether to obtain e-commerce software or a service , if either .
Independent E-commerce Site
Retailers and distributors wondering whether to sell on a marketplace ( e . g ., AB ) should investigate each one by first going through most of the steps mentioned , above , skipping ones that do not apply ( such as the cost of owning software ). Then study the data needed for being approved for selling , rules about types of products / services that can be sold , rules about rating seller performance and customer service , and rules about buyer-customer-eligibility . Also study a marketplace ’ s functions and features . Next , guesstimate the expected extra sales from using a marketplace . Determine a marketplace ’ s fee and charges structure , to estimate annual sales charges , and determine how a seller gets paid . If a site sells ads that would be bought , estimate their costs .
As with the decision about an owned e-commerce capability , this decision is not all about money-contact a few users of the marketplaces about their experiences . And revise the list of non-financial factors previously created . Finally , calculate life-cycle savings less costs , and use dollar and non-dollar metrics to determine whether to use a particular marketplace .
Ideas For Thriving Regardless of E-Commerce
There are numerous ideas for growing a business , and they can be grouped into the following :
• “ Helping-hand ” free services to customers ( e . g ., training on the use of technical products )
• Chargeable customer services ( e . g ., Provider Managed Inventory – where the retailer or distributor provides product without the customer ordering any )
• Value-added services , for a fee ( e . g ., custom labeling with school name and logo )
• New lines , related and unrelated to current lines ( e . g ., very hi-tech products )
• Aggressive marketing , not just selling-budget for it
• Customer loyalty programs ( e . g ., extra materials to customers whose sales increase at least Y % and $ X ).
Already Have An E-commerce Site .
Retailers and distributors that have a true , integrated e-commerce capability , but are not getting as much revenue as expected , and / or would like to develop new revenue streams can use the steps above to determine whether to use a marketplace , and determine actions to take to obtain new business regardless of alternate channels of distribution-actions to thrive .
Although the threats from e-commerce will continue growing , there are e-commerce strategies that traditional retailers and distributors can explore , and should do so as soon as possible . n
DICK FRIEDMAN , a Certified Management Consultant , has spent 40 years helping retailers and distributors develop strategic plans . Dick is the author of The Distributors Guide To Surviving Amazon Business While Thriving , is a detailed description of the actual steps he uses to determine whether a distributor should establish an e-commerce capability and / or sell on independent e-commerce web sites . It contains many detailed ideas he uses to help clients thrive , regardless of e-commerce . For a FREE copy of the Guide , contact Dick via www . GenBusCon . com , or call 847.256.1410 . essentials | www . edmarket . org 17