Delivering for Best-in-Class Wholesaler-Distributors
November 20, 2017  |  ByMark Dancer, NAW Institute for Distribution Excellence Fellow

I am having many new conversations with distributor leaders now that my new research report, CEO Insights on Innovating the Distributor in the Digital Age, is published. This is always the case. I gather insights from many distributors as I research and write a new report, and then the report creates new discussions—some confirm my findings and others push my understanding deeper or in new directions. All of this is good for my work as a Fellow for the NAW Institute for Distribution Excellence, because a continuing dialogue is essential as progress unfolds and new experiences give way to new questions.

In this post, I will address the first of three essential rules that should help to share your vision, mindset and plans for achieving results from your digital investments:

  1. Technology is not your strategy. Your strategy should guide your digital investments and use of digital tools. As distributor leaders work hard to gain a personal understanding of digital technology, it is easy to lose sight of the fact that without their strategic vision, the use of digital tools will falter.
  2. New results require new behaviors. Digital tools enable new results for your business, and it is the responsibility of leaders to identify what new behaviors are required by your employees, customers and suppliers for successful execution of your strategy.
  3. Innovate to automate. New capabilities and often people are required to take advantage of digital tools and distributor economics require careful management of staffing levels to remain profitable. One solution is to use digital tools to automate jobs and to allow space for new roles and positions.

I will address the second and third essential rules in subsequent blog posts. But to start, it’s important to “get our head straight” about the relationship between digital technology and business strategy.

What Exactly Will Technology Enable in Your Business?

Distributor leaders have definitely woken up to the requirement to have a modern e-commerce platform, and for many, there is a rush to get one up and running. Digital pundits help stoke this fire by pointing out that business customers will want an online buying experience shaped by their personal shopping habits. Moreover, disruptors like Amazon are an ever-present boogeyman, on the verge of breaking through in business-to-business markets and cutting out distributors from the value chain.

I do not argue with either perspective. Customer preferences are evolving and disruptors are disrupting. But, distributor survival will not be assured by reacting to events when they occur. A defense-only strategy is not enough, because digital tools are creating change and with change, comes opportunities. I have found that distributor leaders who are most comfortable with digital tools and market change are making plans to pursue new opportunities.

What I’ve found most important in my research is that “e-commerce is essential, but not everything.” Effective digital visions must reflect your business strategy for driving growth and profits, and I offer two questions that can help you move forward:

  1. How will your e-commerce platform disrupt your salesforce? Sooner or later, gaining advantage with existing customers is about offering an e-commerce shopping experience. However, it’s also about enabling them to monitor and analyze their existing business with your company in real time at any time. The latter goes to customer portals, predictive analytics and new value-added activities by your sales force (to replace the time they spend on face-to-face account reviews, answering questions and solving problems). Your e-commerce platform is more about taking orders. As online business grows, you must redefine and restructure your channels. If you do not have a strategy and only focus on your e-commerce platform, you will miss opportunities, and ultimately, make your business more susceptible to disruption.
  2. How will you differentiate through analytics, not platforms? Most distributors are in the process of implementing three platforms as they implement new solutions for ecommerce, ERP and CRM. In practice, the solutions offered for each of these platforms are being implemented by all distributors with very little differentiation achieved in the platform itself. Moreover, the location of critical data across the three platforms varies according to each distributor’s data policy and, more importantly, every distributor’s unique business strategy. Differentiation is about gathering data and acting on it to deliver a better customer experience, to leverage support from suppliers, and to drive productivity and profits in the distributor’s business. Developing a robust data and analytics team with advanced competencies and following through with sales, marketing, operations and financial teams, all working together, are absolute requirements. Success is not achieved by an e-commerce platform alone.

Please Share Your Ideas and Experiences

I will cover the next two rules in follow-on blog posts, and I would very much like to hear from you. If you’ve purchased my new research report, CEO Insights on Innovating the Distributor in the Digital Age, let’s have a conversation about how it fits with your business and where you are going. Your ideas and insights are essential for shaping my ongoing work as a Fellow with the NAW Institute for Distribution Excellence. To get things started, reach out to me at mark.dancer@channelvation.com.

P.S. Don’t miss this SAP-sponsored webinar on December 7 featuring me, “Digital Technology Is Making a Difference: Are You Still Sitting on the Sidelines?”

 
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Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer founded the Network for Channel Innovation to drive awareness, advocacy and excellence for channel innovation, and to enable an exchange of ideas between channel leaders on business transformation, technology adoption, social impact and community engagement. For more than 30 years, Mark has worked with leading companies to achieve channel excellence across a wide range of industries in developed and emerging markets.
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