Issue link: https://www.e-digitaleditions.com/i/919877
November/December 2017 45 Please contact Kevin Brink – kbrink@retransfreight.com or 1-800-426-8896 Ext. 390 to develop your customized program RETRANS FREIGHT HAS MORE OF AN IMPACT ON YOUR BUSINESS THAN ANY COMPETITIVE SOLUTION Committed Pricing without a contract to sign Transparency through a consultative approach Faster implementation Eliminate hassles to improve productivity Control freight costs Audit and freight bill administration Specialized services Multi-department efficiencies Scalable, Efficient, Integrated EDI and XML interface E-commerce integrations Vendor routing controls Customized reporting -Many distributors are unable or unwilling to change their business model to remain successful online. Distribution was formed in an age when product features and benefits, availability, and price were relayed by sales assistance. Today, these information needs are a few simple mouse-clicks away. Hence, sellers and brick and mortar locations, who can cost over 40 percent of operating expenses, are increasingly found redundant as online ordering mitigates their value." This will reduce operating expenses and some of the cost savings will be in the form of a reduced price to the end user. A good example of these dynamics in action are at Grainger. The Maintenance Repair Operations (MRO) goods distributor has aggressively invested in new "segment platforms" such as Zoro Tool (www.zoro.com) which has a reduced price and few sellers. (Basically, Grainger has introduced new single- channel models, not affiliated with its core business, that use technology in e-commerce, one central stock location, and few sellers to reduce the price to the customer. They are growing substantially over core Grainger.) -Outside sales is in need of change for the Digital Age, as the model of a geographic territory with commissions on commodity products is proving too expensive. Conversely, omnichannel members called transactional distributors have few sales resources and minimal brick-and-mortar structures. They can sell commodities at 10 percent or more less than full-service distributors. Our financial models show that leveraging the total sales expense by half can translate to a 5 percent reduction in price to the end user. Despite pressure from new entrants and manufacturers that partner with them, distributors are sticking to their old-style sales efforts. -Some distributors are reticent to invest in e-commerce and have trouble making it work. Our 2016 survey of 170 distribution firms in the MRO/institutional/commercial sectors found that 60 percent of distributors sell less than 5 percent of their goods online. And, if distribution firms do invest significant sums in a competitive online experience, many can't drive sales volume online. We call this a Digital Washout and it is increasingly common. There is a small percentage of distribution firms that are growing online and they tend to be the larger firms with deep pockets and outside specialists. Smaller, regional firms are having difficulty succeeding online and maintaining power with their manufacturers. We find that more and more distribution firms are joining cooperatives, hoping to leverage a collective purchase volume for time-period rebates. New Channel Members for the New Age It is a common mantra in the distribution sector that the core values of place, product, credit, sales and warranty support will always be needed in physical product channels. With the growth of the digital supply chain, however, there are new firms with different models of business that can perform these functions less expensively, more quickly, and more conveniently than full-service distributors. These firms