Issue link: https://www.e-digitaleditions.com/i/919877
48 FEDA News & Views offer different value-chain solutions and often have different fee structures. Some may take title to inventory while others simply connect buyer and seller. Marketplaces are especially popular in communities where there are nonstandard material lists or numerous applications requiring specialized inventory. New models using online technology are expected to grow at the expense of full-service distribution. Forrester forecasts B2B online growth at 7 percent annually, whereas traditional distribution grows at 2 percent to 2.5 percent. Currently, Benfield Consulting's estimate is that B2B e-commerce across distribution accounts for 15 percent of total sales volume but this varies widely depending on the vertical sector. New models, in almost all cases, are growing at the expense of traditional full-service distribution. What's a Distributor To Do? Distributors are not without options, however, and we list them in the final paragraph. First, the distribution firm should make it a goal to have a competitive online platform of software. This consists of the transaction engine, PIM, punch- out, faceted search, and quotation module integrated into the ERP system. Distributors with these elements outsell firms without them by a factor of three times. Secondly, distributors should look at their brick-and-mortar locations and consolidate. Numerous branches aren't needed with today's advanced logistic options and they are costly in upkeep and excessive inventory. Third, and most contentious, distributor execs should examine ways to trim their sales efforts. This is simply not an exercise of reducing the sales complement, but redesigning the sales effort to provide needed value while moving away from geographic sellers compensated on commodities. A small but growing group of wholesalers are finding new sales roles that deliver value to the customer. The pace of digitalization is expected to increase and distributors should be prepared for new online competitors and manufacturers that sign on with them. The old brick- and-mortar model is becoming pressured by new firms with technology advantages of cost reduction and ease of purchasing. Those who are slow to invest in technology and corporate change run the risk of harming partnerships and losing sales. ■ About the Author Scott Benfield is a Chicago-based consultant for B2B firms in digital marketing. His work and research has been cited in Forbes and the Financial Times. He can be reached at Scott@ BenfieldConsulting.com or (630) 428-9311. OPERATIONS