Wednesday, June 10, 2015

Slightly OT How to get from old world to new world (parts and vendors)

Twenty years ago everything slightly technical came through a distributor that provided technical support.  Today the internet is a source of that support, so what function does the distributor provide?

I was looking to buy some tooling for my lathe. (Names not included to protect the innocent)
I found the exact thing I wanted where a vendor had a nice description of how to use the tool and had captured the exact thing I was looking for...

I emailed the vendor, they entered my information in their system and one of their technical people provided me with a quote and some nice technical information on the proper usage of the part....

So far we are happy everything is golden....

The problem is there was no way to order the part.  On their website their was a list of 29 distributors for their stuff in CA.  I called one at 2:15 pm they said the factory is closed I can't get you delivery info.... I'll call you back on Wedensday.... After some more searching I found no on-line vendor for this "Exactly what I wanted part"  So I went to MSC direct and figured out what I needed to order to do the job, probably not as well as the part I wanted, but I placed the order  at 4:59 pm.

Today I received a call back from the distributor at 1:15 pm saying the part was not in stock.
I got the parts from MSC delivered to my house (UPS ground from NV) at 1:57pm.

So here is a vendor with good marketing an a quality product that failed to make the sale.
Why?  They aren't stupid they know this process is killing them why no online ordering or stock check?

They are a successful company that was actually profitable and doing well before the internet.  100% of their revenue comes via distribution and if they open an online store they kill all their distributors and loose most of their existing business flow.   If they offer their product line through some existing on-line distributor they upset all of their existing customers. Its sad, but they are trapped.

In my day to day life I see a lot of these....

Its one of the things that's changing in the world,  it takes a lot less people to run a few centralized where houses set up to ship quickly than it does to have a real human at a distributor in every city.

Just this past weekend our dryer died, in years past this would have involved a drive down to the appliance parts store in Chula Vista on Monday morning..... This time I ordered a new dryer belt from amazon Saturday at 9PM and had it at 9:30am Monday morning.

The internet and automation is going to eat a lot more jobs before its done. Its not just automation replacing specific workers, its a new structure of doing business that is decimating a whole layer in the supply chain that used to employ millions of people.  May you live in interesting times...


QuantumG said...

There's whole industries that think they're "with it" because they replaced their fax machine with email.

Ben Brockert said...

Amazon has decentralized warehouses so that they can do Prime without shipping everything air. They have around a hundred of them, which puts 31% of the US population within 20 miles of a warehouse. Smart companies are sending their stuff to Amazon warehouses so that it shows up as "fulfilled by Amazon" and they can get rid of a lot of their sales and shipping overhead.

A middle ground approach to getting rid of distributors would be for them to sell their own stuff on their website at a small premium. Then if you want to just order it you can, and existing customers effectively get a discount by continuing with their suppliers. Once the distributors become a smaller part of your sales then get rid of them then.

Some companies are ditching distributors, though. About a year ago I bought some high end RTD amps from Dataforth through their Colorado distributor. Earlier this year I got this email:

"Dataforth Corporation – USA Manufacturer of industrial signal conditioners and data acquisition equipment is now marketing and selling its hardware and software products direct.

"Effective immediately Dataforth will sell its products factory direct from Tucson, AZ into your area."

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PK said...

We make industrial electronics which we are bringing to market around the world. This issue of channel vs direct selling is a really tough one. Distributors need to make around 100% markup to get interested in a new product, which prices you out of the market.. Oh, and we still do nearly all the support.....But the distributors (claim to) have and existing customer base so sales ramp up a little quicker..

We're pretty much over the channel model and are very close to adding a "buy it now button" to our product pages....

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Sometimes it gets really hard to let go of the old ways of life that we are used to, but then we do have to change with the way technology have changed the whole world in general. I love the way you explain your phrase 'How to get from old world to new world (parts and vendors)'. Good post.
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