THE CHANGING FACE OF DISTRIBUTION
A Changing Environment: The old saying “the only constant is change” and speed of change to us old baby boomers has never been greater than now. Don’t get caught waiting for this trend of rising agility within the marketplace to end, the pace of change will continue to increase.
As an OEM with sales in over fifteen global markets around the world, we at Magswitch know it’s not enough to have great products today. You need to be developing the next generation of products for tomorrow, and for distribution and dealers it’s no different.
The challenge is in how we adopt a route to market that covers multiple global markets with a technology that is disruptive, needs to be sold top down in Robotics and requires demonstrated sales techniques in welding, lifting and fabrication markets.
The rapid changes in manufacturing today will require similar variations in how we sell and deliver products to end users tomorrow. Social media, YouTube, blogs and an overall tech-savvy generation are changing what and how we do business. There is much to be learned from retail consumer delivery models in how industrial business is starting to be done.
At Magswitch we have a customer direct strategy, which is not as it sounds. We are not setting out to bypass distribution. Magswitch direct sets out to create direct communication links to our end users in the industry. The Magswitch model sees distributors partnering with Magswitch to create quality relationships with our major dealers and in turn with their customers, especially large OEMs and global organizations.
Distributors who do not partner with OEMs to drive these strategies in dealer networks will retreat into the domain of logistics and freight, good luck in that commodity market. Distributors who do not develop the capability to effectively sell new technology to their markets will be bypassed by the rising tides of the internet. These skill sets are largely developed through technology, and need not be labor intensive. As foreign supply chains develop expertise in selling factory direct through Amazon and Alibaba, and large Industrial suppliers bypass supply chains and buy direct from the overseas OEMs, dealers in particular will have to reinvent their market strategies and become experts in new technology and solutions rather than commodity brokers.
The two fundamental motivators for this change are rapid technology development and the accessibility of information. We used to rely on trade shows and industry magazines. Today its expert newsletters every morning focused on narrow channels curtailed to our direct areas of need that often result in customers being better informed than dealers. They may know pricing, delivery, lead times and specifications before dealer staff are even aware of the products.
What else is influencing the rate of change within the industry? If you don’t understand the psychology of “millennials”, it’s time for a lesson. These are baby boomer kids, quietly sitting in the corner working on their school assignment typing away on the family computer while an instant messenger runs in the background, YouTube videos streaming and music playing into their ear phones. These kids grew up multi-tasking and living their lives vicariously through an internet that delivered new experiences and more information to its users than the methods available to previous generations.
I recently attended a conference for high-tech distributors where it was estimated that 60% of purchasing decision research is being done by millennials. These are the guys and gals who know what they want before turning to traditional supply channels to validate their research. If you get that call, you had better be prepared to drop the pitch strategy and give good technical advice. If you are successful in this, prepare to communicate via email or increasingly by text message. If you did not justify your position in the food chain, they will be adding “buy now” to the google search engine listing for that product you have on your shelf and it will likely be delivered by a catalogue house such as Amazon or Alibaba.
The one saving grace in all of this for the progressive among us will be the ability to deliver the latest technology with an expert message to your customers in a manner that makes you valuable to the customer. If not, then let’s finish with another old saying “like dinosaurs in the tar pit.”
-David Morton, CEO Magswitch Technology Worldwide