In today’s high-tech world, it may seem that every business is jumping on the on-line bandwagon. Business owners may worry that if they don’t launch websites, their businesses won’t survive the electronic age. However, distributors are discovering that it is an endeavor that takes more time, effort, planning and resources than they imagined.

“When companies look into adopting e-business strategies, they often underestimate the level of executive commitment required,” Chris Cantwell, e-business manager for HellermannTyton Corp., a Milwaukee-based manufacturer of cable management products, says. “Executive commitment (including adequate resources, basic technical knowledge, and an appropriate business strategy) is an essential component of successful e-business.”

Therein lies the problem for many distributors. Obstacles, such as a lack of funding, technical knowledge, or long-range business plans, create roadblocks that make e-business success appear out of reach. Moreover, distributors may not anticipate these obstacles before they launch an Internet presence.

Cost-Benefit Analysis
The most frequently mentioned obstacle to adopting an e-business strategy is the cost of creating and maintaining an Internet presence. “Distributors may think that putting up a basic website, maybe consisting of a catalog and price list, would result in many new orders,” Bruce Merrifield, president of Merrifield Consulting Group in Chapel Hill, N.C., says.

“But when looking at a cost-benefit analysis, the cost of putting up and maintaining even a simple website may not result in enough new business to make it worthwhile.”

Because the appearance of the website may be the first impression customers have of the business, it is necessary to spend enough money to make it attractive and user-friendly. The costs of advertising the site, maintaining it, updating it, and employing personnel to handle inquires adds up quickly.

Often, a website does not generate the hoped-for new business: the only customers who take advantage of the new website are current customers.

“It is similar to any new form of distribution,” Jim Shulevitz, general manager of Portland, Ore.-based Indoor Billboard, says.

“If you buy a fancy new supply truck, does that truck create any additional revenue beyond what the older trucks in your fleet were generating? It’s the same on the Internet — sometimes the compensating revenue does not offset the cost of creating and maintaining the site.”

Why doesn’t the website generate the new business it was supposed to? One reason may be that the sterile electronic world of the Internet will never replace personal relationships. “People want to call and talk to someone, especially if they have questions,” Merrifield says.

Customers may also lack the access to the Internet. “You have to look at who your customers are and if they have the capacity to reach your business,” Shulevitz says. “Many of my customers can’t take advantage of our website because they don’t have access to computers, or don’t know how to use the Internet.”

Bert Bellinson, president of Tangent Industries in Atlanta, agrees. “What we find is that our buyers aren’t sitting on the Internet looking for prices like a sophisticated purchasing agent would. They are out there cleaning rooms and offices,” he says. “Most of our new business has come from homeowners who are buying our cleaning supplies in smaller quantities.”

Although the cost of taking small-quantity orders is prohibitive for some distributors, Bellinson has learned never to turn customers away. “A homeowner who saw our website made a small order — maybe one bottle of cleaning solution — but the next year took a job as a purchasing agent for a city, which generated a lot of new orders for us,” he says.

Delivery is critical, too. Customers may fear that ordering over the Internet risks delivery delays. Therefore, businesses must ensure prompt order processing and guaranteed shipping times.

Making E-Business Work
Because of the obstacles mentioned here, many distributors have forsaken e-business strategies, at least in the short-term. However, this doesn’t mean that the Internet cannot be made to work — and work well — for businesses that adopt strategies appropriate to their needs.

“You must sit down and figure out what you’re trying to accomplish using the Internet,” Merrifield says. “Having a strategy is very important before you attempt to create an e-business plan that works for you.”

Because distributor websites provide information about their products and services, they often assume the number of telephone inquires will be reduced. However, this is not usually the case. “Our phone still rings all day long, because the vast majority of our customers want to call us to get their questions answered,” Bright says.

However, Bright believes more telephone calls generated by an Internet presence is a benefit, not a drawback. “That is a sign you are generating traffic on your website,” he says. “In addition, you can up-sell when you have customers on the telephone.”

There are other ways to streamline business. Cantwell cites a basic example: “One customer service representative that has basic computer skills can handle five to seven customer e-mail inquires in the time it takes to answer one phone call,” he explains.

“If you’re getting a lot of phone calls from customers who have looked at your website,” he adds, “a smart company will compile a list of these frequently-asked questions and post them on their site.”

Bright believes that accuracy of Internet-based transactions is also very important. “When you ship orders out, you want them to be accurate. But a lot of times, the dialogue between a customer and salesperson can be confusing, resulting in mistakes,” he says.

“But on the website you can have a picture of the product and a price, and when the customer orders online you have a black-and-white record of the transaction, which eliminates a lot of confusion.”

Evaluate Your Needs
Today, many progressive firms are looking beyond commerce for initiatives that will help them achieve new levels of productivity and efficiency. The use of powerful e-business strategies may help them reach these goals. The key is to be open and accepting to quickly changing technology, but also to be careful and calculating in your decision-making.

Lynne Knobloch is a freelance writer based in Mishawaka, Ind.

Lagasse Pairs With E-Commerce Provider IOS2
Lagasse Bros. Inc., recently announced an alliance with IOS2, an e-commerce enabler for independent resellers of janitorial and paper products. The e-commerce platform, Distributor Station, is available to distributors for a start-up fee ($2,500), a monthly charge ($200) and a 2 percent per-order charge. Once enrolled, distributors will be able to promote and sell 3,000 Lagasse products over the Internet. Distributors will have the ability to accept credit card orders, post daily and weekly specials, allow end users to maintain shopping lists and provide contract pricing specific to each account. Distributors don’t have to purchase any hardware or software. IOS2 also offers website design and hosting services. Visit its website for a demonstration.

Buy, Cell and Trade Online
EarthVision Cellular recently announced they have built what they claim is the most comprehensive site available for cellular phone users. It features a moderated online forum, a consumer newsletter, industry information, safety tips and an auction area for cellular and wireless products. There are also accessories, and the site offers corporate discounts and gift certificates.




POSTED ON: 2/1/2001