Manufacturers that compete with resellers online are missing a huge opportunity.
Manufacturers that compete with resellers online are missing a huge opportunity
Whenever I lecture about Internet marketing and customer service, there's invariably someone in the audience -- hand waving madly -- desperate to ask the disintermediation question. "But, Jim, I'm a reseller," the person moans. "How am I supposed to compete against my own business partners when they start selling direct online?"
My answer: you're not. That is, manufacturers shouldn't be competing against you. On the contrary, manufacturers' Web sites should support resellers. And offering a dealer-locator feature is just the minimum requirement in doing that. Manufacturers who have the will and imagination can use their sites to enrich relationships with dealers -- to the financial advantage of all parties.
Polaroid learned that lesson after an early false start. In 1999, assuming that clients would appreciate the convenience of having an online catalog, the camera-and-imaging-products giant created one for business accounts. That decision made the company's dealers mad.
Polaroid stopped dead in its direct-sales tracks. It reversed course.
The company's new strategy was to make it as easy as possible for customers to locate and buy its products online from existing resellers. Toward that end it created www.polaroidwork.com, one click off the company's Web site. In addition to providing a traditional locator, Polaroidwork.com offers a souped-up version that plants a button on every product page. And that button allows the user to locate dealers that carry particular products, either online or in the neighborhood. Customers can see, click, and buy without wasting one byte of virtual shoe leather.
Such locators, of course, automatically put the sales ball back in the dealer's court. And yes, some Polaroid dealers missed that ball because they lacked E-commerce functions. Even with a supportive manufacturer, the landscape is pretty bleak on the wrong side of the digital divide.
The Mechanics of Partnership
You've probably seen those large white Snap-on trucks roaming your neck of the woods, but chances are overwhelming that you've never bought a wrench from one. That's because Snap-on sells its premium tools and equipment primarily to professional automotive technicians.
Snap-on franchise dealers, who drive their own trucks stocked mainly with Snap-on products, labor to establish rapport with each and every technician to whom they sell. Indeed, Snap-on dealers' prowess in face-to-face customer-relationship management makes competitors' efforts look like a Sun Myung Moon mass wedding. The dealers track their customers' purchases and needs on PCs that Snap-on provides. They know how much technicians can afford to pay for their weekly orders because they act like rolling finance offices. Naturally, business is conducted on a first-name basis.
Understandably, dealers feared for those relationships when, in mid-1998, Snap-on gave serious thought to Internet sales. Dealers, whose contracts restrict them to specific customers, worried about being bypassed. Installing their own E-commerce functions would be too expensive, too difficult.
At dealer conferences, the Snap-on brass assured business partners that it would first do no harm. But dealers still had to trust in the company's goodwill and good sense. Fortunately, Snap-on possessed both, personified in its chief information officer and vice-president, Al Biland. Biland knew that Snap-on had to sell online, but he refused to alienate the company's most important sales channel. His solution: inclusiveness.
Here's how inclusivity works, Snap-on-style. The big-white-truck guys direct their accounts to Snap-on's corporate site, where customers identify both themselves and their regular dealers. Dealers get the credit every time one of their accounts buys something. Customers, meanwhile, get a choice: Snap-on can ship their orders overnight, or dealers can drop the orders off on their weekly visits. Either way it's faster than the old system. Before the Web, if technicians wanted something not in rolling stock, they had to order the item and then wait until the next week's delivery. Now they place their order on the Web, Snap-on rushes it to dealers, and dealers have it in time for their next regular visit.
Drivers, notified of the Web sales electronically, add that information to their own databases so their personal customer profiles don't suffer. In addition, they combine news of a sale with knowledge of their customers and bring along upsell/cross-sell offerings. Sales are up. Snap-on is delighted. So are its dealers.
Take This Storefront, Please
The folks at Hewlett-Packard liked the idea of inclusiveness so much, they took it even further. Last summer I was contacted by Rudy Herrera, who is responsible for marketing programs for the HP DesignJet Sales Center, in San Diego. Rudy asked me to help flesh out a new initiative for the division's resellers that HP hoped would prevent a classic channel-conflict situation.
Rudy explained that lots of HP resellers already had Web sites that delineated their product lines and service options. The challenge facing HP was to beg, coerce, or otherwise cajole those resellers into doing serious E-commerce. Getting resellers to build up the service, supplies, and accessories pieces was particularly important since those value-added components constitute the most profitable part of the business, and one that HP has no desire to conduct itself. (Even when a customer buys direct from HP, the local reseller still handles installation, training, maintenance, and sale of supplies.) And since HP's dealers sell a variety of brands, the company wanted to ensure that customers of those Web sites would find its products the easiest to find and buy.
So HP built a razzle-dazzle, superfunctional E-commerce site called AisleOnline that was crammed with every DesignJet offering imaginable. And it handed the site to its resellers on a silver platter. Dealers whose customers follow a link to AisleOnline and buy products there get credited for the sale.
Then HP did 500 of its most important resellers one better. It gave them customized versions of the HP store so that their customers would never know that that virtual virtuosity was courtesy of someone else. All the reseller does is supply its own logo and plug in its pricing.
For example, customers on the site of Laser-Life Technologies Inc. ( www.laser-life.com), a reseller of HP products and other brands, based in Livermore, Calif., select the HP section if they're looking to buy the company's products. That takes them to AisleOnline, which looks and acts just like the rest of Laser-Life's site; products purchased there arrive with Laser-Life labels. But the transactions take place on HP servers, and orders are shipped by an HP fulfillment contractor. Still, it's a reseller sale.
Oh, and one more thing: it's free. A gift from HP to its partners.
So Here's What You Do
If you're a manufacturer, treat your resellers like royalty. Create private (extranet) pages for your sales partners and stuff them with more information, specifications, hints, tricks, tips, and customer-service features than you offer on your public or customer pages. If your resellers can see what's in stock, check when it ships, track the shipment, and easily correct shipping errors, they are far more likely to recommend your products over those of your competitors. But don't stop there. Make it pie-simple for your sales channel to create advertising from your artwork or to prepare a proposal from your boilerplate, return-on-investment spreadsheets, and product images.
And if you're a reseller, look to the deep pockets for help. One reseller told me that all his Web-site design and development costs had been paid for by several manufacturers' co-op marketing plans. That gentleman asked me not to reveal his name, his product line, or even his industry. But I'll tell you one thing: he's not that guy sitting in my lecture audience terrified about being disintermediated out of business.
Jim Sterne, president of Target Marketing, in Santa Barbara, Calif., is a speaker, a consultant, and the author of Email Marketing, World Wide Web Marketing, and Customer Service on the Internet (John Wiley & Sons).
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