Jon Schreibfeder 2017-10-03 02:00:52
. . . ARE IN YOUR BRICK AND MORTAR STORE! It seems that every industry magazine this year has had a story questioning whether small- to medium-sized wholesalers can survive when forced to compete with Amazon and other “mega distributors.” After all, these goliaths, with all of their technology and automation, seem to have tremendous advantages including: Feature-rich websites Extensive product availability Fast delivery Low prices Sometimes it is hard to realize that these “one stop shops for all of your needs” also face some challenges that prevent them from meeting or exceeding their customers’ needs and expectations. You can continue to be successful by taking advantage of these weaknesses. How? With the tool that probably led to the initial success of your organization: knowledgeable, human interaction. Let’s look at some of the ways you can still win the distribution game. ASK CUSTOMERS TO DESCRIBE THEIR SYMPTOMS The “search” capabilities of most e-commerce sites allow you to search for products by a number of criteria. This works well if a customer knows what he is looking for or has a lot of knowledge about the product. But what if you aren’t an expert (or close to it) concerning the item you are trying to find? There is a good chance you won’t find the best product to meet your needs. Think of your frustration when a website provides “technically accurate” search results that answer your question. How often do your customers experience the same frustration when trying to buy products on the internet? Probably fairly often if they don’t have the time to become as knowledgeable as your sales staff concerning the products you sell. But what about a website’s “chat” feature to provide guidance in product selection. These “help” services are normally staffed with entry level people who can only respond with scripted answers. However, no matter how well developed, their scripts cannot address every situation presented by their customers. Earlier this year I had to buy a new laptop. Just for fun I tried to see how helpful the “chat” personnel on a PC website would be in making my decision. After asking five questions (none of which applied to my unique challenges or situation) the clerk suggested a system. When I told her this system was not going to work for me she responded that this was the suggested system based on my responses to her questions. She seemed frustrated that I didn’t understand the “right” way to buy a laptop. The next day I bought a computer from a local dealer whose salesperson asked me far more questions to ensure she was selling me the “perfect” system to meet my needs. It was a custom solution that met my specific needs. And, I was happy to spend over $500 more for what I thought was the best solution, despite what the chat operator said. When you go to a doctor he or she will listen to you describe your symptoms. This can be compared to a customer entering search criteria. But doctors don’t stop there. Usually they ask more questions, which will vary based on your responses to previous questions. After assessing all of this information, they feel comfortable providing a diagnosis and determining the proper treatment. Your knowledgeable employees should be trained to act like doctors concerning your product offerings. First, listen to a customer’s request and then ask specific questions based on the information they provided. What problems are they trying to solve? How are they going to use an item? In what environment? In what time frame? Answers provided can lead to even more questions as they focus on determining the optimal solution for the customer’s specific situation. No machine can be programmed to thoroughly understand every facet of every possible material acquisition situation. Human expertise is necessary. And when your customer understands your employees are “problem solvers” they will probably call you first the next time they have a need for one of the products you sell. You have the potential to provide a faster and less frustrating purchasing experience. CUSTOMIZE YOUR OFFERINGS TO YOUR LOCAL MARKET How often have you heard someone say, “You can get everything on Amazon!” This is a true statement for customers who want one or two pieces of a product. But we have seen that in industrial distribution, quantities of products requested by customers are often erratic. You might get a request of four pieces of an item and then another request for 400 pieces. In both cases, the customer expects immediate delivery from your stock inventory. How are you in a better position to handle these problems than a big on-line competitor? You can spend time with your customers discussing their upcoming product needs and base your replenishment decisions, in part, on the feedback you receive. One of our distribution clients experienced the following usage history for a product over the previous six months: Their computer system identified the unusual usage and a salesperson was sent to ask the customer why they occasionally needed a large quantity of the product. The customer explained that large quantities of the item were needed for a custom product produced for their best customer. And, that they were given very little advance notice concerning when the custom item would be needed. Our client agreed to keep large quantities of the item on-hand as long as it was purchased at least every six months. Most distributors, both large and small, use data in forecasting future demand of products. But to make sure you consistently have the right quantity, of the right item, in the right location, at the right time, this information must be supplemented with information from your salespeople, your customers and other sources of information in your local market. Mega distributors are usually not equipped to gather and access this information. They have no way of designing stocking policies that meet the needs of a particular customer. You can! Understand that you must be a business partner for your customers, not just another vendor. Being a true partner often includes providing special value-added services including: Special packaging Delivery services beyond just getting the material to the customers’ doors Consignment of inventory at the customer’s site Vendor-managed inventory WHEN NEXT-DAY DELIVERY ISN’T FAST ENOUGH It is not unusual for a mega distributor to offer next-day delivery for most normal orders. In fact, in our city, Amazon offers same-day delivery for many products. But you can offer more! Your “preferred” customers can be given a special emergency after-hours phone number. If they have an emergency in the middle of the night, they can receive the products they need within the hour. I grew up in a family-owned industrial distribution company. About once every six months I would have to fill a customer order at two or three in the morning. The customer was always grateful that we helped to “solve” the crisis; often a flooding warehouse. The result: the customer learned that the best supplier was a true partner and not just the company that currently had the lowest unit cost for each item. GIVE THE CUSTOMER WHAT THEY WANT — NOT WHAT IS BEST ADVERTISED Manufacturers spend a lot of money to have their products featured prominently on Amazon and similar websites. It may be necessary to sort through dozens of pages, to find the actual product that best meets your needs if the vendor did not pay for premium placement. Again, your salespeople, through careful questioning, can bypass unsuitable products and identify the “perfect fit” in the least amount of time. USE TECHNOLOGY TO FREE UP TIME TO WORK WITH YOUR CUSTOMERS Business history is filled with stories of new competitors threatening to bankrupt existing suppliers. As department stores grew in the 1880s and 1890s, it was commonly believed that small specialized merchants couldn’t survive. But many thrived. When the A&P Food Markets opened throughout the United States in the early 1900s, little hope was given to small grocers to endure in a much more competitive market. But numerous grocers increased sales and profits. How did these “Davids” compete with the “Goliaths”? They realized and continually developed their core competencies. They identified the weaknesses of their big competitors and exploited them. Remember: the smaller your organization, the faster you can react, change and improve! Amazon and other mega distributors are here to stay. It would be challenging if not impossible to win a price war with them. But by being a business partner, you can become the lowest “total cost” provider for your customers. But being a business partner takes time and effort. Your best employees cannot waste their valuable time on paperwork and other tasks that can be automated. Utilize technology to free up their time for more important tasks. That is to interact with your customers to ensure that you are providing the best possible service to meet their unique needs. STAFDA’s inventory consultant, Jon Schreibfeder, is president of Effective Inventory Management Inc. His specialized, five employee, consulting/analysis firm has successfully competed with the “big four” (previously “big six”) accounting firms and world-wide consulting companies for over 21 years. Jon can be reached at jons@Effective-Inventory.com or 972-304-3325. Learn more at www.effectiveinventory.com.
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