Industrial distributors: can they survive in the new economy? (original) (raw)
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Industrial Marketing Management, 2003
As e-commerce evolves and gains power in the business-to-business (B2B) marketplace, what lies ahead for the industrial distributor? The fundamental issue from the distributor's point of view is how to compete more effectively and profitably, given the changing business environment of the new economy. This paper reviews the literature on the distributor's role and relationships and introduces a conceptual model of distributor viability. The model identifies sources of value that distributors offer to manufacturers and customers, including customer relationship management (CRM), production and operations management (POM), and knowledge management (KM). The paper explores the managerial implications of distributor relationships and sources of value. This provides the foundation for better understanding of the viability of industrial distributors in the new economy. D
Viability of e-commerce as an alternative distribution channel
Logistics Information Management, 2003
This paper proposes a framework for evaluating the impact of e-commerce on the roles of distributors in the semiconductor industry for four different types of products, namely differentiated products, architectural products, technological products, and complex products. Questionnaire and the purposive sampling method were used to collect data from respondents in the distribution industry. The results of the study show that the salience of the roles is increasing. In addition, there is strong likelihood of e-commerce replacing the traditional distributors, more so for less standardized products such as complex, technological, and architectural products.
Overcoming basic problems between manufacturers and distributors
Industrial Marketing Management, 1991
Manufacturers selling to industrial and commercial markets rely heavily on distributors for many diverse marketing functions and marketing support functions. These relationships evolve over time to cover many different complex situations and issues. This article examines the critical factors that dtfferentiate the highly successful suppliers that grab the largest share of an industrial distributor's business and summarizes the route to success.
Understanding industrial distributors' expectations of benefits from relationships with suppliers
Journal of Business & Industrial Marketing, 2004
Due to the increased domination of industrial sales channels by distributors, suppliers must develop strong relationships with industrial distributors in order to succeed in new markets. Initiating partnering relationships with distributors in new markets, however, entails significant risks and commitments with the prospect of substantial long-term rewards. To help suppliers assess and select distributor partners, this study focuses on the starting-point of the relationship by exploring industrial distributors' expectations of benefits. A nationwide survey of US industrial distributors showed that distributors expect financial and competitive differentiation benefits with greater differentiation benefits inferred to lead to fewer financial benefits. Several observable distributor characteristics can be used by suppliers to conduct preliminary assessments of distributor expectations and thereby prepare for a healthy future relationship.
The shift of profit margins from products to services, has transformed traditional production equipment supplier industries to providers of Industrial Product-Service Systems (IPSS). IPSS is a new business model for consistent delivery of industrial products such as production equipment and manufacturing services (Manufacturing as a Service). However, procurement of IPSS between industrial companies (i.e. Businessto-Business-B2B) is more complicated compared to the case of products offered to consumers (i.e. Business-to-Consumer-B2C). The complexity in interaction between the involved B2B stakeholders, the lack of trust and high costs especially for Small Medium Enterprises have hampered the establishment of standardized e-marketplaces in a similar manner as in the business to consumer world. This research work presents an overview on the requirements to support supply-chain processes on a digital B2B platform as well as a discussion of the objectives and the benefits of this multi-sided platform.
Supply Chain Forum: An International Journal
Business-to-business electronic marketplaces (EMs) were hyped as the future of efficient supply chains and as essential to the growth of e-commerce, but in spite of this promise, many EMs failed in the first few years after 2000. Although numerous studies have involved EMs, little research has focused on the degree to which an EM’s automated supply-chain strategy contributed to its survival or failure. Accordingly, this study examines 400 EMs through an extensive survey of the strategic supply-chain capabilities in conjunction with McKinsey & Company and CAPS Research. These results are interpreted using existing strategy literature. The following factors were found to be positively related to EM survival: capturing detailed spend data, providing sourcing and process change recommendations, allowing international contracts, offering the ability to track supplier product availability, and having more than 100 employees. In contrast, the following factors led to EM failure: providing warranties, employing low to medium transaction functionality, integrating with a buyer’s accounting system, allowing buyers to “punch through” to supplier Web sites, permitting the online creation of requisition and purchase orders, transacting a daily volume less than $1,000, and having 25–75 employees. These results highlight the need for EMs to create network effects of economies of scale and scope for buyers, focus on core competencies, and create buyer lock-in through high switching costs. Existing EMs should focus their strategy on developing the factors found to lead to EM survival and eliminating the factors leading to failure.
The Impact of Internet Exchanges on Business-to-Business Distribution
Journal of the Academy of Marketing Science, 2002
The authors review an incumbent business-to-business distributor of electronic components faced with the entry of more than 50 lnternet-based competitors and offer an explanation for why the distributor prevailed. Underlying the explanation is an assertion that the appropriate unit of analysis is the buyer-distributor-seller triad, not the buyer-seller dyad. In the case examined, the channel activities were interrelated such that when each party calculated the costs and benefits of the activities that occurred within this three-way relationship, they outweighed the net gains from disintermediation or Internet intermediation. Particular conditions favoring the status quo included existing activities for sharing customer identification information between the distributor and the seller, a high proportion of negotiated distributor-customer contracts, and new entrants'reliance on open technologies. While no claims are made about the generalizability of this explanation beyond the case studied, the authors believe their assertion and hypotheses may have broader applicability. In the late 1990s, it was generally expected that the shock of the rapid commercialization of the Internet would be felt particularly heavily by incumbent business-to-business distributors (Kaplan and Sawhney 2000; Lief 1999). Buyers, particularly of commodity-like products, would order directly from sellers' online catalogs or from new Internet exchanges at much lower transaction costs than incumbent distributors could match. On this expectation, many entrepreneurs rapidly deployed Internet-based
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The question whether to buy directly from manufacturers or indirectly from distributors is an important factor in shaping the structure of the supply chain on many markets. Yet little literature can be found with respect to this topic. In this paper we try to close this gap. We investigate which factors will influence the outcome of the choice process, both on the basis of a literature review and on focus interviews with buyers and users in six industrial companies.
Buyer-Supplier Relationship and E-Commerce-An overview
International Journal of Computer and Communication Technology, 2017
Information exchange between the buyer and supplier is an important aspect of supply chain management. Business to Business e-commerce helps firms to share information, maintain relationships, and conduct transactions more efficiently. The choice of e-commerce transactions will influence, and as well as affect, the relationships between exchange parties. In this paper, we examine a collection of diverse studies on EDI and e-marketplace from marketing and information systems literatures. Findings for managers considering choices on e-commerce transaction mechanisms will provide a more consistent understanding of buyersupplier relationships in the e-commerce context.