Modernizing Channel Relationships: There’s an App for That

While some aspects of the supply chain have adapted to digital communication tools, the distributor-sales representative-manufacturer business model is still largely analog.
In this week’s MDM Podcast, Walter SVP Chester Collier shares four decades of international sales management and business development experience across industrial distribution channels. We discuss the current state of channel dynamics and how sales management has — and has not — evolved in the face of rapid change the past few years.

An increasing number of digital platforms are emerging across distribution verticals, each with a unique value proposition. One example is a start-up called Factrees, which last month emerged from stealth mode with an AI-powered platform intended to digitally transform and modernize how business partners connect on the selling side in the construction products channel. In our podcast this week, I talk with Keith Williams, founder of Factrees, on the opportunity he sees to streamline complex sales channels and help improve their efficiency.

“Think of it as LinkedIn meets a dating app,” says Williams, a longtime veteran of the distribution sector, with stints at HD Supply, PETCO and Sonepar USA. “Our platform is designed to improve visibility and streamline how people find sourcing partners. This is all done by word-of-mouth today.”

Factrees is targeting construction and building material product sectors, but expects to broaden its sector coverage once it achieves airspeed. These sectors have a combination of attributes where Williams sees AI and algorithms helping to reduce friction and complexity: a fragmented manufacturer base with a large number of categories, coupled with a geographically fragmented network of sales representative firms and distributors that are highly territorial. That’s a heck of a matrix to navigate and monetize. Williams shares some detail on how he sees technology solving that puzzle.

What Factrees is trying to provide, he says, is better transparency and visibility into efficient sourcing, not only for the key players across the supply chain but also the service providers plugged into each part of the chain. “I like to see Factrees as the mall,” Williams says. “My job is to bring traffic into that mall. What that customer does, once they get in there, what store they go in, what they buy, that’s really up to them, and they are going to dictate how they want to use a platform and where they find maximum value.”

Ecommerce, Marketplaces and Digital Transformation

Also in this podcast, Williams and I talk about the evolution of digital across distribution channels and transitioning from more traditional outside and branch-based sales models. His role in digital transformation for a few leading distributors gives him a unique historical perspective on the headwinds of championing e-commerce. “One of the challenges we faced is when you have a business model that is conducive to one way of doing business and you’re trying to implement a new way like e-commerce,” Williams says. “That’s where the real pain comes in. In my experience, it’s not a technology limitation or an expertise limitation. It’s a cultural limitation.”

We also touch on the B2C to B2B migration of marketplace adoption. “If I was going to go start a new business that goes to raise money right now, which model would you go with?,” Williams asks. “Would you go with a marketplace or a traditional distribution model? It’s not unlike the ‘90s. In the late ‘90s, where was the investment going? It was flooding out of brick-and-mortar into web. This is very similar to what was happening there. And with respect to how it affects distributors and digital transformation, I really think you have to take a hard look, as a distributor, where you have a competitive advantage in how you provide irreplaceable value.”

While Amazon Business and other marketplaces have sucked the air out of the room around disrupting and digitizing distribution channels (rightfully so), niche-focused platforms are emerging to fill some vacuums. Just as each sector of distribution has unique customer attributes that distributors have developed value-added services for, these next-gen apps and platforms are developing more targeted and unique value propositions. With this next ecosystem of digital transformation playing out, some traditional channel participants will leverage them, while others will be disrupted. Welcome to the 2022 edition of digital transformation.

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