The 2020 Mid-Year Economic Update_long

Disintermediate This! Omnichannel That!

Location still matters to buyers.
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There’s an opinion piece distributors should find interesting in this week’s The Economist (Schumpeter column: Pointers to the Future). This typically contrarian column talks about how predictions on technology and, in particular, the Internet have a bad accuracy rate.

While many predictions about the Internet have already been proven wrong, this column focuses mostly on two more recent predictions: “that it would make location irrelevant and eliminate middlemen.”

This is certainly music to the ears, but does it ring true? I think so. Unlike the hype around Amazon’s drone announcement so many months ago, their same-day delivery service efforts and opening of a physical store in New York are more meaningful moves. Location and local, physical presence still have value. That value has changed, but it is still an important part of the vast majority of B2B customer relationships.

Newsflash: People still want to deal with real people they know and trust.

But they also want to shop/source differently to review best selection and price – a fact noted in the Schumpeter column. Retailers are trying harder to tap the best of both worlds: the convenience of shopping and comparing online and the familiarity of picking up the product at a branch. The terms for that are click-and-collect or BOPS (buy online, pick-up in store), just in case you needed more jargon and four-letter acronyms. About one-third of orders Grainger gets by mobile device are then picked up at a local branch.

The final, and perhaps most important, piece for distributors is that researchers are starting to make a case that middlemen are in fact becoming more important than ever. Reviews are everywhere, but how can you tell if they're real? As the column points out, some people are making good money writing false reviews. Buyers need a trusted guide more than ever before.

And the ease that buying online was supposed to provide? Think about the time and effort to make flight arrangements today, versus the good old days when I could just call Marty and five minutes later he had booked the lowest-cost and best itinerary. (Ask your teenager what a travel agent is.)

Too many pundits want to make this an either-or proposition. Yes, the Internet is increasingly transforming how business purchases are made, but that doesn’t seem to be killing traditional business in the way many people were predicting. Omni-channel, multichannel, call it what you like. The real issue is how to make your company easy to do business with in the many different ways that customers now want to. (Read more about how distributors are responding to the threat of disintermediation in Differentiate to Combat Disintermediation.)

A local physical presence, a voice on the telephone, a print catalog – these all increase credibility, and credibility in turn drives Web traffic and the odds that a customer will choose you to search first. That’s the real battle – getting to the front of the line in a cluttered environment.

Distributors that make it easy to shop, learn, evaluate and buy online and in person, and make the experience seamless and efficient, will continue to deliver value to their customers and stay at the front of the line.

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