“There are decades where nothing happens, and there are weeks when decades happen.” Vladimir Lenin
What Did Vlad Mean?
My guess: society (or a vertical/channel ecosystem) can remain stable on the surface for a long time. But, forces for change build – like tectonic plates pushing against each other – then boom – a big, fast – earthquake, political order or business model shift – happens.
- Milk-men working suburban neighborhoods in big cities collapsed in numbers from ’64 to ’68. Homemakers got second cars. Bigger grocery stores with parking opened to: kill corner grocers; and sell dairy products for half what the milkman, service-cost-model charged.
- Drug distributors and pharmacists went from a century of field reps calling on stores; to, sole, integrated supply contracts during the ‘80’s. Only about 10% of the original reps transformed into consultants with territories 1200% larger in volume.
- Walmart invented cross-docking warehouses from ’83 to ’88. Sales exploded. Other regional discounters folded. And, factory reps covering Arkansas on straight commission saw commissions explode. In ’91, Walmart fired the reps. Too expensive, with obsolete value. Walmart demanded that suppliers provide a new sales model. Send a supply-chain team to work on continuous-improvements for cross-docking effectiveness. And, teams had to be led by a honcho who both understood “supply-chain” and had the power to say “yes” and “sign checks”. No messengers. Some factories tried to protect and please their reps. They lost to competitors who went with Walmart’s customer-centric-model needs.
In general, every big, distribution-channel, success story has been powered by a new, service-cost model often technology enabled.
What Will Digital-Cloud eCommerce Do to Your Models?
The digital buying trends eating into B2B channels will shake decades-old models at three levels: channel; replenishment process; and selling.
- Factories must develop – end user, digital-content-engagement – strategies. But, the ripple effects of these new e-buying journeys will both dis and re-intermediate traditional distributors. Which factories and distributors will reinvent the best omnichannel experiences?
- Trends for – a) customers consolidating; b) customers consolidating vendors; and c) pushing for integrated, sole supply contracts – will all continue. Distributors will need cost-to-serve analytics at the picking level to co-create – open-book, unbundled-services-for-fees, continuously-improving, win-win – solutions.T
- The field-rep model of calling on buddy buyers in their silos to shoot prices on products will shrink rapidly. Multiple, customer-centric, selling models will replace the decades-old, one-size-fits-all model .
How To Win at Model Innovation?
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