183. A Millennial Fleeces Both Contractor & Distributor: Lessons?

What Happened?

In a virtual meeting, a B2B millennial (call him Joe) took over the screen and masterfully showed me (with pride) how he avoided both a repair contractor’s fee and a distributor’s high price.

Joe’s refrigerator was ailing. He googled a site that helped him identify the required repair parts. Then, he found an appliance-parts distributor’s site with an excellent, how-to-fix-it video. But, the distributor’s price was about $60, plus shipping and a delivery date of 5-7 days.

Joe reflexively checked at Amazon to find: $30; no shipping; and next day delivery. Amazon won. And, the fridge got fixed faster for less.

Growth Trends:

  1. Dis-Intermediations
  2. Stripping-of-service-value
  3. “Web-Rooming”

This tale has two types of dis-intermediation. A contractor lost labor-income (and parts markup?) on a simple, bread-n-butter job. And, the distributor lost the part sale. How will channel dis-intermediations accelerate with soaring B2B Cloud Ecommerce?

The distributor also got stripped of the video’s value and the part price-shopped or “web-roomed”. Millennials have showroomed retailers for years. Expect them to check distributors’ prices on all bigger-dollar SKUs/pick needs.

Higher-priced, popular SKUs are most net-profitable for distributors. The mark-ups on high-priced, popular goods typically go down less than the total price goes up. So, the Gross-Profit-Dollars per pick are greater than the fulfillment-dollar cost to yield a net-profit. They pay for the many, small-dollar-pick losers. Webrooming will cause either lost sales on or last-look, price-cuts for cream SKUs.

Questions:

  1. How will channel players measure and correct the profit/loss cross-subsidies that exist between super-profitable and unprofitable SKUs?
  2. Many distributors are “winning” new, small, web-orders that are net-profit losers. How can they compete profitably with Amazon?
  3. An even bigger challenge: how will distributors rethink rep e-selling to millennials (who don’t want regular rep calls) by 2022?
  4. The distributor’s “how-to video” was valued. Best video-clips within a digital, sales funnel are forecasted to be important. How will B2B manufacturers use videos in their “digital-engagement strategy” for end-users?
  5. Best video-clip examples? At Amazon.com search “Echo”. Click on the “learn more” links to see what new, table-stakes videos look like.

For More On: Digital Transformations Within Distribution Channels

Sign up for my blog alerts at www.merrifieldact2.com. Connect with me at LinkedIn for my curated posts with commentaries. (D. Bruce Merrifield, Jr). And, stay tuned for my spring webinar series.

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