Category Archives: Distribution Industry Sales

107. Friends, Your Input Please. One-Day Fall Seminar Series

AmazonBusiness, Big Data, Distribution Industry Sales, Distribution Strategy, Index, Line Item Profit Analytics, LIPA, Profit Analytics, WayPoint Analytics

THE VISION

I will start conducting one-day seminars in larger cities in North America this fall. The working title: “Analytics for Defending Against, Partnering, and Out-Niching Amazon”.

The content is radical. Download the seminar summary for the full story, including:

  1. An “Overview”
  2. Who should attend and what you’ll learn and (hopefully) act on
  3. How your distributor affiliation groups, trade associations, buying groups, ERP vendors – can become co-sponsors to earn their constituents a discount from an already affordable fee
  4. A summary of my AMZ-oriented blogs to spark team discussions
Get the summary here:
Grand Summary of Fall Seminar Series

THE CITIES

Already booked due to local co-sponsor support:

  1. St. Louis on 10/16 with St. Louis University’s Center for Supply Chain Management as a co-sponsor and host for the presentation.
  2. Montreal on 11/5
  3. Toronto on 11/7

Other Prospective Cities: Chicago, Boston, NYC/N. NJ, Philadelphia, Washington DC, Atlanta, Dallas, Denver, LA, San Francisco, Seattle/Tacoma. And, wherever else enough bottom-up interest may arise.

HOW CAN YOU HELP?

  1. Email me your interest. On a 1 to 5 scale: 1 is “No Way. AMZ is a fad.”; 3 “Maybe” and 5 “Will be there”.
  2. If not a “5”, any changes to boost interest to assure your attendance?
  3. Alert your affiliation group about being a co-sponsor. I will be contacting many directly too.
  4. If you are in one of the target cities, can you suggest a best logistical place to run an 8am to 4pm seminar?
  5. If you would like the seminar to run in your unlisted city (or sponsor your own private seminar), be in touch to brainstorm on making that possible.
  6. I’m also amenable to doing one-hour, highlights, free webinars for affiliation groups.

The St. Louis University (SLU) Model In Other Cities?

From previous experiments at SLU, the Supply Chain Center discovered that by hosting this seminar:

  1. Their MBA students can attend all or part of the seminar for free and network with distributors for consulting/employment opportunities.
  2. Attending companies get exposed to the Center’s offerings.
  3. The Center can invite their own community supporters for a 50% discount (as a co-sponsor): a good outreach benefit.

If any readers have a hometown MBA/Supply Chain, university connection that could be a co-sponsor like SLU, please request an e-introduction of your SC Head to SLU’s Center Head: Cindy Mebruer.

Here’s hoping I’ll see you this fall and into next year for a provocative educational experience!

Sincerely,

Bruce Merrifield

[email protected]

105. Connecting Customer Profitability and (Amazon) Cloud Commerce Effects

AmazonBusiness, Distribution Industry Sales, Distribution Strategy, Index, WayPoint Analytics

Willful blindness and selective denial

Willful blindness is legalese for “ignorance of the law is no excuse”. Other selective denial expressions include, ignoring the elephant in the room, sparing sacred cows, believing in the emperor’s new clothes, shooting the bearers of bad news and groupthink.

Humans tend to deny new facts when they are too shocking, painful and/or scary to confront. But, companies that acknowledge, debate and act on truths beat competitors who remain in denial. And, they will be better able to compete with Amazon in the ecommerce cloud of 2021. Continue reading 105. Connecting Customer Profitability and (Amazon) Cloud Commerce Effects →

104. Innovation Two-Step: Core Renewal and a Cloud-Based Value-Channel

AmazonBusiness, Big Data, Concierge Customer Service, Distribution Industry Sales, Distribution Strategy, Index, WayPoint Analytics

The Present Facts

Amazon (AMZ) is building out the first value channel from end-users back to factories. And of course, this channel is a cloud-based digital channel. The customer-centric channel is comprised of 10+ intersecting, reinforcing, winner-take-all platforms starting with the 60MM Prime members in the U.S. (100MM+ worldwide). This monopoly capability will allow AMZ to sell into, and/or collect fees from, all verticals that sell anything to Prime members.

This cloud-based value channel has breakthrough advantages over legacy, product-push channel players. Hence, there is insane loyalty from Prime members and astronomical sales growth. Continue reading 104. Innovation Two-Step: Core Renewal and a Cloud-Based Value-Channel →

102. High-Margin Counter Sales Aren’t Profitable!

Concierge Customer Service, Core Renewal, Cost-to-Serve Math, Distribution Industry Sales, Distribution Strategy, Index, Profit Analytics, Service Value Innovation Guidelines, WayPoint Analytics

This is one of the first insights that distributors who subscribe to Line-Item Profit Analytics are shocked to find out. Analytics reveal that:

  • Naturally high-margin percent SKUs and customers are mostly net-profit dollar losers
  • Gross profit dollars on small-dollar lines and orders are less than their cost-to-serve dollars

You can’t ignore small transaction size, or the variable service-people costs for customers with bill-me-later, paper-based trade credit. Continue reading 102. High-Margin Counter Sales Aren’t Profitable! →

100. Distributors: Upgrade “Strategic Pricing”

Big Data, Cost-to-Serve Math, Distribution Industry Sales, Distribution Strategy, Index, Profit Analytics, Service Value Innovation Guidelines, WayPoint Analytics

The first step to ensuring your strategic pricing initiatives are successful is to understand what you’re doing. Here are a few questions to ask of yourself, as a business owner, and of your top management.

  • What is “strategic pricing”?
  • What is our Pricing Analyst’s job? (scope, objectives and success metrics)
  • What assumptions underlie these answers and is there data to back them up?
  • What additional analytics would improve pricing effectiveness?

If you find wildly varying answers, or confusion, from your management team it’s time to upgrade your approach to strategic pricing. Continue reading 100. Distributors: Upgrade “Strategic Pricing” →

98. “Your Margin is My Opportunity” (Jeff Bezos)

AmazonBusiness, Big Data, Distribution Industry Sales, Index, Line Item Profit Analytics, LIPA, Profit Analytics, WayPoint Analytics

Why Are Your Margins Too High v AMZ’s?

Your margins must cover your channel cost structure which was built for bygone days. Most channel costs evolved (from WW2 on) to push true-new products to first-time buyers. Cold calls (requiring product-education) required both factory and distributor reps to create demand. Both sets of reps got paid roughly 5% of their respective sales. Today (70 years later), most channels still have two sets of reps costing about the same. What other elements of your push-channel costs will AMZ threaten?

2018 Legacy-Channel Challenges:                    

  1. The US consumer-society lifecycle is mature with too much global supply. Power has shifted to customers. And, AMZ owns the increasing numbers of Prime customers. Brands must go to where the eyeballs are and sell them the way they want to buy.
  2. 80%+ of distributor product sales are for equally-excellent commodities (no demos needed)
  3. 90% of sales are rebuys from experienced customers (fewer cold calls)
  4. The internet makes all product – information, availability and pricing – 24/7 available. As digital information grows, product knowledge help from local reps drop.
  5. Mark-ups for full-lines of SKUs create profit/loss cross-subsidies. Average-pick size and turns are ignored. Buy: a popular $500 piece of equipment at 20% margin and some fittings for $1 to $3 each at a 40% margin. The equipment’s $100 of gross profit covers: its activity costs; the losses on fittings; and residual company profit.
  6. Mark-ups covering bundled services are not customer-centric. Customers get an assigned rep whether they want them or not. If reps were unbundled for fees and customers got 5% rebates for buying on their own, what would happen? Without unbundling, Millennials will web-room you on the big-price, popular and most profitable items on AMZ for less. They will: check the $500 equipment price at AMZ. Sees savings of $X. Spot buy it. Then, order the little-dollar picks (net-profit losers) from the distributor.
  7. And, the Perfect Clones of most profitable items are increasing at AMZ. Clones – with great information content, reviews and prices – will steal share from top brands not there. Clones can skip channel development costs and go right to AMZ’s unlimited cyber-shelf space using Fulfillment by Amazon.
  8. Loyalty to – brands, distributors and reps – will continue to erode.

Unless What?

Factories and distributors share SKU profitability analytics to solve cross-subsidies and rethink their respective service bundles. And, factories get on AMZ to win the content management war against the clones. For more: contact me for a free, virtual, SKU analytics session.     [email protected]