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Bricks to Clicks: Where’s Electronics Distribution Going?

In the not so distant past, all of the distributors, reps, suppliers, and customers had hard-site offices in order to visit and conduct our respective business. Those are going away slowly but surely — what impact will this have on your job and on your company?

When distribution began to evolve, suppliers all got compensated on what the distributor bought for local franchise — paid on Point of Acquisition (POA). Each distributor had to support its local franchise with shipments from its local warehouse; thus, the need for a hard-site office.

Many of today's manufacturer reps began as “stocking reps,” which competed with distributors for the customers' orders. Most/all of them evolved into distributors or non-stocking reps; but the hard-site offices remained.

Suppliers also opened offices to show a commitment to each local market. Training and meetings were conducted on a regular basis — “Your place or mine?” was the battle cry…

POA was replaced By Point of Sale (POS) sales and commission plans. Computers were invented and came into use; inventory was consolidated into one or several regional warehouses — yet the branch offices remained in place.

But what has happened over the last decade or so? Distributors have been hubbing inside sales and product management at different speeds and in different methods — and for different reasons.

But then one well-known distributor, the folks in Thief River Falls, changed the game! They opened ONE branch that housed ALL sales, product management, asset management, and engineering. The savings realized in not having to invest in “bricks” was invested in an online tool that has become the de-facto standard for engineers worldwide. Now, that distributor is knocking on $2 billion in revenue — all out of a single location — with a virtual field-based sales force.

What does this mean to you and your company? Have you asked your customer if they really care that you have a local branch with local sales and local engineering? Do they really care that you personally come in to visit them?

But wait: Where will we have meetings? Where will we do our training? Where will I go each day?

Go into any coffee shop from eight a.m. to noon. Look around and who do you see? People holding meetings! They have a virtual office at Starbucks or Panera Bread and use it for free! Of course, they run the risk of not getting seats only then to be (politely or not so politely) ushered out for lingering too long and buying too little!

Amazon (the clicks expert) is a huge threat to Best Buy (a favorite electronics brick-and-mortar store) as many folks window-shop in person at a store and then buy by clicking their way through Amazon Prime. Have you taken a peek to see which of your top components are being sold today on Amazon? Plenty! How many offices or field sales or engineering folks do they have? None!

The clicks are taking over slowly but surely, and its high time that all of us assess how we react to the new reality. Even purchasing agents and design engineers are starting to realize “I can shop when I want with no distractions or interruptions.”

If you decide to stay a brick company, remind your suppliers and customers that you are committed to the local market — ask them to support you as you try to support them. You cannot fake the bricks!

Get ahead of this new wave before it drowns you and your company… or stay the course and don't apologize for “old school” selling. Many customers still need and demand local folks with local facilities that build local market knowledge — also something you cannot fake!

Let us know where you like to do your sourcing. Are you a brick person? Or do you prefer clicks?

4 comments on “Bricks to Clicks: Where’s Electronics Distribution Going?

  1. Ashu001
    November 22, 2014

    Anyone who refuses to run their Distrbution Business via Amazon today is asking for trouble.

    You can always have a secondary prescence but if you don't use Amazon your Business will bite the Dust very soon.

    Its kind of obvious that E-Commerce has gained enough traction today that it has left most offline retailers(with no online Prescence) shaking or forced to just cut prices and services down to the Bone.

     

  2. SP
    November 24, 2014

    You need bricks office to give seriousness of business and ofcourse due to legal requirements all buinesses have to have a registered address. But since marketing people spend lot of time travelling it would be quite ok to conduct meetings in star bucks or any such coffee shops. TRends are changing and definitely some jobs can be done in these places. But to show your attendance and that you really are working management would like to see you in bricks office sometimes.

  3. t.alex
    November 29, 2014

    There gone the old days where people have to go to retail store and buy electronics goods. Online shopping is so convenient with one click away and 2 days shipping with Amazon prime. Saving gas and time why not? Best Buy might be out of business in the very soon future however, people do want to try out their products at the store. They just need to have both good retails and online store. 

  4. Ashu001
    December 26, 2014

    Alex,

    That's a fair statement to make.

    Consumers want the retail experience too;The world (atleast Shopping would be) so much-much more Boring if everything just had to be done Online.

    I am guessing that's why Amazon is now building Physical Stores in the US?

     

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