What Color Is Your E-Commerce Parachute?

Sure, online commerce is rapidly gaining acceptance by consumer buyers, as evidenced by this year’s holiday “e-season.” But it’s gaining even more acceptance by business buyers. A number of studies suggest that business-to-business e-commerce will dwarf consumer e-commerce by the year 2000.

Before you launch a serious e-commerce effort, however, you must consider how you sell now — and how your selling model might be affected by the internet. Here’s how electronic commerce could affect several common business-to-business selling models.

The Retail or Mail Order Model

Amazon.com — arguably the most famous of all e-commerce success stories — is at its roots, a retailer. The retail model is basically one in which the customer makes a direct purchase from a location — a store. The store sells its goods to a customer who must physically come in to make the purchase.

If the store has the item in stock, the customer can purchase it immediately; otherwise, the item needs to be ordered, and the customer needs to return to get it — or have it delivered when available.

The mail order model is a variation on the retail store model. It simply uses a different distribution channel to complete the transaction. Here, the customer does not physically come to a place to purchase, but rather orders an item via phone, mail, fax, email, or through the web. Representative of mail order, probably more than anything else, is the catalog.

In many respects, an e-seller such as Amazon.com is both a store and a catalog. It is an electronic storefront with millions of books which are classified and cross-referenced so that each product can be individually purchased by any number of criteria. Every product has its own description, its own order number (in this case, the standard ISBN by which books are identified), and its own price.

The internet difference is that you can “visit” the catalog, as you would a physical store. You don’t have to get in your car, drive there and park. You can find what you want without a salesperson. You can browse limitless “shelves” and visit whenever you want (even in your pajamas). You’ll find every book imaginable, and never wait in line to make a purchase.

If you sell a large number of products through stores or other direct-to-the- end-user locations, or through catalogs and mail order, you can quickly see how to apply this retail or mail order model to your own brand of internet-based order generation.

Not surprisingly, on the business-to-business side, the first electronic merchants to succeed with web stores were technology-based catalogers — sellers of multiple computer software, hardware, and networking products and services. Software merchants have even been able to fulfill the promise of instant product delivery by allowing customers to unlock and download live products upon purchase.

But the marketplace has quickly extended far beyond that niche. And now virtually everything is, or will be, available for sale on the internet.

A variant of the retail model on the internet is the virtual mall. As with a traditional mall, a virtual mall is a collection of storefronts. While most malls are established primarily to sell to consumers, an increasing number of malls feature business-oriented categories.

Yet another internet-based retail model is the auction. Auction sites (most notably eBay) are springing up on the web to facilitate bidding on new and used products of all types.

The Reseller Model

Many business-to-business marketers rely heavily on distributors, resellers or partners to generate revenue. This is becoming an increasingly common model for numerous product and service categories — especially in a global economy where selling products might be more efficiently done through indirect channels.

Depending on the type of product or service you offer, and the industry you’re in, the reseller channel may enhance or even dramatically change the item you sell.

In the computer industry, for example, a computer manufacturer’s business systems are often bundled with a distributor’s, reseller’s, or partner’s own products or services to create a total package or solution sale. The reseller “adds value” to the sale (hence the term “Value Added Reseller,” or VAR).

How do you apply the reseller model to internet-based order generation? Part of the answer depends on the type of relationship you have with your resellers — and how they sell and deliver your products or services to the end user.

Consider the concept of populating your resellers’ web sites with information you supply if resellers will allow it. Also consider the possibility of funding e-commerce initiatives with the goal of obtaining “site prominence” on resellers’ sites for your products.

You could also provide each reseller with a unique order page on the web, reflecting the special arrangement you have with that reseller. Alternatively, you could authorize your resellers to use special pricing and part numbers on their sites so the orders automatically pass through to your web site and order fulfillment system.

Another possibility is to explore partnership opportunities that link your organization together with key resellers. Joint email campaigns, combination banner ads, cooperative lead and order generation web sites, and web communities or “super-sites” benefiting several non-competitive organizations, are just a few of the possibilities.

The Direct Selling Model

If your company relies on its own telemarketers and/or a direct sales force to sell products, you are accustomed to the ongoing need to feed them qualified leads.

While the direct selling model is likely to survive, it is undergoing dramatic change as businesses feel the pressure to cut selling expenses and improve sales efficiency. Direct selling will always have its place in consultative and complex selling situations.

It is difficult to replace a live sales call when it comes to selling highly technical or high-end products and services. Yet the internet holds real promise as a tool for enhancing the sales process — and for continuing the sales cycle in the absence of the sales person.

Internet telephony offers one intriguing way to take advantage of direct selling. Technologies that integrate telephony with the web make it possible for telesales representatives to intercede during a prospect’s web session, assisting the prospect by answering questions immediately. If the idea catches on, online ordering could be enhanced with live voice support.

The internet-enhanced direct selling model can also facilitate the traditional sales call. A sales person could walk into a prospect’s office and make a sales presentation that was absolutely guaranteed to be consistently the same, anywhere in the world, regardless of that sales person’s personal knowledge base. This could happen by adapting a web-based presentation, such as an online seminar, for the specific selling situation.

While in a prospect’s office, the sales person could access the company web site or a private intranet or extranet to inform and educate the prospect and facilitate the sales process. If the prospect is ready to buy, contracts and product ordering information could be available to the sales person over the web.

The sales person could even place an order and receive an instant electronic acknowledgment from his company — all while sitting in the prospect’s office.

The way you apply e-commerce to your selling model is up to you. But whatever you decide, generating orders through the internet is already offering significant business benefits and productivity gains to business-to-business direct marketers. They are achieving increased reach into new markets, better support for customers, accelerated speed of order-taking and order fulfillment, and reduced selling costs.

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