Monday, June 17, 2024

Manufacturing and the Internet

Q. I read so much about the amount of business being done over the Internet, I just don’t see how my small manufacturing firm needs it. Or, do I need it?

                Thank you, Stanley

A. Stanley, you pose a very interesting question. It really is several questions wrapped up in one. I’ll wrap my multiple answers into one answer to your one question.

Before going into this discussion, I am eliminating from my comments any selling of Internet-related products or services including banner advertising and links. While these sales may be business-to-business (B2B) e-commerce, I see them as a being separate from all other forms of B2B business.

B2B selling on the Internet will always be important to B2B although it may not be seen as being as important as business-to-consumer (B2Consumer) is. However, B2B e-commerce is 10 times greater than B2Consumer e-commerce. There are reasons for this:

1) There are, on average, 5 levels of distribution for most all products from the raw material through to the end user as a finished product. So, while we see retailing every day, there is much more going on beneath the surface that the public does not see. As more and more suppliers at each level gets their products on line, the more important the Internet becomes in B2B selling.

2) In most cases, there is no need to transfer money via the Internet in B2B transactions. A working relationship has, in most cases, already been established. While the news and anticipation about fantastic growth is about the potential of using credit cards, it is directed at B2Consumer transactions. Credit card transactions between businesses plays a very small part in how businesses pay their bills when buying from other businesses.

In the B2B business world, the problems associated with the worries about credit card and personal information being “stolen” via the Internet and misused hardly exists, if at all.

3) The main reason behind the growing importance of the Internet, I believe, in B2B commerce is that it can shorten up the sales process for reorders, add-ons and getting business by referral — better known as “second sales.” Second sales are more profitable that first time sales because the money spent getting the customer on the books goes right to the bottom line. Increasing the number of second sales or decreasing the time between second sales, whichever way one wants to phrase it increases turnover for both suppliers and customers. While I’m not a lover of the “win-win” expression, this is a good argument for using it.

It so happens, although not often reported, that a vendor helps a customer increase the customer’s turnover, the customer will look to see how else a vendor can help; conversly, when a customer helps a vendor increase the vendor’s turnover, the vendor will go out of their way for the customer. With service businesses, while there may not be as many levels of distribution of information, once a relationship between the two parties has been established, the same advantages can be realized. And let us not forget that so-called service businesses have products to sell their outputs.

4) Another advantage to the Internet in B2B business — and it has been put forward many times — is that a business can have a presence in their potential and current customers’ hands 24 hours a day and that no matter where they each reside, business can be transacted.

5) A question that will arise, if it hasn’t already, when it comes to B2B selling on the Internet is, how will it affect the need to have as large as sales staff or even if one is needed? Will or can they be replaced by the Internet? I doubt it. Businesses, or I should say people in those businesses buy “personality” — the personality of the vendor, the vendor’s management, staff and agents, and the product or services they provide.

As the Internet grows in B2B arena, so will the need for better informed salespeople the ones my mentors called “professional peddlers.” A web site can give lots of information, but it is static information, what’s there is there and it can’t be changed from what one is reading or viewing. Ah, but a really good salesperson can help “bend” (tailor or customize) the vendor’s products and services to meet the needs of customers. What I see happening is the sales forces of the future will come from the technical sides of a business who understand how the product or service works and how it can be altered to fit what the customer is doing, planning to do or would like to do.

Yes, Stanley, the Internet can become another way for you to distribute information about your firm’s products and services. It will not replace what you’ve been doing, it will enhance what you’ve been doing.

Printed with the permission of the author, Alan J. Zell, Ambassador Of Selling. A member of cadre of speakers, coaches, and trainers. Winner of the Murray Award for Outstanding Achievement in Sales & Marketing. Chairman, PNW Sales & Marketing Group.

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