Distribution world – Weaving on the Web

Distribution world – Weaving on the WebThe potential impact Internet trading will have on the distribution business is massive. Providing the ability to target customers with personalised product marketing will be a significant factor for the future. By Richard Wilson
The business is fractional, but what is relevant is the rate of growth.” David Sones, head of technical development at RS Components is clearly excited by the potential impact Internet trading will have on the catalogue distributor’s business, but at the same time he is realistic about the Internet on today’s business.
“It will become a significant channel for the business as a whole within three to five years,” adds Sones, who probably knows as much as anyone in the distribution sector about Web based product search and on-line ordering services.
He was one of the architects behind the launch of RS’s Internet Trading Channel last February. Sones is quick with the stats; over 500,000 user visits, 50,000 registered users, average browse time 20 minutes on the site, average order value ?85 per visit and largest order to date ?9,300.
RS is probably the most advance UK distributor when it comes to Internet trading, but arguably the world leader is Marshall Industries, the third largest indigenous north American distributor, which has been developing Web trading services over the last four years. SEI Macro is Marshall’s European partner and together they will roll out this year a range of Internet-based services.
With their franchise distribution businesses Marshall and SEI Macro in Europe, are using the Web in a different way to a catalogue house like RS. It provides a secure means for information to be passed up and down the supply chain between, manufacturer, distributor and customer at the click of a mouse.
The Internet will provide distributors with round the clock access to inventory, across continents if necessary. Sophisticated search engines are being developed and there is secure on-line ordering. All these features can be provided by other means; telephone, CD-ROM and good old pen and paper.
But distributors have quickly come to realise that Internet services can provide two important new business tools. First is detailed historical data of each individual customer’s buying patterns. The second is the ability to use this data to provide focused marketing products tailored in such a way as to target specific customers.
Put simply, if the distributor knows exactly what parts you bought from them over the last 12 months, then they can build up an accurate picture of your individual requirements and interests. This is a powerful tool and can be used by the distributor to ensure that each customer gets to see the products which they know will be relevant to them.
RS for example is already looking to develop personal home pages for specific customers. So that when they log on to the RS site they see a page with product information selected to match their interests and buying patterns.
There may be plans to go one step further and poll each customer when relevant products and services are introduced. Sones accepts their are issues about intrusion to be considered here, but it clearly indicates the way distributors are thinking.
Farnell, RS’s largest rival in the UK, is also pumping significant money and resource into developing its Internet-based electronic commerce services this year. “E-commerce is very important to us,” says Lawrence Jackson, Farnell’s commercial general manager. “We originally recognised the challenges two years ago, but now we are accelerating that work.”
So forget all the whizzy graphics. It is the ability to target customers with personalised product marketing which many distributors now believe will become the most significant element in applying the Internet to their businesses. Internet information RS Components – rswww.com Farnell – www.farnell.com Marshall  –  www.marshall.com SEI Macro  –   www.sei-macro.co.uk A customer tells us why they use the web
RSComponents launched its Internet Trading Channel last February and Cambridge Consultants was one of the distributor’s first customers to use it.
With 120 projects likely to running at any one time design consultancy Cambridge Consultants has a daily requirement for a diverse range of electrical and electronic components.
The consultancy’s range of activities is wide, from RFcircuit design to bio-medical techniques, so sourcing components as and when they are needed can be a problem. Cambridge Consultants uses almost 4,000 suppliers and the list is growing , with 20 new ones added each month.
With 120 projects likely to running at any one time design consultancy Cambridge Consultants has a daily requirement for a diverse range of electrical and electronic components.
The consultancy’s range of activities is wide, from RFcircuit design to bio-medical techniques, so sourcing components as and when they are needed can be a problem. Cambridge Consultants uses almost 4,000 suppliers and the list is growing , with 20 new ones added each month.
Engineers at Cambridge Consultants use the site to search for products amongst RS’s 100,000 product database, and then to order them on-line.
Cambridge Consultants’ purchasing manager soon saw the benefits of Internet product searches and on-line ordering. He says that ordering became reliable, more speedy and the cost per transaction was reduced. “We can’t tolerate a job being held up whilst we wait for one tiny component to be delivered,”says Pullen. “We charge our customers by the hour, so if a product is faulty or late we have expensive engineers sitting around waiting for new parts to arrive which doesn’t align with our ‘fast time to market’ proposition.”
And he adds: “For the first time in our purchasing history, our financial controllers saw the benefit of distributed purchasing because of the cost savings, reassured by the central purchasing controls.”
The system wo rks in practice with three department heads given the authority to order independently from the Web. “We have implemented an electronic workflow requisition system which is initiated by the purchase card holders and mailed to central purchasing,” says Pullen. “The orders are held in a mailbox and checked against physical delivery.”
This has cut out layers of order passing activity, it also saves paper. “There is no generation of paper during the order process,” adds Pullen.
“Because they can order off the web site from their desks (everyone at Cambridge has Internet access), they can add items to the order right up until the 8pm deadline without our involvement. We maintain control because of the reporting functions on the site,”says Pullen.
Pullen also welcomes new developments in the Internet service which allows for multiple orders to be opened under a number of different project cost-centres. “At the end of the day this means sending just one order, and receiving one delivery,” says Pullen. There are also on-line stock availability checks, and full purchasing histories for each customer over a 13 month period.
A kick-back for RSComponents is that it can also use the Internet service as a marketing tool, presenting tailored product promotions according to purchase history of particular users. The beauty of the Web to the supplier is that everything can be stored as customers navigate their way around the site. Why do it?
Cambridge Consultants spends between ?2,500 and ?5,000 with RS Components each month. Average number of orders placed with RS Components each year is 2000, or between 6 and 7 each working day.
The cost to Cambridge Consultants of raising an order is ?60 taking into account every action from raising a paper requisition through to matching the invoice.
Use of e-commerce and Internet services has reduced cost to ?10 an order. Over a year this would represent a saving of ?100,000.


Leave a Reply

Your email address will not be published. Required fields are marked *

*