Over the past year here at Social Media B2B we have talked at length about the marketing implications of B2B social media. However, the bigger picture is that the Internet is changing all aspects of B2B companies from human resources down to channels of distribution. Historically, the issue of B2B product distribution has been a crutch for many organizations. Business have often used their complex product distribution pipelines as excuses.
The Social Web Flattens B2B Product Distribution
Depending on your industry, you are likely all too familiar with product distribution processes that involves multiple distributors, sales reps, independent sales reps, etc. All of these people used to be very important steps in a distribution process to get the product from a manufacturer to the end-user. A large and powerful world of spiffs and agreements have been created to buttress these channels of distribution.
While these powerful supply chains still exist, many are on their way to extinction. The distribution networks were created when it took a major commitment of money and man hours to have an infrastructure to sell B2B products. The Internet has greatly reduced the cost and commitment to bring a product from development to market for distribution. B2B companies are now in the process of understanding what many major retailers have known for years now. That direct sales and fulfillment through the Internet means better margins and increased efficiencies.
First Movers Will Determine Industry Changes
Something I have frequently said, is that the web rewards individuals and companies who take action first. This will be no different for this issue. If companies sit back and allow distributors and independent sales reps to build the preferred online customer acquisition methods for a given industry, then companies will again lose the leverage they gained when e-commerce began on the web and will exist in an online version of the current product distribution pipeline.
Ideas For Evolving B2B Distribution
One thing that I love so much about the Internet is that it provides opportunities and solutions that haven’t been possible before. It is an easy jump to say that some manufacturers will likely sell products directly especially to certain markets like small business owners.
What is next? If that is the easy jump, then what is the hard one that likely only some elite business owners will achieve?
1. Add service-based revenue streams – Service-based businesses are hard to run, because they are completely dependent on talent and they often operate on low margins. In the future, it is likely that as B2B companies begin to rely less on distributors and current distribution models that a side benefit will be the discovery of new revenue streams. Some of the most successful web companies and open source software companies have already discovered that it can be lucrative to charge for support and additional features for free or low cost products. B2B companies will likely find that the Internet is a strong catalyst for launching these new types of revenue streams cost effectively.
2. Data Will Become Even More Important – I read many conversations on the web each day about marketing and growing businesses. It is often scary to me how many of those discussions fail to mention the importance of data. When it comes to product development and distribution for B2B companies, the future is about data. The internet and the social web have turned on a firehouse of data that has the potential to empower business decisions like never before. Data will help discover emerging markets and provide direct feedback from customers on the best methods of product distribution.
3. Efficiencies Offer New Customer Acquisition Opportunities – The Internet has lowered the cost dramatically in many cases when it comes to cost of distribution. These reduced costs provide B2B companies with new decisions. This lower barrier of entry may entice some B2B business owners to diversify target markets in an effort to reach a new customer base. This will mean more competition in some industries.
How do you think social media and the Internet will change B2B distribution in the future?