Distributors Switching Focus to Web Business

BOSTON (06/14/2000) - Rather than being squeezed out of the trading chain as some feared, some distributors are taking advantage of their demand-aggregation capabilties, logistics infrastructures and customer relationships to deliver new, revenue-generating services via the Web.

Southern Marketing Affiliates Inc. (SMA) in Jonesboro, Ark., is a distributor of agriculture-related supplies in 15 states in the South and Southwest. Later this month, SMA is scheduled to launch an online buying community called SMALink that will connect more than 300 suppliers, 2,000 dealers and several thousand farmers in the regions.

The site will allow SMA's dealers and customers to order online from comprehensive electronic supplier catalogs and check the status of orders, said Rodger Hurt, president of SMA. The goal is to drive more demand from dealers and customers by giving them more flexible ordering options, more product choices and much quicker access to information than before, he said.

Services that link distributors more closely with suppliers and dealers are going to be crucial going forward, said John White, director of worldwide business processes at Parker Hannifin Corp., a manufacturer of motion-control technologies in Cleveland.

The company is in the midst of an ambitious project to build a Parker-branded network linking its 7,500 global distributors, suppliers and customers in the commercial, mobile, industrial and aerospace segments. Parker's distributors provide personalized engineering and around-the-clock maintenance support for many of the company's highly engineered products globally, so it's crucial to involve them in the Parker network, White said.

"We keep hearing words about the disintermediation of (distributors) by Internet companies," he said. "The fact is that they are the customer service interface point" and thus continue to be crucial.

Milwaukee-based ICM Inc., a mail-order distributor of stationery products for banks and schools, is setting up a similar site linking its 1,000 dealers and more than 1,500 suppliers.

Like SMA, ICM is using technologies from Champaign, Ill.-based dChain Commerce Inc. to build the hub. The marketplaces give distributors automated ordering, online inventory management and Web-based order fulfillment and promotional capabilities.

Such sites "radically decrease the amount of time and expense involved in trying to coordinate the communication that is required" between the different partners in a trading chain, said CEO Brian Nelson.

For instance, a similar hub being developed by Pacific Bearing Co. in Rockford, Ill., will let its distributors cut the time spent ordering and buying custom products from an average of three days to just a few minutes, according to Robert Schroeder, the firm's CEO.

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