DIGITAL CHANNEL - 2001
Looking past the Y2K speed bump, how will the digital revolution affect our distribution channel(s) within two years? What should we start doing now to make these changes become our friend instead of our foe? "Scenario planning" is a necessity for all distribution channel players. We must make assumptions about trends that are going on; create scenarios that incorporate these assumptions; and then move our companies towards our best guess vision(s).
As food for thought, here is a partial list of issues and assumptions to consider:
- Customer connectivity to the net. Arenít the costs for both wired and wireless appliances that connect to the net dropping? Arenít the collective reasons for being on the net exploding? If all customers will have to be wired by 2001, what new value propositions could this enable?
- Bandwidth availability, reliability and costs. In the next two years enough new fiber optic cable will be turned on to increase national bandwidth by at least 8000%. Best business partners will have big bandwidth, direct net connections. Won't they expect us to have reciprocal connectivity to do what new activities? Do we have a network infrastructure plan? How will an explosion in communication possibilities change selling roles?
- Wireless communication and access to the web will be common by 2001. Some wireless customers and salespeople are already expecting faster response times from support people and fulfillment processes. How should we target and serve this emerging niche? Will it be a mainstream opportunity within 4 years? Will we be able to mass-customize services quickly enough?
- When will old or new competitors set up sites that will provide the best total information solutions; the best landed costs for all of our products; and/or the lowest prices for commodities guaranteed in stock and delivered on time? Smart customers will click through all three types of sites before they email us a last-look proposition. Visible channel economics and niche competitors will attack our most profitable businesses, leaving us with our currently cross-subsidized, losing parts.
- How much new capital is being targeted at our channel? Verticalnet, for example, went public in February to gain $52 million in cash, a huge market value and super-currency stock. They have already targeted 33 distribution channel end-user groups as an infomediary. Now they want to partner, buy or build their way into doing transactions within those channels. FedEx and UPS stand ready to deliver the precious per pound, special order items directly from manufacturers to end-users if and when some cyber-dealer decides to attack our old selling model to better serve both producers and end-users.
- Auction-type markets and applications are emerging in many channels. These exchanges come in many varieties. Do we understand why, how and where these new models are appearing, and why they do work in cyber-space? How much of our volume could be vulnerable to the market maker models that make sense for our channel? What should we do and when?
D. Bruce Merrifield, Jr. of Merrifield Consulting Group, Inc. Article # 8.5