Crafting & Promoting the Business Strategy
Reading time: Approximately 1 hour 15 minutes
It’s too late to fight for B2C e-commerce because Amazon and other online powerhouses have already won that battle. However, B2B can stil l be a different story.
The future for independent resellers must revolve around the removal of friction points for doing business with their existing customers. While the ease of conducting price comparisons in a transactional business model remains a leading cause of customer churn, competitors are also having success with their customer acquisition strategies by incorporating technology to help improve the overall customer experience. Unless resellers match this performance capability, their outlook for the future will continue to look uncertain.
To start a business improvement process, resellers must recognize that over 70% of buyers are researching online before they ever contemplate a purchase decision or consider talking to a salesperson. Without a website that caters to this research, a reseller cannot qualify itself for the purpose of getting deeper into the selling/purchasing process.
Creating a website that fulfills the needs of researching buyers is, however, only the first step in the process. Unless there’s also a compelling value proposition combined with great user experience, the researching buyer will still look elsewhere.
Once a reseller has accepted the futility of trying to compete in the “red ocean” of the B2C e-commerce marketplace, then it must focus its attention on the “blue ocean” of the B2B sector. This is where competitors such as Staples and Office Depot may be vulnerable to resellers who position themselves to compete with the content, the value proposition, and the technology to be first, found, second, qualified, and third, given the opportunity to prove they’re capable of consistently providing a customer with a great experience.
TABLE OF CONTENTS:
1. Technology and the Independent Reseller
It is increasingly important for independent resellers to close the technology gap that exists between them and their larger competitors and to implement systems over which they have enough control to achieve their own business objectives, rather than succumbing to those of third parties.
2. The Value Proposition
Every reseller has its own approach, core values, and mission objectives. Not all will embrace a cartridge conversion strategy as part of their value proposition. However, regardless of whether they do or don’t, no one can argue this can’t be part of a viable strategy.
3. Barriers blocking the alternative value proposition
It’s one thing to state that aftermarket replacement cartridges are a viable value proposition but it’s another challenge altogether to remove the barriers that have served to prevent them from entering mainstream distribution.
4. What are the typical resellers’ web traffic roadblocks?
First, recognizing web traffic is mission critical, second, deploying a website with the content necessary to earn it, and third, having the staying power to sustain a multi-year journey.
5. Developing Successful E-commerce for Small Business
Resellers must stop thinking e-commerce is all about B2C and start thinking B2B. As a reseller, the chances of developing a profitable B2C e-commerce channel are close to zero.
6. The Science Underlying Web Traffic Development
As the foundation for developing traffic, it’s impossible to neglect the requirement for a “rule-conforming” website with frequent content updates and powerful backlinks that serve to help improve organic search results.
7. Business Transformation for Independent Resellers
It’s impossible to start a digital transformation without the foundation necessary to do so. However, most resellers lack the skills and financial resources to build one so, in a classic Catch 22, their survival is now at stake.
8. The Technology Solution
It’s one thing to resolve the technical challenges associated with pricing and purchasing to maximize profits, and it’s another to leverage technology to win the testimonials and customer reviews necessary for demonstrating the social proof required to improve customer acquisition rates.
Many independent resellers are finding themselves in a situation where, not only have they fallen behind the technology curve, they may have also relinquished significant elements of control over their business to third-party providers, some of whom are instinctively more likely to act in their own best interests rather than those of their clients.
Furthermore, adding insult to injury, many of these providers are also well behind the technology curve, so their services often don’t provide the solutions the resellers need to be successful. However, with most independent resellers continuing to be dependent on them, they [the resellers] have become trapped on second-rate systems and, as technology assumes an ever-increasing role in business operations, are continuing to fall further behind.
Falling further behind translates directly into increased customer churn and lower customer acquisition rates. Furthermore, as these key business performance metrics deteriorate, the resellers’ attempts to stem the decline usually results in price reductions that reduce profitability. Reduced profitability means the ability to invest for the purposes of upgrading technology systems and fix the root cause of the problem becomes even less likely. These circumstances combine to create an ongoing downward spiral.
What do we mean when we say the resellers have relinquished an element of control?
Below is a list of the main elements of a technology structure necessary to operate a business in today’s digital environment. While it’s okay to utilize third-party services for the backbone of the infrastructure, it’s important for the reseller to have enough control of the system to achieve its own desired outcomes rather than those of a service provider.
- Pricing
- Product catalog and promotions
- Supply chain and logistics
- Integrated email marketing
- Social Media
- Branding
- Promotion
- Audience development
- Audience engagement
- Local Listing Directories
- Product review acquisition strategy
- Company review acquisition strategy
- Customer satisfaction (Net Promoter Scores)
- Analytics and Business Intelligence
- Website
- Content
- Content strategy
- Search Engine Optimization
- Traffic development
- Visit-to-lead conversion strategies
- Technology and customer communication channels
- Systems integration
For most independent resellers, this is an overwhelming list of requirements, many of which are outside their typical skill set as well as their financial resources to independently implement. This means these services must be obtained from third-party providers if they’re to be provided at all.
While even the largest enterprises may retain outside help for some of these elements, usually, they have enough knowledge of what they need to adequately identify and select providers with the necessary skills. Furthermore, they know that failure to do so leaves gaps in their system and compromises their entire setup.
This is where the problem starts to exhibit itself for smaller businesses where decision makers often lack sufficient knowledge of the individual components. This, in turn, means they usually lack the skills necessary to qualify those who claim to be capable of providing the technology for the services they need.
Many times, resellers end up paying for services that cover certain segments of the requirements, but rarely the complete solution. Furthermore, even the segments they’re able to obtain are often on legacy platforms which are no longer optimized for today’s requirements.
Where has all this gone wrong?
Most of the office products and business equipment industry has fallen behind the information technology curve, with the resellers usually in the weakest position. This is ironic because the success of the manufacturers, distributors, and wholesalers is contingent on the success of the resellers.
1. This dilemma is broadly understood by each of these suppliers, a situation which individuallymotivates them to come up with programs designed to help the reseller become more successful.
2. However, unsurprisingly, these programs are designed to only help the reseller become more successful selling the “program-providers” products.
3. The resellers’ individual vendors are not incentivized to provide a solution that may (incidentally) help the reseller become more successful overall because this may, in turn, mean they sell more of the products they source elsewhere and perhaps even less of their own.
4. So, a reseller who sells products from multiple suppliers is likely to be offered different incentive programs from each of those suppliers. It is unlikely these different incentives will combine well to provide a solution that covers the list of requirements detailed above.
It can only be an integrated “vendor-agnostic” full-service platform that ultimately serves to fulfill the resellers’ needs. In this environment, the resellers’ and their vendor partners offering the best value proposition will be the ultimate winners.
Resellers have not implemented platforms with the necessary capabilities, and over which they have enough control, to operate their businesses according to their strategies and objectives as opposed to someone else’s.
By control we mean:
1. Freedom to choose which vendors to buy from and the types of products it prefers to purchase from different vendors.
2. The ability to calculate and set new market-driven prices on demand and without restriction, regardless of which supplier they are purchased from.
3. To optimize prices according to profit objectives and to minimize costs (including freight and handling) that maximize its profit while optimizing its customer service.
4. To transact with vendors and customers in a seamless, efficient way.
5. To have full control over product promotions and content.
6. To provide stakeholders and employees with permission-based access to activity records by contact and to ensure, regardless of who talks to a customer or prospect, all relevant information about that contact, their website activity, email activity, and transactional history, is shared knowledge, freely available to help improve the overall experience.
7. To provide a means to reliably transmit all transactions into a robust accounting system without the need to perform manual, double-keyed, data entry activities.
8. To be able to seamlessly survey customers according to best practices, and to use the information gathered from surveys to remove friction points and continually improve the overall value proposition.
9. To ask customers for reviews and testimonials when they are warranted, and to use this feedback to help win the confidence of new prospects as they complete the journey toward becoming a customer.
10. To utilize technology in a fashion that dynamically updates contact lists, thereby facilitating contact segmentation to ensure delivery of the right marketing collateral, to the right person at the right time.
11. To be able to seamlessly assess the impact of vendor cost changes on vast product catalogs and to adjust purchasing decisions in accordance with their own profit objectives rather than those of their suppliers.
12. To be able to communicate with customers and prospects according to the channel they prefer, whether it be emails, phone, chat, website forms, or social media, and to record communication activities seamlessly into the individual contact records.
Conclusions:
It’s unlikely to be worthwhile investing funds for the purpose of updating websites or social media accounts unless there’s also a plan for deploying the integrated information technology platform. Only then, once such a platform is combined with a content and marketing strategy designed to increase levels of awareness for the overall value proposition, can an exit route from the downward spiral be established, thereby making it possible to grow a business once more.
However, even once the platform has been established, resellers must recognize the process for developing sustainable and relevant traffic to their websites remains a long-term, ongoing project.
More important in the short-term; in providing a platform that adds value for its existing customers, retention rates will improve, and resellers will position themselves for up-sell and cross-sell opportunities into their existing customer base. In parallel, for the longer-term they will also be positioning themselves for developing relevant traffic and, in deploying best-practice visit-to-lead conversion strategies, will start to acquire new contacts, a portion of which may ultimately be converted to customers.
It must be clear that resellers cannot rely on “silver bullet” solutions from their traditional product vendors to provide them with the platform necessary to operate successfully in the digital world. It is instinctively against the best interest of these companies to provide what is needed because a solution of this nature would, at least partially, serve to assist their competitors.
Instead, resellers must improve their understanding of all the elements necessary to make up a full-service platform by turning to qualified independent third-party providers, providers who are only motivated to help develop and sustain resellers without attempting to influence or restrict what products they sell.
Once this has been accomplished then, and only then, may attention be transitioned to the task of developing the relevant web traffic that’s necessary for the long-term survival of a business.
Before moving on to fully explain the web traffic challenge, we will first explain more about the aftermarket value proposition, and the barriers that have served to prevent this from entering mainstream distribution.
Our passion is the office products industry, with an emphasis on office supplies such as the ink and toner cartridges which, because of the high profits earned on the sale of replacement cartridges, underpin the entire $150-200 billion office products and equipment industry.
1. This is a mature industry with market distortions and barriers combining to ensure the original equipment brands (OEMs) maintain an 80%+ ($20 billion out of $25 billion) share of the retail spend on ink and toner in the United States.
2. The aftermarket is reported to have a 20% share and the overall market to be declining at 2-4% per year as the total number of pages printed decrease.
3. The spend on aftermarket replacement cartridges is decreasing faster than the overall market due to price, product mix (color) trends, and aggressive OEM market development strategies.
4. No one knows for sure, but it’s estimated there are still as many as 5,000 independent resellers in the United States.
5. Many of these resellers were the pioneers of early aftermarket alternatives, recovering and remanufacturing toner and ink cartridges to make them part of their value proposition back in the early 1990s.
6. The quality of aftermarket alternative cartridges has improved significantly since the early days, although most local remanufacturing has closed down due to the high cost, the technical, and the quality barriers.
7. The majority of office products and supply items sold by transactional resellers have been commoditized. It is almost impossible for a reseller to grow its top-line and increase market share selling more paper, pens, paperclips, or even OEM brand ink and toner. There is no other category within the industry that can be leveraged to win market share besides aftermarket ink and toner.
8. The profits that can be earned on aftermarket replacement cartridges, versus OEM brand, are many times greater, while they also save the reseller’s customers’ money.
9. The independent resellers work hard, they know the business, the quality of aftermarket alternatives has improved significantly, and there’s a compelling value proposition selling aftermarket alternatives versus high-priced OEM cartridges.
We look at these market conditions and see a growth opportunity, despite the overall market shrink. $25 billion in annual retail sales in the U.S. market constitutes a large market and, with the aftermarket share estimated at 20% or so, it means there’s a $20 billion opportunity for resellers that embrace aftermarket replacement cartridge conversion strategies.
However, there are barriers that serve to obstruct most resellers from converting this opportunity into reality. These barriers, whether they are fully understood or not, mean relatively few resellers will currently agree with our view that cartridge conversion strategies really do underpin a significant growth opportunity, at least not in the “black and white” way it has initially been introduced here.
We’ll go on to explain what these barriers are in the next section but, for now, let’s summarize the general outline as follows.
Firstly, an aftermarket replacement cartridge conversion strategy is indisputably a viable value proposition. Similar approaches have worked in many industries including automotive parts, prescription drugs, groceries, etc.
Secondly, this is not an all or nothing approach. The strategy must revolve around educating customers and prospects about the availability of viable alternatives. Ultimately, the goal is for a customer to make an informed purchasing decision about what works best for them.
Thirdly, it is imperative resellers believe in this as a viable strategy. The key is for them to provide their customers with the best fit for their requirements while also working to optimize their own profits.
Fourthly, unless effective tactics are deployed to spread the word with compelling, educational approaches that support cartridge conversion strategies designed to improve the profits of a dealership and to save their customers’ money, then nothing will change.
So, within this framework, how can a large group of business owners be educated and motivated to embrace cartridge conversion strategies for the purposes of improving their own profits, and for winning new customers?
Unfortunately, as we’re about to learn, it’s not just about educating and motivating resellers to consider alternatives. There are some very real, and very challenging technical barriers that must be overcome before it becomes possible for aftermarket replacement cartridges to form part of a resellers mainstream value proposition.
We have explained the importance of closing the technology gap between large and small enterprises, with our usual emphasis on independent resellers in the office products, supplies, and business equipment verticals.
We have introduced the concept of alternative aftermarket replacement cartridges as a viable value proposition while recognizing these alternatives will not always be suitable for everyone.
Now, we will move on to examine the barriers that have historically prevented aftermarket alternatives from gaining a stronger foothold in the marketplace, and the role technology must play to start removing these barriers.
Most businesses have a few, straightforward high-level objectives.
1. Maximize sales revenue
2. Maximize profitability
3. Exceed customer expectations
Sales Revenue:
Within this framework of objectives, the concept of offering aftermarket replacement cartridges introduces some complications because it compromises the natural tendency of a business owner to focus on sales revenue. Selling aftermarket alternatives means generating less revenue because they always sell for less per unit than the higher priced OEM brand cartridges.
Profits:
However, mitigating the reduced sales revenue are the (much) higher margins that can be generated selling aftermarket alternatives compared to original OEM brand cartridges. Bottom line, most business owners who can overcome their natural tendency to focus on the top-line, can then prioritize maximizing profits over sales revenue. If this can be accomplished, then the first hurdle to accepting the role of aftermarket alternatives in the overall value proposition has been overcome.
Customer Expectations:
Next, is the requirement for exceeding customer expectations. Failing in this objective introduces a myriad of issues centering around customer retention. In our digital environment of unlimited alternatives and instant feedback, fulfilling customer expectations cannot be compromised. Historically, the reliability and performance of aftermarket alternatives have been patchy, and the OEM marketing campaigns serve to amplify the risks of off-brand, cheaper alternatives and make consumers wary. Resellers must be confident with regards to the consistency and quality of aftermarket alternatives before they introduce them to their value proposition.
Reducing Customer Spend:
On the flip side of the quality risk, there’s the upside of saving customer’s money. There’s no doubt this aspect of a customer relationship is a significant contributor to overall supplier satisfaction. However, it should not be expected that a customer must be willing to compromise on quality in order to get a lower price.
OEM Power:
We cannot ignore the power of the OEM relationships as a significant component of the overall barrier preventing greater market penetration of aftermarket alternatives. Many resellers have OEM authorizations that come with certain obligations and restrictions. We must remember, an OEM resale authorization has value for a reseller and the reseller’s decision to seek and maintain an authorization is its choice, not the OEMs. It’s not unreasonable that the authorization comes with some obligations, such as quarterly and annual sales targets. Clearly, agreeing to sales targets with OEMs that result in authorizations to resell their products, and then aggressively pursuing a conversion strategy to sell aftermarket alternatives, carries the risk of compromising those sales targets. Ultimately, missing sales targets may compromise the status of an authorization which may, in turn, have larger implications for a reseller.
Logistics:
Another formidable barrier confronting the more widespread introduction of aftermarket alternatives are the logistics. We cannot ignore the current difficulties a typical reseller faces when managing its product offering, the pricing, and its daily purchasing optimization decisions.
Pricing Logistics:
The complexity of the pricing logistics cannot be overlooked as a barrier to distribution. A typical office products reseller may have 60,000 or more products in its catalog. Many of these will be items provided by the two wholesalers, Essendant and SP Richards, both of whom independently provide pricing tools for their individual product catalogs.
Think about the complexity of bringing in products outside of the two wholesaler catalogs, or for that matter, even just choosing between the two catalogs. Think about these problems in the context of a “simple” model we have prepared.
A Simple Model:
To illustrate our point, we have selected a fictitious OEM cartridge model that’s available from multiple sources such as Essendant, SPR, Arlington, and Supplies Network, and has various aftermarket alternatives available, including Innovera (Essendant) and Elite (SPR), plus other options direct from Clover Imaging Group, Ninestar, and Aster Graphics.
Essendant’s pricing model will price the Essendant products including the OEM and Innovera brands. SPR’s pricing model will price the SPR products, including the OEM and the Elite brands. Neither of their pricing platforms will price products sourced directly from alternative suppliers. This leaves the reseller to figure out their own pricing on these products which, because of the number of products involved, usually means resorting to cost-plus as illustrated in the charts labeled “current” (left-hand side) below.
What we see here, in the selling price model, is a cluster of similar prices for the OEM products, and rational market-driven pricing for the Innovera and Elite wholesaler “house-brand” alternatives. The problem develops when trying to add in CIG, Ninestar, and Aster alternatives. In a cost-plus pricing scenario, even with 50 points of margin on the Ninestar and Aster products, the calculated selling price is too low. Equally, for the CIG product, there’s no knowing where the pricing will end up when using a cost-plus approach on a wide range of products. It may work okay (by accident) on some products, but it will be high on some and low on others.
In our model, a 30-point gross margin calculates the price for the CIG alternative at $60. Perhaps this is under-priced, and the dealer would prefer it to be closer to the price of the Innovera or Elite brands. Unfortunately, though, this outcome is not practical for a reseller to achieve because it involves a time-consuming and error-prone manual process.
In the cost model above, we can see there are small variations in the cost for the OEM branded product from each of the four suppliers, thereby introducing the problem of deciding which is the optimum supplier to buy the equivalent product from. We also see the costs for the Innovera and Elite aftermarket brands, as well as the costs for direct purchase from CIG, Ninestar, and Aster.
Finally, we look at the gross margin model and introduce the “future” charts showing on the right-hand side of the two side-by-side charts. What we’ve done here is to introduce market pricing for each of the alternatives which serve to eliminate the cost-plus pricing issues. What you now see is the CIG alternative priced at $65 and the Ninestar and Aster products priced at $50.
The outcome of all this is that the highest gross margin on the OEM cartridge is earned from the Arlington supplied cartridge at $22, and the highest gross margin on an aftermarket alternative is earned on the Aster cartridge at $45 when it’s priced to market at $50.
The overwhelming complexity of the problem should be clear. Without technology analyzing these different options and the use of algorithms to calculate optimal outcomes, it is almost impossible for a reseller to offer the alternative value proposition to its customers.
Purchasing Logistics:
The introduction of aftermarket alternatives should not involve any blind product substitution on customer orders. To comply with the customer satisfaction requirement, the reseller must deliver what the customer orders. To contextualize the complexity of this, think about the following logistics considerations for a non-stocking reseller:
1. Customer orders 10-line items totaling $1,000
2. Nine of the line items come from a wholesaler’s catalog and will be delivered to the reseller the next day.
3. Reseller will then deliver the order directly to its customer.
4. The remaining line item (representing $100 of the $1,000 order) is a third-party cartridge that comes from a different supplier.
5. The lead time is 2 days, not the next day. This means holding back 90% of the order to deliver 100% complete or making two deliveries. There are real costs incurred by both the customer and reseller with either option.
6. The saving to the customer in selecting the aftermarket alternative was $50 and the increased profit to the reseller was $75. However, the single order from the third-party supplier carried a $15 freight charge, reducing the margin improvement to $60.
7. It also reduced purchases from the wholesaler that must be accounted for in their growth rebate program as well as the OEMs.
Think about these purchasing complexities in the context of a $5M “non-stocking” office products reseller who may be placing 100 or more orders per day, each of which may contain an average of five, or more, line items. Reviewing these orders in the context of the complexity outlined above cannot be accomplished manually so, there quickly comes a point where the reseller, understandably, concludes it’s more trouble than it’s worth and is forced to pass on presenting the alternative value proposition to its customers.
It should be clear, there are real and significant barriers that combine to prevent aftermarket alternatives from achieving greater market share. This is despite the fact they can save the reseller’s customers’ money, as well as earn the reseller’s themselves higher margins. However, because sales and profits are the most critical business requirements (especially in a mature, declining market), there should be ample motivation to implement a solution that overcomes these barriers.
Those that utilize technology to help overcome these barriers will stand a better chance of growing their business profitably despite the declining market.
At this stage, we believe we have laid enough groundwork to have illustrated the concept of deploying technology to create a differentiating capability, and that adding aftermarket cartridge alternatives to the value proposition has the potential to help the reseller increase market share as well as improve its profitability.
What next?
What we haven’t illustrated yet, is the scope and capabilities of a technology solution necessary for removing the barriers and permitting the resellers to offer a wider range of items, including those from outside the national wholesaler’s product catalogs. Products that can be seamlessly incorporated into their value proposition while optimizing the entire catalog for the purpose of maximizing sales and profits.
However, before moving on to explain the scope of the technology solution, we’re going to outline the online strategy that’s necessary, and the obstacles that are currently associated with the reseller’s website and social media presence. These components must play together to help communicate the value proposition, build awareness, and satisfy researching buyers at different stages of their buying journey.
Unless the online components of a reseller’s capabilities and technology infrastructure are in place, then the technology solution we’ll be explaining later will be unable to fulfill its potential.
It’s logical – if a business has a poor-quality website lacking features designed to turn a visit from a targeted audience member into a value-add experience, then there’s not much point trying to develop traffic to that site. It’s also logical that, if an investment has been made to develop and deploy a world-class website, then unless there’s a parallel strategy to develop traffic, the investment will be a waste of money.
In this section, we’re going to expand on the importance of content as a requirement for developing sustainable website traffic and as the foundation for improving awareness with regards to a resellers value proposition.
A typical mistake made by resellers in the office products and supplies arena with regards to their websites and their web strategy has been to focus only on the product catalog and the selling of products out of that catalog.
The failure here is to understand that only a small percentage of web-traffic is ready to buy at any moment in time. If all a reseller does is to continually “go-for-the-kill”, aggressively pursuing poorly targeted campaigns to promote transactions for products in its catalog, then it fails to cater to the much larger segment of traffic that may be looking for something else at that moment in time.
In order to expand the audience a website caters to there are two major components that must be accounted for within the content that’s published and accessible from the site:
- Educating the target audience
- Building trust and authority
Let’s expand on these two components:
1. Firstly, educating a relevant audience and specifically with regards to the office products industry.
We are part of a very large market – $25 billion spent per year in the United States alone on ink and toner. Probably close to $200 billion spent annually on all the products typically required to operate an office, including office products, furniture, hardware, software, etc. Not much argument … this is a large market that’s undergoing rapid change as workers go mobile and technology changes the way old-school workflows take place.
There is no shortage of material for resellers to create relevant content about, and to target this material at researching buyer’s who are starting to realize the old way of doing things is not likely to still be the best way of doing things.
The two largest retail players serving this market are Office Depot and Staples. Between them, they have around $25 billion in U.S. sales and close to 50% of these are transaction conducted online. This equates to $12 billion in e-commerce. There should be little argument with regards to whether or not buyers of items required for the office are willing to conduct a significant portion of their business online because they already are. Between Office Depot and Staples there is a combined volume of 275,000 unique daily visitors.
How can a smaller sized independent reseller intercept some of this traffic and start to compete effectively with organizations such as Office Depot and Staples?
2. Typically, this is where the second mistake occurs.
It’s not difficult for a reseller to look at sites like Office Depot and Staples, and it’s not too difficult to copy their format. However, this is usually where it starts to go wrong for a smaller independent reseller.
We’re continually advocating the importance of content on a resellers website for the purposes of establishing trust and authority as well as for the purposes of educating site visitors – such as researching buyers. However, it’s notable this type of content on websites such as those deployed by Office Depot, Staples, New Egg, Tiger Direct, Amazon, Wal-Mart, etc. appears to be absent – at least on the surface.
Because it is likely many independent office products resellers looked at these competing e-commerce sites and then attempted to replicate them, they have overlooked the requirements for the type of content that’s required for them to develop a successful web strategy. Copying the strategies and tactics of large organizations simply don’t work for smaller independent resellers. In failing to create content for the purposes of educating the target audience and for building trust and authority, the independent reseller’s web strategy is badly flawed.
Large organizations with high traffic volumes have many other factors in their favor which allow their strategies to work, which we’ll expand on in the next section when we deal with the “science” underlying internet traffic. For now, we’re going to continue to focus on the importance of the content component for a smaller independent reseller and its web strategy.
For a large industry, there’s a remarkable absence of content “about” the industry. Internally, we focus on the aftermarket and lament the declining aftermarket share. There’s a focus on the challenging market conditions and there’s intense competition between the traditional “brick and mortar” office products dealer and the online marketplaces. These combine to drive prices down and damage the long-term viability of the reseller channel. That there’s a $20 billion growth opportunity on the ink and toner that underpins the $200 billion industry is mostly misunderstood or ignored.
For the most part, resellers haven’t earned the right to participate in the $20 billion growth opportunity because they haven’t deployed tactics necessary to earn the respect and trust of researching buyers before they will seriously consider alternatives. Resellers have been unable to deploy platforms that enable them to demonstrate to researching buyers they are experts, and their value proposition deserves consideration.
Content has not been created to specifically educate potential customers about the industry and the aftermarket options with a purpose to build authority, demonstrate knowledge, and establish trustworthy credentials for doing business with the buyers that collectively spend $20 billion every year on high-priced OEM cartridges.
Resellers have collectively failed to earn their way into the $20 billion growth opportunity because they lack the technology platforms and digital presence to do so.
Instead, despite the availability of high-quality alternatives, resellers have had to mostly sit back, passively allowing the OEMs to spread fear, uncertainty, and doubt about aftermarket alternatives.
Unfortunately, creating high-quality content strategically targeted at buyers who may be researching long before they’re ready to make a buying decision, is not easy. In fact, the requirements are typically overwhelming for a smaller independent reseller, especially when they’re factored alongside the challenges associated with developing web traffic.
- Creating worthwhile content takes time.
- Creating content with a strategic purpose takes even more time.
- Investing time for content and establishing a parallel strategy for developing web traffic requires more time.
- For the most part, independent resellers simply don’t have this time available.
Furthermore, and significantly compounding the time-allocation dilemma, most of the skills required for creating, targeting, and publishing content, and then to coordinate this for the purposes of developing web traffic, are outside the capabilities of typical resellers in the office products industry.
This is not an encouraging combination, but it helps explain the underlying failure of smaller independent resellers to develop relevant traffic for the purpose of acquiring new customers and growing their business in a declining market.
We have established a strong foundation for our argument that the website plays a critical role as the platform for content designed to cater to the interests of researching buyers.
However, in another level of complexity, it’s also very important the content provided on a website caters to buyers who may be at different stages of their individual buying “journey” and who may be researching for different types of information. Business owners must be aware that web-traffic doesn’t consist solely for the purposes of e-commerce. In fact, most of the traffic is for research or entertainment, and not for the purpose of a decision that results in a transaction.
We also explained that, even if a company develops a world-class website and also creates and strategically publishes high-quality, useful content, then it’s still not enough to develop significant web traffic without pro-active strategies to do so.
Finally, we touched on what may initially appear to be a flaw in our argument, by pointing out that many of the large enterprises who already have high traffic volumes don’t always publish the type of informational and educational content we’re advocating.
Instead they rely on thousands of product reviews that serve to build the confidence and trust of site visitors for new transactions. However, the volume of reviews is outside the scope of a smaller business, so it is not a viable strategy for them to exclusively follow.
To understand why a small group of large companies dominate web-traffic, and why simply copying their strategies will not work for smaller businesses, we must understand how these organizations continue to attract traffic. In so doing, it will become clear why similar tactics are not viable for smaller businesses.
We must also understand what the “rules” are for determining whether or not a website appears prominently in results from popular search engines such as Google and Bing.
The table below shows some of the most important key performance indicators (KPIs) of prominent resellers of office products and supplies.
The seven companies listed (as of December 2018) have annual global sales of over $900 billion, out of which 26% or $236 billion is conducted online. Between them, they have nearly 25 million unique daily visitors, 8.6 million social shares, average domain authority of 86 and, collectively, over 650,000 backlinks.
However, within this group of seven, look at how dominant Amazon is. Although accounting for only 24% of the $908 billion in annual sales, they have 84% of the $236 billion in online sales, 88% of the daily traffic, 81% of the social shares and 92% of the backlinks.
Now, look at Walmart who, despite accounting for over 55% of the total sales, and despite being the second largest internet retailer with $15 billion in online sales, their online activity only represents 3% of sales, 7% of the combined daily traffic, and 4% of the total backlinks. Walmart has been investing tremendous resources into its e-commerce initiatives but, despite recent impressive percentage gains, have been left behind in the race to establish themselves as an online destination.
Finally, look at the last three lines in the table that represent three different revenue examples of independent resellers.
1. $1M annual sales
2. $10M annual sales
3. $100M annual sales
Between them, they have no web traffic to speak of, very low domain authority, and virtually no social shares or backlinks. The ratio of their online sales is less than 10% as may be expected when there’s virtually no web traffic.
Based on a 2016 study of nearly 200 office products and business equipment reseller websites, these are the typical metrics of over 85% of small to medium size resellers.
We’ll return to the plight of the typical independent reseller, in the context of these numbers, after we’ve briefly explained the importance and relevance of each of the three following web metrics key performance indicators.
1. Domain Authority
Domain authority (DA) is a website metric developed by Moz and, the higher the traffic volume, the higher the DA is more likely to be. DA is established from a lot of factors, including the sites link profiles, the quality of the content and how frequently it’s updated, the internal page linking, and the “age” of the domain itself.
2. Backlinks
The number of backlinks is treated as an indication of the popularity or importance of a website, but more weighting is applied to high-quality links. For a business investing time to establish links back to its website then those links must come from sites that are relevant – the higher the relevance the greater the quality and the higher the search engine “score”. Search engines ignore irrelevant inbound links, but all outbound links are calculated so, if outbound links are not high quality, they dilute the “relevancy” score and diminish search engine result standings.
3. Social Shares
Social shares, sometimes described as the “social currency”, are easily facilitated through incorporating “social share” buttons, for example on a website’s blog. They quickly and easily allow readers to share articles or content they have enjoyed onto various social media platforms. The importance of this activity should be obvious in terms of potentially expanding the audience content can be delivered to. By including links and other “calls-to-action” in the content, then traffic can be attracted back to the site it originated from. In this fashion, the larger the audience the material can be exposed to, the greater the potential volume of traffic back to the website is likely to be.
Typical Office Products & Equipment Resellers
Let’s look at these requirements in the context of the smaller independent reseller’s that have been around for an average of 20+ years but don’t have significant traffic volumes. Although a 20-year-old domain has lots of potential value, for the most part, this potential has not been realized because the reseller has failed to understand the importance of building relevant back-links.
However, an unavoidable prerequisite for building high-quality backlinks is a world-class website with world-class content. Unfortunately, very few office products sites meet this standard and very few office products resellers have understood the need for backlinks in terms of establishing higher standings in search results and for the purposes of establishing trust and authority in its field.
Ask yourself – why would a researching buyer do business with a company that fails to present itself in a manner that demonstrates authority in its field and can, therefore, be trusted?
If a business fails to build its Domain Authority (DA), then it fails to show up in search results. If a business fails to deploy a world-class website, then it fails to provide a platform for engaging potential site traffic. If it fails to create and publish high-quality relevant content, then it fails to demonstrate its authority in its field and fails to build trust with its target audience. If it builds a world-class site and creates world-class content but fails to build social shares, then it fails to expand its audience and fails to leverage the potential for building traffic from that content.
It’s unfortunate the clock can’t be turned back for the benefit of independent resellers – if only an effective link building strategy had started 15+ years ago and an average (for example) of one backlink per week had been developed. Over 15 years that would now add up to nearly 750 backlinks – nearly 20% of the number Office Depot has established in its lifetime. Look at Office Depot’s DA at 80 and imagine where 5,000 independent resellers would be, and what the aftermarket share and profitability of the channel could have become with an average level of DA around 50.
It does us no good to lament what hasn’t happened and it’s easy to identify this failing with the benefit of hindsight but, the key now is to start to make up for lost time and to provide the support the industry requires for building its DA and starting to participate in the $20 billion growth opportunity.
It should be clear what’s required:
- A world-class website
- High-quality, relevant content with frequent updates
- A social strategy for shares and audience building
- Building and measuring domain authority
In the next section, I’ll explain our solution to the office products industry. It’s not a “silver bullet” and it’s not an overnight solution. It takes hard work and a partnership running over many months, or even years, to help increase the chances for success. Without such a program, the industry, the aftermarket manufacturers, and the reseller community are destined to continue to experience declining revenues and profitability.
We’ve argued there’s a $20 billion growth opportunity associated with replacement ink and toner cartridges, a $25 billion category that underpins the entire $200 billion office industry. However, it’s an opportunity that remains difficult to exploit while certain, complex, technology barriers remain in place that currently prevent alternatives from being seamlessly added to a resellers value proposition.
1. We’ve illustrated there is an experienced and knowledgeable reseller organization in place with the skills to take advantage of the growth opportunity if the barriers can be removed.
2. Everyone’s aware significant changes are taking place to the way business is being conducted and, at the heart of these changes is the digital environment the internet has created. It should be clear, a new set of business skills incorporating a digital strategy are necessary to operate successfully within this environment.
3. However, many of the independent resellers lack the digital skills necessary to establish the platform needed to develop the opportunity. Many are also experiencing declining sales and profitability, further reducing options to pay others for the skills they lack.
4. Furthermore, in lacking these skills, it makes it difficult to assess whether others, that claim to have the skills needed, are really qualified to help.
These circumstances have combined to prevent most resellers from understanding enough about each of the platform components needed to launch a digital transformation, let alone implementing strategies and tactics to actually start one.
In summary, building a digital transformation platform, and implementing a business transformation strategy, has proven too challenging for most independent resellers. Furthermore, even with the platform, it’s not easy and it’s not going to happen overnight. It’s hard work, it takes time, and a host of new skills are required. Recognition of these challenges is also necessary before taking the first steps toward a transformation.
Throughout this paper, we’ve made the case for the following requirements:
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A “rule-conforming” website incorporating sophisticated visit-to-lead conversion strategies.
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World-class content with a strategic purpose, designed for educating, developing trust, and building confidence.
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An expanding and engaged social audience.
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High-quality backlinks for the purpose of increasing domain authority.
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Creating and deploying an inbound digital marketing strategy for web traffic development and successful e-commerce.
The large resellers in the office industry (shown in the table in section 6), who have successfully accomplished a digital transformation, are a small group of large organizations. They’ve spent millions of dollars and 20+ years getting to the position they now benefit from. Small to medium size independent resellers do not have the resources, or know-how, to independently replicate the technology and the tactics they have used, thereby eliminating options for them to implement “go-it-alone” initiatives. The scale and the complexity of the elements involved are, not surprisingly, beyond them.
In order to better illustrate this scale and complexity, let’s temporarily put ourselves in the shoes of a small to medium size reseller, and identify everything it must account for as it contemplates the requirements for an “analog to digital” business transformation.
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A new website specifically developed for the industry, content marketing, and sophisticated visit-to-lead conversion strategies.
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Vendor agnostic online product catalog specifically configured for B2B commerce channels.
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Modular information technology platform, including integrated website, e-commerce, CRM, email marketing, accounting, and digital marketing.
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Business Plan to establish goals and key performance indicators necessary for measuring performance against plan.
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Business Intelligence enhancements – a successful digital strategy requires data to be converted into business intelligence.
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Content strategy – an understanding of a content strategy must be developed. Attempting a digital strategy and development of relevant content without a plan will fail.
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Social Media platform setup – a minimum of four platforms will be necessary – LinkedIn, Facebook, Google+ and Twitter. Each of these platforms must be optimized for them to have any value.
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Social Audience Building – how to build and engage with a relevant audience is imperative. Optimizing each of the platforms but not understanding how to build and engage with an audience is not going to help.
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Digital Marketing – a solid understanding of digital marketing techniques and strategy must be developed. The scope of the field is vast and researching and developing a viable strategy will consume a lot of time.
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Relevant content – a business either has to generate its own content or outsource. No one knows the business better than the owner and outsourcing to a less knowledgeable agency involves a significant risk that the content will not be useful or respected by the target audience.
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Email Marketing – one of the most important components of a digital strategy as this will be the primary platform for communicating with prospects and nurturing leads. Significant time will need to be invested to understand modern techniques for the development of effective campaigns.
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Social currency – we’ve seen how valuable incorporating a social media strategy can be for the larger enterprises. For independent resellers, publishing and promoting social media content must become an important component of their digital strategy. Significant time will be required to develop a sufficient understanding of what to do, and then to maintain these efforts on an ongoing basis.
Attempting to independently satisfy these requirements requires an upfront investment in the region of $45,000 and recurring monthly expenses of nearly $8,000.
That’s a $140,000 expense in the first year alone, followed by recurring annual expenses of $100,000. This is a cost-prohibitive investment for a small to medium size business and, even for a reseller with the revenue scale and the skills to understand the concepts and risks, it’s unlikely to be considered a realistic option.
Furthermore, we have to look at the scale of this investment in the context of the current market conditions where a number of factors are combining to hit the top line of typical resellers:
- Market shrink.
- Competition (i.e. Amazon) and customer churn.
- Price compression.
- Adverse product mix changes.
These conditions are reducing the top line of a typical reseller by as much as 10% per year and, unfortunately, it takes a lot to turn around a decline of this scale. Even an expertly implemented digital marketing strategy will not accomplish this immediately and, although it can be anticipated to slow the decline and eventually lead to growth, resellers still have to face up to a couple of years of continued revenue decline.
The above chart illustrates the problem. The red line shows the trendline for a $10M reseller (it won’t be substantially different for a $2M or $20M reseller or any other size for that matter), and the green line shows the business outlook for that same $10M reseller implementing a full-scale digital transformation using all of the twelve elements we’ve previously identified.
How many owners are likely to have the fortitude to continue with the investment as the top line continues to decrease in year one, does no more than to stabilize in year two, increases slightly in year three, but doesn’t even pass beyond the threshold of the starting point until year four? The answer is, not many. Until a reseller has faced up to the baseline outlook and accepted the foresight to measure actual performance during the transformation against that baseline, then they will conclude the transformation isn’t working and will probably abandon it.
Furthermore, if revenues are declining at 10% per year, profits are almost certainly declining at a faster rate. Clearly, paying for a digital transformation has to come out of profits, which, as they decrease, further reduces the likelihood of a reseller being in a position to invest in the first place.
Finally, the deterrent is not just the cost. The other, and perhaps even more formidable deterrent, is the know-how. How many resellers really understand all twelve transformational elements presented in our wheel above? How many understand them well enough to seriously contemplate investing over $400,000 during a four-year transition period to try and implement them? The answers again, as we know, are very few.
And so we have the catch-22. The cost is too high, and the typical decision maker rarely has sufficient understanding of all the elements involved to trust his, or her, decision-making capability to invest funds of the scale necessary to accomplish the transformation. However, and here’s the catch-22, without implementing such a strategy the 10% per year decline in revenues will continue unabated until the reseller fails or is forced to sell at a discount.
In the concluding section of this paper, we will move on to explain how the technology solution must enable each of the different pieces of the platform to work together to help optimize sell prices and lower costs, features that serve to improve margins in a tangible and measurable way. Improved margins that, not only help finance the overall transformation strategy but also act as key performance indicators typical owners are more readily capable of understanding.
The business outlook chart we presented toward the end of the previous section contains a third data series showing the projected web traffic over a four-year transformation period. We didn’t call out this traffic projection at that point in the paper but, it’s important for resellers to understand, it’s this metric that underlies the digital transformation. Without traffic, the strategy fails, period.
It’s this requirement that places the website at the foundation of the business transformation, but, it can’t just be any old website. It must be a website that conforms to the myriad of “rules” as well as providing a value-add experience for new and returning visitors.
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Content designed to educate relevant visitors about problems they may, or may not, even know they have. Content that’s subtly created to dovetail into the reseller’s value proposition.
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Conversations facilitated, encouraged, and recorded to CRM with a variety of options available to permit the user to select from their channel of choice, whether it is via email, web forms, chat, telephone, or instant messaging via social media.
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Conversions accomplished by seeking personal details from visitors once the right to ask for them has been earned and the visitor has developed sufficient trust to be comfortable providing them.
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Product Catalog with open pricing available to browse without requiring registration or having to wait while an administrator sets up an account. Organized to promote the best customer value proposition as well as optimizing the reseller’s profits.
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Pricing that reflects competitive market pricing for the channel the reseller is selling into whether it be B2B or B2C while avoiding the “margin-destroying” outcome of cost-plus pricing models.
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Internet of Things capability provided for clients to adopt for the purposes of improved efficiency and reduced cost while also helping the reseller to reduce churn and improve its value proposition.
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Social Proof in the form of testimonials, product and customer reviews, social audience, scope and engagement (likes, etc.)
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Automation by way of seamless updates to contact records as additional information is obtained as well as dynamic list segmentation to facilitate marketing the right content to the right person at the right time.
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Analytics deployed to enable the reseller to fine-tune and promote its value proposition to its individual customers, as well as optimizing its own business model in terms of selling prices and costs for the purposes of maximizing its profits.
The immediate goal for a reseller in the current industry environment is to stabilize its existing business by reducing churn, then to uncover opportunities for upselling and cross-selling with existing customers, and then, ultimately, to start to win new customers. The foundation for achieving this is the website and, for it to fulfill its role, it must perform in terms of its suitability for developing relevant and sustainable traffic, and it must be fully integrated into the back-end systems for the purposes of converting clicks and other activity into actionable business intelligence.
The key takeaway to fully grasp here is that a new website in isolation will not automatically lead to traffic, and it will not automatically lead to an increase in customer acquisition rates. As we have explained, although it serves as the foundation for achieving these objectives, it’s only one element in the overall suite of requirements. This means, after the deployment of a compliant website, the initial focus must be on the implementation of tactics to win more business from existing customers, while also knowing these tactics will be laying the foundation for future improvements in customer acquisition rates.
Improving the existing customer experience:
It’s unlikely most of a reseller’s existing customers often visit their current website because, usually, there’s no value-add to be gained from doing so.
Customers must be provided a good reason to visit their reseller’s website. This can be for:
- The purposes of an ongoing education related to the overall value proposition.
- Conducting a transaction.
- Accessing client-specific information such as order history or product availability, pricing, analytics, etc.
Whichever it is, it must be a positive experience and it must add value from the perspective of the customer. Anything less and they just won’t visit.
Over 70% of buyers now research online before they will engage with a salesperson. These researching buyers include existing customers so, a reseller who fails to provide content that’s responsive to this research must understand this is likely to be one of the primary reasons why its customer churn rates are increasing.
The use of technology helps a reseller drive traffic to its website for the purposes of a value-add experience.
While the website may be the foundation for a digital transformation, the customer relationship management (CRM) software is the hub. This is where all the accumulated data must be mapped to and then stored for the purpose of developing actionable business intelligence.
Contact records are the foundation within the foundation and make up the single most important asset for the early stages of a digital transformation. Data accuracy is essential in terms of spelling, email addresses, street addresses, phone numbers, titles, responsibilities etc. It continues all the way down to making sure the use of upper and lower case is appropriate. Remember, contact details will be used for email personalization and, misspelled or inappropriately capitalized names, are jarring oversights that must be avoided. Finally, every contact must be assigned an “owner” who has full responsibility for managing the contact.
Forms on the website are designed for conversions but they must be smart forms. If you already have the information you asked for from a previous form submission, then it’s simple, don’t ask for it again. Ask for something else that helps you learn more about the contact and ensure each new form submission is integrated directly to CRM and the contact owner notified.
Chat has become an important communication channel and must be deployed intelligently across targeted site pages. Different messages displayed according to the content and objective of the page along with full integration to CRM for capturing transcripts, auto emailing them to contacts, automatically populating data fields in CRM as the contact profile continues to be built, and instantly notifying the contact owner of the activity.
Email client integration becomes another powerful element for measuring and notifying contact owners of engagement. Emails dispatched from the user’s email system copied automatically to the contact record in the CRM, email opens, link clicks, and file downloads instantly recorded and owners notified.
Social engagement becomes another source of actionable business intelligence with integrated data flows to CRM advising contact owners of clicks, likes, follows, and other forms of engagement.
Accounting system integration is important for a number of reasons including maintenance of one set of common (accurate) customer and contacts records, but even more so for providing signals to the CRM system to quickly identify changes in customer procurement patterns and managing thresholds for launching product and vendor review requests as well as customer satisfaction surveys.
Website activity remains at the foundation of the overall strategy, so it’s important to be monitoring the activities of visitors by recording clicks, and other forms of engagement to the individual contact records in the CRM system. Collecting, and then leveraging the information gained about visitors from their page views, clicks, content downloads, etc., underlies the ability to target them with additional related and relevant content, to continue the lead nurturing process.
E-commerce activity has taken on a life of its own, becoming a “vital sign” to gauge the health of many businesses threatened by the emergence of Amazon. However, mostly, these “vital signs” relate to retail, or B2C, commerce and are used to judge how businesses such as Best Buy, Walmart, etc., are responding to the threat. For most resellers though, it’s not about B2C. Instead, it’s all about B2B which may often require integrations to client systems alongside the provision of other features designed to eliminate customer friction points. A reseller’s online portal must also be integrated with its CRM system to allow relevant transactional information to flow through and become part of the shared knowledge base.
Email marketing will be the single most important element of the initial stages of the transformation because it will have the highest return on investment, building awareness and compensating for the lack of scale and engagement of social audiences and little to no web traffic. Email marketing must be fully integrated with the CRM system, leveraging accurate, dynamic contact records containing the latest information gathered from a contacts engagement history. It is this capability that will facilitate delivering highly targeted information, to the right person, at the right time.
Content engagement metrics provide valuable signals about the value the audience associates with the material that’s being provided. Whether the content is accessed from social media, a blog, or via email marketing, the opens and clicks continually provide clues about the interests of the audience and the channel they prefer to engage from. These clues are all seamlessly incorporated into the contacts timeline helping the “owner” fine-tune the overall nurturing process.
Contact segmentation is one of the most important components of digital marketing and must not be compromised. Dynamic segmentation of contacts into small, highly focused “lists” cannot be accomplished cost-effectively with a manual process. This explains why it’s so important to integrate every system from which important signals can be gathered and using these signals to dynamically segment the lists within the contact database. This becomes the “magic” underlying the ability to deliver the right content to the right person at the right time.
Customer transactions are, ultimately, the lifeblood of a reseller and their customers should be “intelligently” thanked for their business and “judicially” asked to occasionally leave a review of their reseller’s performance. Again, this activity cannot be accomplished effectively with a manual process, or with “dumb” automation. Sending a “thank-you” or “review” request out each time an order is processed may be appropriate for a client that orders once per month, but completely inappropriate for one who orders multiple times per day. This means business activity thresholds must be established based on ordering patterns and volume and then using these to trigger a “thank-you” or a “review” request. Ultimately, favorable reviews lead to testimonials, which helps provide the social proof potential new customers will be looking for evidence of before making a decision to move forward.
A Data Collection Agent represents the gold-standard in terms of providing the capacity for collecting priceless information about the status of all the networked printing devices at customer locations. The data aggregated from the remote collection agent reports the status of the printer and identifies when ink and toner supplies need to be replenished. The data can also be analyzed to determine overall running costs and help with the selection of lower cost hardware and supplies alternatives at the optimal replacement time. This type of integration with customers is the foundation for getting ahead of the curve and helping to reduce the churn currently taking place to online competitors such as Amazon.
The complete technology package necessary for a digital transformation.
As has been explained, and as can be seen from the images below, there are many components and there are many moving parts. Because of the complexity, it can only be through the implementation of integrated technology systems that it becomes possible to bring all these components together, and then to leverage an accumulation of data into actionable business intelligence.
Actionable business intelligence is what makes it possible to improve the value proposition, to turn existing customers into advocates, to reduce churn, and to make it possible to improve customer acquisition rates for the purpose of profitably growing a business.
This all leads us to circle back to our concluding point from section seven, that the reseller must be able to accomplish a quantifiable improvement in gross margin, an improvement that can be measured, and that will actually pay for the transformation needed for its survival.
The use of technology to optimize sell prices, build the best possible value proposition, and to optimize the product and logistics costs, becomes possible when a reseller operates its business on a platform designed to deliver these objectives.
However, even this capability will be insufficient to offset the impact of typical churn rates resellers are experiencing, explaining why it must be used in tandem with all the digital marketing elements covered in this paper.
The following chart-stack illustrates examples of $2M, $5M, and $10M reseller’s achieving three key performance indicator improvements that become possible when using technology:
- Optimize sell prices and frequently update.
- Optimize product cost.
- Improve efficiency.
- In implementing market-based pricing on a broad selection of products, not just those from the national wholesalers, but also those from a selection of additional vendors, and then using advanced pricing tools to frequently update the entire catalog, it is assumed the reseller can improve sales revenue by 1% without any additional customers or volume.
- Leveraging technology to optimize purchasing decisions and ensure the lowest cost is obtained, (from a wider variety of vendors that is typical of most resellers) while also factoring in the cost of freight, handling, and growth rebate programs, it is assumed product cost can be reduced by 2%.
- In utilizing technology for pricing optimization as well as for procurement, and by integrating information technology systems, double-entry of data will be eliminated, improving efficiency and reducing costs by 1.5%.
In these examples, the combined impact of the three elements is to improve overall gross margins by 3.7%.
- Reseller A: $2M annual sales – improves operating income by $75,000
- Reseller B: $5M annual sales – improves operating income by $190,000
- Reseller C: $10M annual sales – improves operating income by $382,000
There are several platforms available that have been developed specifically for the office products industry and from which the independent resellers may operate their business. They each have their strengths and weaknesses, but, most exhibit major flaws when it comes to the data structure underlying the catalog and the integration features that are essential for the purposes of converting data into actionable business intelligence.
While they may provide a robust solution for customers to potentially fulfill their requirements from, frequently, B2B customers are not prepared to re-key orders from their own enterprise management systems into the resellers, so they transmit their orders in various other forms for the resellers to do the re-keying. It’s for this reason these platforms accomplish little in terms of traffic generation, brand development, or the acquisition of new customers.
To access a competitive analysis with a side-by-side comparison of the primary industry platforms, please click the download button.
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