You’ve heard the story before. A large, successful company sets up shop in an emerging market. They take the right first steps, limiting their exposure by identifying an independent local distributor with a solid record. Not surprisingly for a big-name company acting with caution, initial sales are robust. But then, there’s a slowdown and sales turn lackluster. Why?
Does the local partner possess the skill, staffing, and motivation to evolve with the company and the marketplace, and keep products moving smoothly from point a to point b? Does the partner still “get” the product and value proposition? As a company struggles to answer these questions, the relationship sours, along with sales.
Could online platforms be a panacea? As the B2B answer to e-commerce, digital distribution systems bring companies, products, and customers closer. They take manual processes and human error out of the equation, for faster, more effective operations across the supply chain. And their operations are trackable and tweakable, with impartial reporting of metrics, progress, and results.
But before a company goes too digital, too quickly in its global distribution, it’s important to evaluate all the options: human, high-tech, and otherwise.
Platforms boom—but may not be right for all products
As distribution platforms offer undeniable advantages in terms of efficiency, scalability, and some areas of cost savings, such as labor, business leaders across industries and around the world have been taking notice.
One example is XIAMETER,® an online-managed, low-cost sales channel developed by Dow Corning for bulk sales of the multinational corporation’s commodity silicones. The new brand offered competitive pricing for customers willing to make purchases without research or technical support. Within 10 years of XIAMETER’s launch, online sales accounted for 40% of Dow Corning’s revenues.
In the auto industry, Bridgestone and Goodyear have integrated distribution, warehousing, sales, and delivery into a single portal: TireHub. The biggest behemoth of all, Amazon Business, has achieved $10 billion in annual sales as a portal where companies can purchase almost anything.
B2B distribution differs in many ways from the e-commerce portals upon which the platforms above are based. Many time, the stakes are higher, the relationships deeper, and the journey more complex.
McKinsey notes that “top distributors are aggressively expanding their ‘moats’—including deep product knowledge, technical expertise, service capabilities, and a long tail of products that pure digital players can’t match without big investments in technical talent and physical assets.”
In fact, certain products and services are particularly well-suited for such specialized expertise. Think complex medical devices, for instance. Expansion into a new global market for this type of product demands regulatory knowledge, industry expertise, insights into healthcare delivery, technological readiness, procurement and reimbursement systems, and more. In short, this kind of distribution scenario requires an on-the-ground representative steeped in product knowledge and understanding of the local landscape.
The irreplaceable value of on-the-ground insight
Even as an online distribution platform offers immediate, worldwide reach, the content and strategy behind that platform needs to be in line with the local environment. And often there’s no substitute for on-the-ground insight.
A human distribution partner can:
- Help you keep products in line with local customer tastes—including the emerging and word-of-mouth trends cookies and analytics have yet to catch
- Navigate cultural issues for marketing and communications
- Provide human intervention, problem-solving and empathy when something goes wrong, like a delayed shipment
Strengthening the partnership with emerging technologies
As companies work with local distribution partners, new innovations offer great potential for easing the process and improving results.
Natural language processing (NLP), for instance, uses smart algorithms and self-teaching mechanisms to turn language input into appropriate responses and actions. NLP’s value for global distribution is obvious. Imagine reducing language barriers in compliance, shipping milestones, performance metrics, and more.
NLP can also be used in tandem with machine learning to derive insights from previously cumbersome-to-analyze unstructured data sources. Think documents, emails, memos, logs, and more. In the words of global technology leader SAS: “Natural language processing uncovers the insights hidden in the word streams.” This supercharges an internationally focused company’s ability to monitor the landscape, spot trends, and analyze customer sentiment.
Predictive analytics, another new technology, uses historical data and machine learning to turn information into insight. This could yield powerful results in planning and resource utilization.
Ready to get started?
Specialized consultants and advisors can help you navigate the evolving distribution landscape to find the best solution for you, from digital innovations to on-the-ground partners and beyond. For more information, contact us.