For distribution companies of all sizes, a competitive edge is difficult to win and even harder to maintain. On one side, independent parts distributors need access to leading-edge technology in order to maximize customer engagement and compete with large retailers. On the other side, global organizations are always looking to improve controls for system pricing and inventory in order to stay profitable.
Category: White Papers
E-Commerce … The Model Is Changing – Is Your Business Ready?
Although it may come as a surprise to 30-something “digital architects,” e-Commerce has actually been around for more than 40 years.
What began as an electronic process to facilitate ordering and payments between large corporations has evolved into a strategic business system that allows companies of all sizes to connect with customers in ways that were unimaginable just a few years ago. e-Commerce enables companies to create, deliver and capture value to customers, leveraging its supply chain management, marketing and sales, and IT competencies in new ways that make the company more accessible to customers.
E-Commerce is creating a networked economy, creating value largely through gathering, synthesizing and distributing information. It allows companies to compete in real time rather than operating by batch processing, making them more competitive in a world characterized by low barriers to entry, near zero variable costs of operation and shifting competition. It organizes resources around the demand side rather than the supply side, and allows companies to strengthen relationships with customers by using technology to increase interactions.
DST has been an e-Commerce technology leader for 25 years. This white paper explores some of the critical success factors that companies need to take into consideration when launching or expanding their e-Commerce initiatives.
Electronic Data Exchange (EDI), the forerunner to e-Commerce, began in the 1960s when some large companies began transmitting business documents from one computer system to another. However, implementing an EDI system was extremely expensive, which was a limiting growth factor, as was the fact that each company had its own standards for formatting documents.
Change accelerated in the 1970s. First came Electronic Fund Transfers (EFT), which allowed payments to be processed online. Then, in 1979, the American National Standards Institute (ANSI) developed a new universal standard for sharing business documents over electronic networks, which they called ASC X12. The next major advance was the movement of e-Commerce from the exclusive realm of large companies doing business with each other. This took place when CompuServe, which had been one of the first to provide home PC users with services such as email, message boards and chat rooms, opened its “Electric Mall” in the 1980. This service allowed users to purchase items online directly from 110 merchants.
Amazon was born in 1995 and quickly established an e-Commerce standard. Much of the e-Commerce functionality that we take for granted today were Amazon innovations, including custom search options, personalized recommendations, and the “one-click” checkout system that allowed for quick and secure purchases. When Digital Subscriber Line (DSL) service was launched in California in the late 1990s, it eliminated the need for slow and inconvenient “dial up” service. In a sense, DSL unshackled e-Commerce as it worked its way across most of the country.
e-Commerce Changes Everything
For most established companies, particularly B2B-oriented companies, their online presence was initially limited to online brochures. These websites were little more than online sales literature, as companies resisted e-Commerce due to the potential for channel conflict and cannibalization.
However, many of these companies now embrace e-Commerce, and some of them are actually doing it well. They understand how to leverage their brand names to bring customers new options for interacting with them and are reaping the rewards for their investments.
The benefits of a robust e-Commerce system from a company’s perspective are myriad. First, and most obviously, e-Commerce provides lower transaction costs by significantly lowering upfront order-taking and post-sale customer service costs. In effect, it opens a company for business 24/7/365 without the corresponding increase in headcount and other overhead. It also allows companies to sell from larger catalogs, which can be updated in real-time to make new inventory available for sale immediately.
From the customer’s perspective, e-Commerce allows them to shop how and when it is most convenient to them, a benefit that cannot be overstated. In addition, e-Commerce gives businesses and consumers more shopping options by exposing them to businesses they would otherwise have never heard of.
Implemented and managed correctly, e-Commerce is a strategic business advantage, differentiating a company from its competitors. However, there are too many turnkey products in the market that just don’t provide companies with the flexibility they need. Sophisticated companies are looking for bolt-on solutions that can be customized to solve their specific problems and that offer an investment model that makes sense for their businesses.
An Example: e-Commerce In The Automotive Aftermarket
The automotive aftermarket offers a good case study on how e-Commerce is expanding markets, not replacing the underlying structure.
For example, regardless of how customers place their orders, those parts will have to be warehoused, inventoried in local stores and delivered as needed. Due to continued vehicle complexity, even the most highly-trained technicians will need professional counter people available to answer their questions – despite all of the technical information available online.
From an e-Commerce perspective, however, the aftermarket remains inefficient. Companies must accept that because technology changes rapidly and continuously, e-Commerce cannot be a one-time initiative. Unfortunately, instead of developing and adapting new technology, companies are still spending time and money trying to work around old technology.
Too many aftermarket companies still see e-Commerce as an electronic stock check or just another way for customers to place orders. Even if their business is focused on B2B trade, they forget that their customers use Amazon, e-Bay and other B2C sites regularly, and expect the same kind of user experience from the companies they shop for parts.
Data has become the driving factor. More specifically, companies need to identify the content that users value and get it on their screens. In some instances, this will be a company’s own intellectual property; in others, it may come from a third party. Regardless of where content originates, however, the key is to present it to users in a compelling way. For most companies this is a completely new way of looking at their e-Commerce strategy. Instead of concentrating on what is best for the company, they must focus on what is best for their customers.
True aftermarket e-Commerce solutions must allow companies to adapt to changing market conditions. If a company changes its distribution management system, for example, its e-Commerce engine needs to be portable to accommodate the new platform. Similarly, e-Commerce needs to be flexible enough to handle multiple Buying Group relationships, Internet specials, and expansion into additional market verticals.
Most organizations consist of many legacy business systems, and they are understandably hesitant to implement new technologies that would force them to change parts of their business that may be operating at acceptable levels. DST understands this, and for more than 10 years has been delivering bolt-on e-Commerce solutions customized to meet specific customer needs faster and more efficiently than most companies thought possible.
DST TurboParts® is a bolt-on solution that can be customized to meet an organization’s unique needs. Furthermore, DST’s strategic partnership with IBM brings the power of the IBM i-Series to support e-Commerce initiatives for companies of all sizes.
TurboParts has become the preferred e-Commerce gateway for global organizations that want to provide users with the content they need to make intelligent purchasing decisions at their convenience. The TurboParts e-Commerce engine transforms order entry and fulfillment from an operational function into a strategic business advantage. It allows companies to increase sales and expand their customer base by making them “open for business” 24/7/365 – and it accomplishes this without adding to payroll or forcing customers to consider making a complete distribution management system change in order to utilize the power of a best-in-class e-Commerce engine.
With TurboParts, scalability is a standard, with custom pricing models to allow businesses to budget intelligently. Moreover, end users don’t need to install additional software to interact with TurboParts – all they need is a browser connection.
TurboParts provides “right time information” through easy-to-use, advanced sales data analytics to help customers improve inventory management. The system’s drill-down capabilities provide extraordinarily timely information that can be used to run businesses more efficiently – including lost sales data and information on customer order patterns by day of week and time of day.
Many companies are looking to maximize sales opportunities by offering Internet specials tied to real-time inventory. This functionality is built into TurboParts, allowing companies to customize TurboParts without relying on third-parties to create these offers. Due to its open architecture, the system can accommodate content from a variety of third party solutions.
A key functionality of TurboParts is the Rear View Mirror, which allows a company to place links behind photos on TurboParts pages. Even the best sales people may only be able to talk with a limited number of customers in a day to inform them of upcoming promotions or company news – TurboParts provides users with access to external catalogs, vendor websites, .pdf documents and promotional literature at the click of a button. This allows them to get the information they want when it is most convenient for them, generating the positive online interactions that result in improved customer service levels and a stronger affinity for customer brands.
In order for customers to receive the full benefits of their DST e-Commerce solutions, they need to drive usage throughout their organization. Unfortunately for too many companies, this is easier said than done.
DST understands that the old pricing models no longer make sense for customers, and has developed creative, flexible models that encourage full usage and allow a company to still intelligently manage their budgets. DST believes that cost should not be a driving factor in whether a company will be able to deploy an e-Commerce solution that helps them remain competitive in all of their markets.
A number of factors drive usage, such as geography and corporate culture, which is why DST customizes every phase of implementation – from the actual technology to training and support. The DST team utilizes best practices gleaned from years of working with companies in different markets and of varying sizes to identify programs that are most likely to generate those results. TurboParts is designed to be user-installable, but DST recognizes that as with all technology, there are critical times when a user needs a real voice on the other end of the line. The resultant pre- and post-implementation support programs reassure customers that DST stands behind its solutions beyond providing a series of tutorials and Help documents.
Companies considering an investment in e-Commerce need to believe that their chosen solution is truly aligned with how the company wants to go to market and encourages full deployment to all touch points. They need scalability and custom pricing models that allow them to budget intelligently. They want to be able to bolt on other third-party solutions that enhance their e-Commerce engine. Some businesses work with multiple e-Commerce solutions because of different purchasing and customer relationships, and need a core platform that will make it easier for them to deploy and manage the e-Commerce part of their business.
DST is demonstrating a unique ability to solve all of these problems, which is fueling the company’s growth. For instance, the company continues to win major enterprise deals, including retailers and manufacturers, as well as business with independent distributors and buying groups.
e-Commerce has come a long way since the days of Electronic Data Exchange.
What began as a way for large companies to share business documents has evolved into a service that customers, B2B and B2C, expect. e-Commerce has transformed the model away from companies pushing product into the marketplace and towards customers demanding how and when they will interact with a companies.
Companies can continue to treat e-Commerce as nothing more than a way to take costs out of their operations, or they can play second fiddle to companies that embrace the new model and use e-Commerce to help strengthen customer relationships. Forward-looking companies are implementing bolt on e-Commerce solutions that are customized to the unique needs of their businesses, and that seamlessly integrate with legacy business systems.
The e-Commerce solutions that worked even five years ago are no longer good enough. In today’s competitive global economy, a powerful e-Commerce program can be the difference between prosperity and stagnation. Standard solutions deliver standard results, and that’s just another way of saying inefficient and inconvenient.
Even companies that recognize the competitive advantage that can be gained from a robust, customer-centric e-Commerce program oftentimes fail to execute the initiative properly because they attempt to do this “in-house.” Captive IT departments are responsible for a myriad of programs within a company, and juggling those responsibilities can force them to lose focus on an e-Commerce initiative, resulting in programs that take twice as long to develop and cost 2-5 times more than they anticipated. Moreover, outside experts have a broader view of “best practices,” which make the final solution more robust than might otherwise have been the case. Finally, because creating custom e-Commerce engines is not core to a corporate IT department, the likelihood is small that they will continue to look for ways to improve their solution once it has been implemented. Innovative companies partner with DST, and use the time and money they save to focus instead of their business’ core competencies, letting DST manage and drive their e-Commerce initiatives.
DST understands how to fully unleash the power of e-Commerce, creating the proverbial “win-win” situation, where end-users get the convenience and functionality they need and companies get the results they need to propel themselves to the next level.