e-Commerce isn't just putting brick and mortar on the Internet. It is a whole different beast.
I thought about my next-to-last posting and realized I just scratched the surface on the topic. Online sales are not just a variation of old-style brick-and-mortar sales, but a whole new beast. Let me explain.
When I gloriously dropped out of college, I got a job with an Aeroquip distributor in Syracuse, right off Carrier circle. I was making the amazing sum of $4.75 an hour and happy to have it. That was enough money to pay the rent on an efficiency apartment and put gas in my van and beer in the fridge. Oh, the 1980's!
It was good work. I made hose assemblies for everything from construction equipment, to stock cars, to Harley-Davidsons, to Singer-Link trainers. It was an educational experience but within a year, I was able to land a job at nearby Carrier for almost double the salary - an offer I could not refuse.
As a distributor for Aeroquip (now part of Parker-Hannafin) we stocked a lot of parts. If someone needed a hose, and needed it today, we had the materials in stock and could cut the hose to length and install the necessary fittings on each end. If you are working construction, you can't afford to wait a few days for Amazon to fulfill your order, can you? So that is one reason why brick-and-mortar still exists, and indeed, the company I worked for is still around, but under a new name.
We kept parts in stock, and if someone returned a part, unused, we often would take it back, minus a restocking fee. And in businesses like that, you could send back parts that didn't sell, to the company that made them, for a credit - in most cases.
So you had this distribution chain that started at the manufacturer, and then went down to regional distributors with warehouses, and then to local distributors such as ours, and then even to retail stores, which might sell to the general public.
Obviously, the further up the chain you went, the lower the price on the item. We had "price books" which had colored pages, and each item was listed in each section. For retail customers coming in the door for a shiny stainless-steel brake line for their Harley, the price was on the pink sheets, as I recall - the highest price. For the local rock quarry, who sent us a lot of broken hoses from big excavators, they got the white sheet, or a much lower price. For big companies, like GE or Carrier, we gave even bigger discounts.
We also had salesmen. And I recall driving them all to Albany in a big Chevy wagon one day, to a sales convention. The salesmen took the purchasing agents at GE and Carrier and whatnot out to lunch, and sold them on our company as a sole supplier for hydraulic and pneumatic hoses and whatnot.
When I was at GM, I shared a house with other GMI students and a purchasing agent from the company. Every Christmas, we would come back to the house to find a stack of boxes against the front door, each addressed to "Nate" the purchasing agent. "To Nate, with best regards, Happy Holidays! Sincerely, ABC Industrial Supply" And inside would be a new boom box or even a television or something else nice. Yes, there is bribery involved, and Nate's predecessor was fired for taking cash under-the-table to favor certain suppliers. Act shocked.
So, brick and mortar might not be totally dead. There are still situations where you need to have parts NOW and not a week from now, or even overnight - when a plant is down or a machine is out of service, and the costs are measured in hundreds or thousands of dollars an hour.
But for the rest of us, overnight or a week is just fine, so there is little "need" to have an inventory of parts for us. As I noted in my last posting, I received two items ordered online in less than 24 hours. Nice, but unnecessary. I could have waited a week for either - but was not offered a slower shipping option.
But the big thing is, for online sales, you need not have the manufacturer, warehouse, wholesaler, distributor, retailer chain. You can cut to the chase and sell directly from the manufacturer. For example, I am a big fan (still!) our our Bissell rechargeable vacuum. I shopped this around, on eBay, on Amazon, on vacuum cleaner sites, and the best deal was from Bissell itself. A lot of companies are cutting to the chase and selling directly to customers online - and why not? It isn't like the distribution chain is adding any value here - allowing people to touch and smell the product or try it out or "have it in stock". So why not keep all those profits for yourself and sell directly?
Of course, most manufacturers who go this route don't undercut their distributors. So while the Bissell site was the "best deal" it wasn't really much of a better deal than other online retailers. In fact, like the shock absorbers or Merrill sneakers, it is suspicious how every site online has exactly the same price. With the Merrill sneakers, you might find a pair from the company for $99.99 or maybe a pair on Amazon for $99.49. Once in a while you find one on "closeout" for $69.99 but that is rare. It is a bit of price-fixing, I'm afraid.
This does not mean distributors are dead or that salesmen are out of business - only they have morphed to a new mode of operation. The Willy Loman of today isn't some schmuck in a ill-fitting suit, driving a "business coupe" with "sample cases" in the back. No, no, he (or she) is an "influencer" on Social Media, hawking products and promoting them - with convenient links and coupon codes to offer small discounts to their "followers".
Salesmen are also the people who cruise the forums and post messages promoting the company's products, but posing as ordinary consumers. Salesmen today are chameleons - they take all shapes and forms, like shape-shifters. I suspect it is a hard job, these days, being a salesman - with the ground shifting underneath you all the time. You go to a company to hawk your wares from a sample case, and the purchasing agent is buying stuff using his cell phone, while he's talking to you. I suppose he still takes bribes, though.
I think that will be the trend - to see less warehousing and distribution for retail consumers. Brick-and-mortar will still be around for "need it now" supplies, including industrial supplies - but even then, some things can be ordered in advance, online. For us consumers, where time is not often of the essence, ordering online is already supplanting brick-and-mortar. Why would you go to a GameStop store to buy a piece of software that you can sample and then order and download, online? This week's CEO is pushing a "turnaround plan" but the only turning they are going to do is circling the drain.
As I noted in my earlier posting, much of what people sell online these days isn't stuff they have in stock. At the hydraulics company, we kept a small inventory of the most popular fittings and assemblies. But if someone wanted something we didn't have in stock, we'd have to order it from the warehouse in Albany, and it would be there the next day, delivered by our own delivery truck. In an era before overnight delivery became a "thing" this was the best we could do - and people really didn't have much of a choice, either.
Today, a host of "retailers" are just lead aggregators. They make a "sale" and then enter the data on a computer and the manufacturer or wholesaler "fulfills" the order. Or even Amazon fulfills this for the salesman. I don't recall this being the case in "the old days" except for large industrial products.
If we sold a hydraulic fitting back in the day, we sold it. It literally passed through our hands. I don't recall having things drop-shipped directly to customers from the manufacturer. If we did, it was a rare thing. Today, it is a thing. A "retailer" is little more than a website and a few people in cubicles answering phones and typing into computers. No "back room" with inventories of parts. Or damn few parts, anyway.
Of course, you wonder why companies bother with salesmen anymore - or these "influencers" and the short answer is, salesmen sell products. You can have the best product in the world at an attractive price, but without salesmen and advertising, it won't sell very well. So you have to get the word out, buttonhole "prospects" and pitch them the product and then close the sale, or nothing gets sold. Maybe back in the day, this was the pushy salesman getting a prospect to sign on the dotted line. Or the salesman offering small gifts and bribes (or hookers and drugs - yes, act shocked) to the purchasing agent at a large company. You grease the skids, as they say, to make things happen.
So salesmen aren't dead, they've just morphed. Now, like the products they are pitching, they are on the Internet, doing a YouTube video for some car accessory, with a coupon code for subscribers if they buy now! It is advertising and sales, rolled into one. Or the company I bought the shocks from, posting links on a truck forum - but not actually having the parts in stock. Their job is just to make sure they get credit for the sale. Interesting, no?
