Why the web is still leaving dealers in a tangle

It’s hard to imagine a business environment where the internet doesn’t exist, such is the profound impact that the web has had on the way that companies operate and processes are carried out.

Yet in the world of commercial catering equipment sales, this commodity we have now come to take for granted continues to drive a wedge through the industry.

The majority of kitchen dealers I speak to instinctively cite the web — or more accurately web sellers — as the biggest threat to their profitability.

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It might seem absurd that this subject is even being raised in this day and age given the prevalence of online buying, but the truth is that with dealers seeing margins squeezed from all sides, competition from web shops selling purely on price remains an ongoing source of irritation.

Many still find it difficult to come to terms with the fact that an operator or end-user buyer can simply type in a description of a product or a model number and find a dozen different suppliers all claiming to offer instant availability at the most competitive price.

While everybody has to accept that it’s a free market, it’s clear that traditional dealers resent manufacturers for not taking control of the situation.

Manufacturers might not be able to dictate price points but they can choose who they do business with. They can also control their discount and rebate programmes to ensure preferential treatment for sales partners that truly invest in delivering value, especially when those sales partners often have to bear the overheads of showrooms and service staff too.

It goes without saying that some suppliers are quite happy to let the web channel do what it wants if it results in more sales for them. Equally, I know of others that are actively distancing themselves from such channels for fear that it is either damaging the credibility of their brand or causing irreparable damage with existing partners.

The situation is certainly not as clear-cut as it might seem, especially when manufacturers are loathe to turn business down.

As one supplier said to me just recently: “A lot of the dealers don’t want to stock five or 10 items these days but they still want the best prices compared to an internet seller. Yet that internet seller is probably being very proactive in the way the market is moving and although we might give them less discount they are selling regularly and don’t mind what margins they make.”

Whether the market likes it or not, internet sales are here to stay, and new and traditional sales channels will need to co-exist.

It’s up to manufacturers to decide how painlessly they can accommodate both.

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