How will Los Angeles distributors do business tomorrow? With business models changing at Internet speed, what you supply and how you supply it today could change radically in the near future.
You don’t think so? Here’s one example. End-customers used to buy IT servers and software licenses. Now they buy cloud computing power. Instead of making one-time purchases with large chunks of capital, they pay out a much smaller amount on a monthly basis.
Some IT distributors were smart enough to see which way the wind was blowing and started offering their cloud computing services that resellers could then sell to end-customers.
The cloud computing model was a big change for many, but there are even bigger changes in store that could dramatically affect the roles of Los Angeles distributors. Automobile manufacturer Daimler AG is busy building a rental service network of its Smart Fortwo cars that end-users can book by the minute with a smartphone app.
The service operates in selected cities and users access the car parked nearest to them. The nearest “Car2Go” service is currently in San Diego. Will it be in LA tomorrow?
Meanwhile, agricultural machinery supplier John Deere has teamed up with partners to offer farmers a guaranteed crop yield. In other words, the promise of a result, instead of just the traditional purchase of a tractor and bags of seeds and fertilizer.
Even if other distributors may not have to grapple with products turning into services like cloud computing and Car2Go, other changes are on the way. Omnichannel distribution is one.
In this distribution model in the apparel sector for example, customers can order an article of clothing on a website, pick it up at a local store, and return it to a different store if they change their mind. Distributors will have to be able to handle the different channels and systems involved in both directions: sales and returns.
Adapting to Another Power Shift
All of this means distributors will need to plan for the future. In doing so, they will also need to take into account an additional factor. The balance of power has shifted significantly once again in favor of the end-customer.
In the IT sector, for instance, when a customer purchased a software license, the reseller and the distributor made their margins upfront. In the cloud computing model, those margins take much longer to come in. And now the customer can cancel at any time.
In a similar way, Omnichannel distribution puts even more power in the hands of the end-customer, requiring distributors, in particular, to be nimble and well-organized to handle the different product flows in and out.
Crystal Ball, Anyone?
Los Angeles distributors don’t have to just wait and see what happens, however. Market data, customer input, and reseller feedback can all be captured and examined to see what the future is likely to be.
Buying patterns can be analyzed to make sure that distribution is optimized today and also to spot opportunities to become more competitive tomorrow. Business intelligence and business analytics software programs have become more affordable and easier to use, often thanks to cloud-based solutions. That means Los Angeles distributors have more chances to see where they should be heading next.
What’s your prognosis for distributors in your sector? Give us your point of view in the Comments space below.
If you own or manage a distribution company in Los Angeles, and you’re looking to stay up to date on the latest technology, be sure to download your free guide, How COOs at Los Angeles Distributors and Manufacturers Get More Done: A Guide to Productivity, Data, Staffing, Delegation, and Making It Home for Dinner Most Nights.