It's different, and I think I know why

I'm not much on epiphanies--maybe it's because I'm not sure I've ever had a real one, or maybe because it's just so rare that we ever get a moment of clarity so pure that we have awareness at the moment it happens.

But I had something the other day. It hit me with a certainty that I've not had all that often. It came to me when I was speaking with a rep about suppliers and how many were exiting, or altering their distribution to our channel.

It was that word--channel--that triggered the epiphany. I'm old enough to remember how companies used to sell retailers. There were lots of them and they divided themselves into several categories. We called them channels.

The Department Store Channel. The Specialty Retailer Channel. The Catalog Showroom Channel. The Wholesale Club Channel. Inside of each channel were several (sometimes dozens) of competitors.

The business was managed by "channel specialists" who understood the mechanics of their particular channel. I know--I used to be one--I managed the Catalog Showroom Channel for a consumer electronics brand.

But in the last 10 years or so the "channels" are being replaced by "customers". There is really only one Department Store of size anymore (Macy's), and the two main Wholesale Clubs are dominant to the point of exclusion. And everyone knows about Wal-Mart.

At this moment it became obvious to me that the lack of "channels" meant the brands managed their business very differently. You catered to the needs of a few super-large customers and ignored any strategy for a "channel".

And it also flashed into my brain that if my channel was a single customer--instead of the 380 customers that comprise my business--that we would probably be treated very differently than we are today. More important--more deserving of attention. Less like the Red-Headed Stepchild we often perceive we are.

This has potentially serious portent for our "channel". Brands may seek to find a "customer" to handle this business instead of working through a "channel specialist". Resellers will have fewer direct relationships and more ties to master distributors, or (God forbid) a "reverse auction" of many smaller distributors vying for business.

It changes the fundamentals of the channel--and makes those suppliers that value the business (like my company) stronger. This gives me hope for the future of this hysterically dynamic market.

But if a brand seeks to make our business a "customer" instead of a "channel" it will bode poorly for a lot of us who make our living in this market.

I see it now. Clearly. Time will tell...


Pete

The Business We're In

I'm hearing a lot recently about the business. Not just the typical "how's business?" stuff but more like "what's business?". It's more than semantics. It's important.

I think it's a change of season--and an important one. To wit:

• A large performance improvement company has dramatically expanded its offerings in an effort to provide a more "Amazon-like" experience for its participants
• That same company is using software that "shops" every price, for every order, to determine which company offers the lowest cost
• More and more end-users are demanding a retail-like experience that provides virtually limitless choice for the participant
• Some suppliers sell this channel through multiple access points--do you have any clue how many different ways there are to buy, say, Garmin? This leads to retail-like competition.

I mean, can you blame our clients for "shopping" us? If there's 10 places to buy the product, and many of them are Internet-based with little overhead, wouldn't it stand to reason that there may be fluctuations in how much our stuff costs?

And all of this poses a challenge for us "traditional" suppliers--the notion that our business is becoming increasingly a Procurement process instead of a Recognition process.

If we're in the Procurement process, then the low-cost provider will get the lion's share of the business. Score one there for Amazon. Also, suppliers that sell to "master distribution" invite a "reverse option" of sorts--a poison that erodes both our Perceived and Actual Value to the client base.

An Amazon-esque experience is fabulous for the participant but lousy for the vendor. In a program with 10,000 (or more) items, how can an individual vendor be valuable? Where does our client go when they need something "special", or support to create a new event for the end-user? To Amazon? Please.

In a Procurement environment we become less important than we already are, and that's saying something. I've been railing for years that manufacturers are essentially the last link in the chain--the final step in the process of Recognition. If we enable (or, God forbid, encourage) our clients to be in the Procurement business we lose what little value we had and that is Bad News for reps and people who do what I do.

What most of us still believe is that we are in the Recognition business, albeit at the very end of that process. We better learn how to provide more value to the Recognition Process or else we'll be left behind by our clients. Remember--THEY'RE the ones in the performance improvement business--suppliers and reps are most certainly NOT in that business. We're in the "stuff" business, and we're endangered by new technologies and paradigms.

Fatal? Absolutely not. Challenged? You bet. We cannot change the way our companies sell product to the retail space, so we need to create "value-add" to our clients or they will find our stuff elsewhere.

And why would they do that? Because they can...


Pete

The brave new world?

...and there before me was a pale horse! Its rider was named Death, and Hades was following close behind him. Revelation 6: 7-8

Well, it's not exactly THAT dire, but there are some strange signs out there:

• A Fortune 50 company just gave its employee recognition program to...a promotional products distributor. Why? Because this distributor offered the client the Amazon platform instead of the one that had been used for the past 15 years.
  
• A major youth organization, which had been using merchandise to incent their young people for 50 years, now will use...WalMart Gift Cards.

Wowzer. The first instance is truly bizarre because the PP distributor in question had no prior experience selling recognition programs to Fortune 50 clients. The second one is strange because it seems odd to give 9 and 10 year-old kids gift cards instead of something they can use.

I'm not sure how to read either one. Maybe they're just individual situations--one-offs that are not indicative of any larger trends. Or maybe--just maybe--they are showing us that the structures we've been working with for the past 20 years are showing signs of age.

I feel sometimes like I'm in a comic book--where there are Bizarro Universes out there where the rules of the "normal" universe don't apply. Where "up" is "down", "normal" is "unusual" and what I can always rely on doesn't seem to be as reliable.

And it's dangerous--really dangerous--to take selected events and extrapolate them out of context. Maybe the Fortune 50 client just wanted an "Amazon experience". Maybe the youth group had exhausted all the options for "stuff" at the pricepoints they use. Maybe.

But I think it's necessary, even mandatory, to keep tabs on these events. What might be considered an "outlier" may be the harbinger of the Next Big Trend.

They were given power over a fourth of the earth to kill by sword, famine and plague, and by the wild beasts of the earth.

God, let's hope not...


Pete