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Distribution Software - Maintain Channels
In the past, distributors have played an important role in distribution channels. Manufacturers relied on them to cultivate deep and lasting relationships with customers. These middlemen excelled at knowing buyer types, end users, volume, and the general lay of the land. Manufacturers understood that distributors allowed them to customize their products to cater to individual and regional tastes and preferences. And the customer seemed to prefer it that way, since they returned to the same distributors over and over for more products. Now, however, manufacturers are cutting out the middlemen and the fastest-growing method of doing this is through e-marketplaces or online portals. Companies are doing this because they believe it will allow them access to a wider range of customers and ultimately increase total revenue. However, this access can come with a price.

The risk is that manufacturers risk losing valuable customer relationships that distributors have worked for years to grow. This represents a significant amount of revenue potential, since even the most successful e-marketplace companies are only producing close to 30% of their revenue from e-commerce. And direct selling can incur increased marketing costs of up to 30% more than using traditional distribution channels. To make matters worse, companies pay a fee for each web-based transaction.

This isn't to say that companies shouldn't engage in e-commerce--they should. But at the same time, they must protect the other 70% of their revenue by protecting their traditional distribution channels so as to not alienate customers. Successful manufacturing companies use the web to preserve and enable their distributors. They do this by using software that creates websites with a familiar look and feel that customers were familiar with, such as using the company's logo, color scheme, and font. The sites are also robust enough to make customer order entry easy by having a consistent functionality.

Visitors to these sites are seamlessly transported to a site within the company's infrastructure where their order is electronically transmitted to the factory floor and the dealer's information is printed on a label that is affixed to the product. Implementation of such a system while still protecting distributors begins with a single-server environment that allows many distributors to do online business with the manufacturer. This gives the manufacturer the advantage of direct sales, yet allows distributors to expand the range of products and services that they offer to their customer base.

A customizable website will also offer multiple catalogues and will differentiate between product lines, company divisions and distribution channels. It should also allow the manufacturer to offer variable pricing, product options and margins for each dealer. A distributor-focused e-business system takes full advantage of efficient ordering, competitive pricing, and the added value of a good relationship with local distributors.

Conducting e-business in this way preserves valuable customer goodwill and maintains a primary revenue stream. Web technologies should be viewed not as mere online sales, but as an extension of existing sales channels as well as a means to enhance and add value to existing distribution channels.

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