Sramana Mitra: What are the broad trends that you see in your network?
Ross Elliott: The biggest single trend is, we see people beginning to recognize that they need to distribute their product both through traditional channels and through emerging channels. The overwhelming scenario is to go through more than one channel. Oftentimes, you’ll find an industrial manufacturer that sells only through distribution. That’s how it’s been done.
Consequently, that’s the way they continue to do it. Now, they’re beginning to think about selling their product either with direct to consumer, through Amazon, or other means to get the product out. How do I tie everything in so that I’m not intermediating the guys that have been with me for years and years? I can’t sit still and watch the world become more omni-channel without making some of those investments myself.
We’re seeing a lot of folks that you would not have seen in the past thinking about selling on an Amazon or eBay. They are not only taking it seriously but starting pilot projects to sell their products through those atypical channels (for them) to make sure they’re getting a piece of where the digital transformation is happening rather than being left in the dust.
Sramana Mitra: What is your prediction in terms of the long-term trajectory of e-commerce and retail in general? Are we going to see more disintermediation? Are these distributors going to get marginalized?
Ross Elliott: That’s a conversation we have with both our distributor customers and our manufacturer customers on a pretty regular basis. The distributors have a tendency to be a little nervous at times. Most of the manufacturers are approaching this from the perspective of how to build a strategy that incorporates the people that got me to the party but allows me to extend my reach.
By extending my reach, it might be extending the distributor’s reach at the same time. It’s putting together a web store or a marketplace so that when orders are taken, they are fulfilled by the distribution channel. Most manufacturers don’t have the warehouse wherewithal to do things. Consequently, the distribution channel is a great means of providing fulfillment that the manufacturers can’t cost-effectively support.
What we’re seeing is a rethinking of the supply chain all tied together from a connectivity standpoint so that when an order is placed wherever it’s placed, it all winds up flowing back down to the right fulfillment location to make sure that we maintain the promise we made to the customer of availability and largely comes out of the inventory that’s maintained in the field closest to where the consumer might be, which is where distribution started in the first place a hundred years ago.
Sramana Mitra: Interesting. What trends do you predict are coming on in this industry and where do you see open problems that we could steer some entrepreneurs to go work on?
Ross Elliott: If I were an entrepreneur today, I think the way people interact with networks and computers and the supply chain is going to change over time. There has been a lot written about robotics in the warehouse. That’s not what I mean. I think the idea of conversational interfaces like Alexa are going to make a bigger splash within the B2B space.
You see the beginnings of things like Alexa beginning to take hold in the retail space in being able to do reorders and subscriptions conversationally. I think we’ll see that same conversational type of interface on the B2B side of the house as well, whether it’s in Facebook or Alexa. As you know, it’s beginning to dwarf retail in terms of the amount of e-commerce that’s happening. We’ve heard a lot about the Internet of Things (IoT).
IoT is fairly significant in sensors. We see that in home appliances to sense what’s going on with the food I’ve got in my refrigerator or the dryness of my clothes. I think you’re going to see the proliferation of those types of devices also from a B2B standpoint so that as I walk the product out of the manufacturing environment, rather than having to keep inventory on it, the IoT device will sense that it’s being lifted from the shelf and automatically go into a replenishment routine to determine how much I should have, how much I do have, where it’s being used to determine the best use case for it and use machine learning to predict that whole part of the supply chain and make orders for me.
I think that intelligence assistance is one of the areas that’s going to flourish either through things like conversational interfaces or through things like sensor devices. All of these feed back into an AI or machine learning scenario that helps me run my business more effectively without necessarily having to spend the time and effort on my own.
Sramana Mitra: Thank you for your time.