The notion that ecommerce might be a serious threat to the future of distribution has been present since the internet started to take off in the mid-90s. But online ordering hasn't replaced distributors or put them out of business. It may have added to margin pressure, but even that point is arguable.
Most distributors have - publicly at least - taken the opposite view of ecommerce - that it's an opportunity rather than a threat. The logic that most of the leading distributors follow is that by allowing basic orders for standard products to be made over the web, it will free sales staff to spend more time helping resellers develop value added sales.
But distributors are duty bound to make this their official position.
By taking orders online they can, potentially, reduce costs and become more competitive and profitable.
Whatever their true motivations, no theory is yet to be proved accurate.
Ecommerce has not cut distributors out of the supply chain and can't reasonably be blamed for the difficulties many have had over the past year. Now, several months after some distributors implemented their online ordering systems, the proportion of orders being placed with them over the web is still well under 10 per cent and is probably below five per cent.
The commonly held view is that online ordering must be provided as part of an overall service. Some customers prefer it and the number who use it will grow. Almost all resellers say distributors already use the web to gather price and availability information, but most still ring in their orders.
But growth in online ordering is inevitable and some distributors envisage a time when perhaps one-fifth of their orders will be taken over the web.
Those that can reach this position fastest will have an advantage over their rivals as they will be able to reduce costs faster and become more competitive, either by cutting prices or enhancing services.
For the past 18 months, CHS Electronics' Interact online system has been offering product information, price and availability and ordering for resellers over the web. Peter Rigby, marketing director of CHS, says about 650 resellers use the system, mainly for pricing and availability.
CHS offers an alternative to Interact - a tailored service that downloads information on the pricing and availability of a selected group of products to the reseller's system. Provided overnight in the form of an FTP file, it means the reseller doesn't have to go online every day to check the products it is specifically interested in.
Rigby says about 350 resellers use this service, but with its current capacity, this is probably its upper limit, he adds. The service places a considerable overhead on the company's AS/400-based system, which manages the data collation and downloading, so the service may not be extended to many other resellers for the time being.
A wide range of information is available though this tailored system, including product information; part numbers; availability; projected availability - if it's not in stock today, when it will be - and back order information.
A lot of work goes into the definition of what exactly is required before the downloads are commenced, Rigby explains.
In common with other leading distributors, CHS also has EDI links with about 50 customers. But it does not expect to extend this to a wider audience or at least, not one beyond the corporate resellers. All distributors point out that it will probably cost smaller dealers too much to set up EDI links even though, once established, they can easily be adapted for use with many different suppliers.
For the wider community of resellers, CHS is developing its web products.
"The next generation of site will have a lot more transparency and give resellers the ability to effectively use our site as a white site - with their own name and brand up front with our stuff sitting behind it," Rigby says.
This product is under development and should be available to resellers in October or November. Although it hopes the added flexibility developments will bring resellers to its website, CHS is not expecting a massive or sudden uptake of these services. Nor does Rigby envisage a rapid move towards web-based ordering. It's still a small part of the business, totalling less than five per cent.
"At the moment, I don't believe the market is ready to fully embrace ecommerce. We have customers who place orders on the site, but still call up to make sure that it has gone through all right. It's not going to take over from the traditional methods," he says.
Tech Data's In Touch online system has been available for more than four years via dial up, and on the web for the past 18 months. It has more than 6,500 registered users and the company claims to receive about 1,000 site hits per day. Usage is mixed, says Andy Dow, general manager of marketing at Tech Data, although a lot more resellers use it for pricing and availability than ordering.
"A lot of sales staff look at it for pricing and quotation information and buyers use it separately to place orders. It's also used to identify products, to look back to technical screens and to link to manufacturer sites where they need to go right down to the specifications," he adds.
The use of the web for pricing and availability even extends to customers with EDI ordering links, says Dow, who use it for quotation details and to place orders via EDI at a later stage. It's rare, he believes, for resellers to go into In Touch, obtain pricing and availability data, and place the order in a single visit - orders will normally be placed on the second visit or over the telephone.
In Touch has been running for longer than any other distributors' net-based trading system and probably has the biggest population of users.
But Tech Data still concedes that, even though the figures are growing, well under one tenth of its business is done online.
Dow says: "The US model is way ahead of us and it is doing four times as much business online. We have no doubt that we are moving in that direction."
Registration is completed online, and a password and identity are allocated to resellers with an account. Personalised pricing is available through the system.
Extensive product information and search facilities are provided by In Touch, and stock availability is updated hourly. Resellers can also check the exact stock position on any individual item at any given moment before placing an order.
The system enables resellers to look at their back order status and is also one of the few that provides a link into the courier's proof of delivery system. Tech Data's partner here is TNT and Dow says delivery details and a digital image of the recipient's signature are available to resellers 20 minutes after the package is delivered.
Like most distributors, Tech Data already has EDI links with big corporate reseller customers and it already has the capability of providing an automatic triggering of orders and picking lists in its warehouse through these links.
Dow says the next stage of its development is to extend that type of functionality to the internet, although he is unable to put a timescale on when such services might be made available.
"There is constant investment in information systems. To say we will have that service or any other available in six months' time is impossible - but that has to be the next step," he adds.
Datrontech is getting ready to go live with its first online ecommerce system for resellers. In mid-August, it was testing a system with 60 customers and nearing the end of the trial period. The plan is to launch at the end of September.
Datrontech Online will be available to all account-holding customers and, as with other systems, resellers will simply need to register on the website and wait to be allocated an identity code and password. Datrontech is also going to allow the placement of credit card orders over the site so shoppers will be able to use it.
Mandy Birtles, marketing and communications director of Datrontech, says a lot of work has been put into developing the user interface. Pull-down menus and a search engine which searches by product category and within price-ranges, help resellers to find what they want and compare prices.
"It is, I think, quite a lot better than anything the competition has at the moment," she claims.
The functionality does sound promising. Birtles says it will be possible to set an overall price for the system to be built and specify price ranges for specific components of a system within the overall shopping list.
Customers will, for example, be able to specify that they want a graphics card which costs no more than £100, but no less than £50. It will also be possible to specify next-day delivery to a company's premises, or direct to the customer site.
Datrontech believes it has stolen a march on its rivals by making one individual at account-holding customers a superuser. This person will have the power to allocate access rights to other individuals within their own organisation. They will be able to limit the ability of staff to place orders or to buy certain products.
There will also be facilities for resellers to check current account status and the credit facilities available to them. Pricing will be provided on an individual basis for account holders, but credit card buyers will be using a standard pricing matrix.
Datrontech has not included back order checking in this development, but it is scheduled in, says Birtles. The company plans to introduce order tracking, an online returns service and a facility for checking back to vendor inventory levels so the system can predict availability, even if stocks are run down or fully allocated.
It will also develop systems that enable through-trading with reseller websites. Datrontech already operates a small number of EDI links with leading resellers.
The current level of product information on the Datrontech website will be improved, with additional emphasis on components and systems taking resellers into detailed specifications. The distributor will continue to offer support forums.
Datrontech believes the use of all the online areas will increase as a result of the introduction of the ecommerce system. It is hoping to have 30 per cent of its account customers - about 1,000 resellers - registered for the system within four months.
But Birtles is not expecting an exodus from the telephone to the PC terminal for order placement. "Not many actually have ecommerce systems themselves and I think generally in the channel there is an in-built need to barter - you can't do that with ecommerce because online, the price is the price," she explains.
Ideal Hardware's big online ordering and information system (Boris) has been in place since November last year. The distributor went into the ecommerce era with all guns blazing, believing there would be massive benefits for both resellers and itself.
But that belief has manifested itself more through the IT Network Internet venture, which is now a separate arm of the InterX Group, rather than online ordering. For Ideal, Boris has proved to be popular as an online pricing and availability resource, but less well patronised as an ordering system.
Karl Harris, ecommerce specialist at Ideal, says the distributor acknowledges that online ordering won't suit everyone all the time. Pricing and availability is the top priority for Boris' users. More than 3,000 resellers are registered with the system and he adds that well over half of them regularly use the system for price and availability.
"We are finding that people use the pricing and availability features a lot, but there is still a tendency to place orders over the phone. But the number that place orders regularly is growing," Harris says.
He was unable to say how many regularly place orders using the system, but it's clearly a much smaller percentage. Ideal was also unable to reveal the proportion of its total orders that are received via Boris. Most companies are keen to keep this information confidential.
Pricing deals on the Ideal system are tailored to the individual dealer and Boris is one of the few systems to provide real-time stock availability figures. The system has become a part of the whole selling process at Ideal, Harris claims.
"The sales staff relay on it as a support system for their dealings with the customers. It's a way to cut down on the amount of time spent on a call, or to avoid calls," he says.
Boris is in its second manifestation and is soon to shed its skin again and enter a third era of development. Ideal is in the middle of putting its plans into action further developments should appear in the next three to four months.
Harris says: "We are listening to our customers more and starting to interact with them in the way that they want us to interact with them.
Rather than simply giving them one service to use, we'll give them a number of different entry points.'
While the service is clearly going to change and perhaps be expanded, Harris insists that Ideal does not expect it to take over from other forms of communications and ordering. However, it is already a contributory factor and part of the overall services offered by the company.
"Everyone becomes hung up about the amount of business that is done online, but outside that we do know that there is an attributed value for the customer," Harris says. "We know that Boris supports our customers very well indeed and that it is valued by them. We are all still learning at the moment but ultimately, it is the customer that will benefit."
Like other distributors, Ideal does have EDI links to some of its main customers but has no plans to take this facility onto the web and provide a link through from the web-based ordering sites of reseller customers.
Ingram Micro has one of the most developed ecommerce products in the distribution sector and offers its customers four different ways of doing business online.
The dial-up Caps system has been available for many years and provides pricing, availability and online ordering. This is available as a green-screen system, but has also been replicated through a browser type interface on the web, on Ingram's reseller business centre.
The company says it does an increasing amount of business on the web in the UK and that this is "a healthy and growing part of our business".
But it can't reveal how much business it does through the website or other online activities.
Ingram also has an EDI option for larger resellers and an extended version of this, called Inside Line, gives customers direct access to Ingram's internal systems, enabling them to check back order details and stock availability in depth. This system is not strictly in real time, but is updated on a regular basis so data is never more than a few minutes or hours out of date.
Inside Line requires the development of a specific API for the reseller.
The scheme was brought in at the end of last year, and Ingram claims a significant number of resellers are having a link developed for this service. It is available globally to Ingram's customers, which suggests it's geared mostly towards the global reseller fulfilment contracts that the main broadliners are pursuing with vigour behind the scenes.
Pauline Taylor, senior manager for ecommerce in Europe at Ingram Micro, says the wide range of services is made available because customers have vastly differing needs. EDI and Inside Line are more or less mutually exclusive, and Inside Line developments will require considerable investment.
Smaller resellers are not expected to take up this option.
Interestingly, Inside Line will also open the door for integration between reseller and Ingram systems, meaning that orders placed on the reseller for certain products will trigger picking and despatch activity in Ingram's purchase order processing system. It could also be done with EDI links, says Taylor, but will always require some kind of integration with the reseller's back end systems.
Back on the web, Ingram provides product information, pricing and availability, and allows resellers to place orders. The distributor's reseller business centre is undergoing a redesign and will be available in its revamped form by the end of the year.
Taylor says: "The business centre will be easier to use and we're putting some additional functionality in the back order management. Historical order information will be made available and the search engine will be improved."
More development can be expected, she adds. "This will be phase one and we will continually assess the requirements of the website and upgrade it. We get productivity gains from it and it allows us to focus more on account management. We have great hopes for the web in assisting our SME customers. With EDI and Inside Line it's much more of a project, so there are fewer numbers involved, but we're seeing significant growth there as well."
Although it has made the least noise about its electronic ordering, Northamber has been offering secure order placement to registered resellers for the past three months and has about 1,200 active accounts. Any reseller with a current credit account can register.
The restricted area on the website allows users to browse for product information and view stock availability - not in real time, but updated hourly. Northamber used to provide a real-time service, but found it unnecessary and uneconomic in terms of the strain it put on the system - this is perhaps why so few distributors attempt to run the stock figure in real time.
Resellers can also view call-off statements and outstanding orders, so they can see what has and has not been delivered and, in the latter case, the reason for the delay.
It's also possible to see proof-of-delivery information online. This links to the system run by Nightspeed couriers and feeds off the information on its database. Resellers can obtain details of the exact delivery time and the name of the person that signed for the delivery. This system is usually very up to date, as Nightspeed uses RF terminals in its vans to transmit delivery details to its central offices.
Northamber is not unique in offering this facility, but only one other distributor, as far as can be ascertained, offers a similar option.
Pricing on the system is standard unless there is a pre-defined agreement over discounts between the reseller and Northamber. Although the system can also be used for order placement, the distributor says the main use so far has been for pricing and availability. It is looking to make improvements to the system, but could provide no details about the enhancements.
Northamber runs EDI links with leading resellers, exchanging orders for invoices. It also accepts email orders in a pre-defined format, either typed into a fixed form or sent form-free if the guidelines are followed.
This enables them to be fed directly into the sales order processing system.
MSP plans to use new acquisition to expand its security offerings
Reseller also saw its operating profit fall five per cent in its financial 2017
Wendy Bahr to bring 18-year spell at networking giant to an end
AdEPT says latest purchase will push revenue beyond £50m