Hot topic: Mission impossible

Getting office products to end-users is a tough job, and collaboration is what's missing.


From a distribution point of view, the OP industry is very efficient indeed. Every manufacturer can deliver within 24 hours; every buying group can deliver to dealers within 24 hours; every reseller can deliver to end-users within 24 hours. Even same-day delivery, particularly in urban areas, is getting more common.

So there’s no problem here. But what about the products that start in the R&D departments of our manufacturers – are they making it to market in the same expedient way and, even if they are, do they get the thumbs up from the end-user? 

“It depends” is the rather evasive answer; it depends on the product. Starting from the top down, the tech industry – growing and fast-paced – is the benchmark. With a much faster product cycle, companies that are not on the ball risk launching products that are out of date the minute they’re launched or being accused of lamely introducing me-too products without any differentiation factor. 

Christian Langvad, in charge of Purchasing/Merchandising and Business Development at OTTO Office, definitely sees a distinction between the IT product industry and the majority – there are exceptions – of traditional OP vendors: “If we have a discussion with HP or Brother, for example, they have a very clear vision of what they want: what time they want to launch a product; how it should be launched; how they want the marketing message to be communicated via the different distribution channels. 

“Interestingly, we see the same in the cleaning category. Companies such as SCA and Kimberly-Clark approach us with entire packages and say: ‘This is the broad basis of our communication and this is how we imagine it will work; how does that shoot into your action plan; how can it be integrated with OTTO Office? What kind of marketing tools do you have in your box that support us to get the product through to the market?’ It’s a real discussion on how to sell and market a new product.”

Traditional office products manufacturers don’t always have the same attitude, unfortunately, which is particularly unhelpful when dealing with a low interest and stagnating – if not declining – category. Of course, in tough economic times, it’s hard to always see the greater picture and not just focus on margins and the top and bottom lines, but it’s vital they do. 

Says Langvad: “OP manufacturers come to us and speak about a pen with a new clip on it or a new file in a different colour. But the go-to-market approach is not thought through at all. On top of that, it often takes weeks to get all the product information because they simply don’t have it at the time.”

That in itself is not particularly uncommon, as most manufacturers – certainly the switched-on ones, approach their reseller and distribution partners at a very early stage, long before the product is actually ready for launch. 

Up-front market intelligence

Esselte is unfitting of Langvad’s description. In fact, it prides itself not only on thorough end-customer research, but also on getting product to market quickly and efficiently. 

The company’s President/CEO Gary Brooks explains: “If you’re a brand-orientated company, you have to own the end-user and you have to get your channel partners involved – you can’t just throw the product over the wall; it has to be a collaborative process. Nobody ever has enough resources to do it all, so manufacturers have to have everything aligned and have the consumer marketing intelligence to prove to their channel partners that their product will be successful and that they should invest time and energy in that product and programme versus someone else’s. Make it easy for your channel partner to introduce new products and programmes because if you don’t have all the data and processes in place, they fall by the wayside.”

That is precisely the sticking point many resellers and distributors have with a collaboration that sometimes isn’t so collaborative. 

Langvad pulls no punches in his assessment: “We often see great new products, but if we ask our partners how they’re planning to market them, they frequently say ‘well, we can give you some money for marketing purposes’ – that’s the usual answer. But what about communication channels: catalogue, internet and within that Facebook, Google – what’s the plan? They don’t focus enough on the marketing side and how we can jointly get this innovation to the end-consumer. It’s not just about having a great product and handing over some marketing funds to convince the reseller and make it their job to market it. It’s not just about listing a product on page 311 of the catalogue and then hoping it will be a great success.”

In his role as General Manager of Dutch dealer group cum wholesaler Quantore, Arnold Theuws is more accepting of his organisation’s marketing remit in getting product to market, but that remit comes at a cost, he says, and that’s in the shape of manufacturer take-back guarantees and monetary incentives.

Theuws says: “Apart from an incentive for dealers or wholesalers to take over the marketing role, we also need to think of other issues. If we as a wholesaler or a dealer group make space available for new products, what’s our compensation? There have to be certain programmes to incentivise dealers as well as wholesalers to put new product on the shelves. Also, we need guarantees that, if a product is not giving the return that we expected, manufacturers will take it back.”

Is that attitude pessimistic or simply realistic? Not all products sell as well as expected, agreed, but it’s in nobody’s interest to have a product sitting on a shelf somewhere, including the manufacturer.

Walter Johnsen, CEO of manufacturer ACME United, is certainly bemused by the notion of “incentivising” its reseller partners: “When we’re rolling out a new product it’s going out because it’s an exciting new product that should stimulate sales with the end-user. All parts of the distribution channel need new products so to be asked for an incentive or a penalty for introducing one is nothing I’ve ever experienced.”

That said, small and lesser-known manufacturers do have a tough time getting their products through the channel and the big wholesalers can prove a tough nut to crack. 

SP Richards’ SVP of Marketing Jim O’Brien admits that going with a complete unknown can be somewhat difficult. “But if it’s something that we believe in, if it’s in a particular category that we’re excited about or an emerging category, it’s not out of the question. 

“One of the challenges is that, to really get into a major wholesaler, you’re talking about support, printed catalogues, guaranteed sale and so on. If we’re going to put inventory into 40 distribution centres in North America, the manufacturer has to be quite prepared to back that up in a number of ways, including basically guaranteed sales.”

Interestingly, Johnsen admits that ACME’s marketing efforts when it comes to brand new launches are squarely aimed at the retail sector. Whether it’s the OP superstores or mass marketers and discounters such as Walmart and Lidl, retail for Acme has proven the best channel for launching a new product. 

“If a new product comes out mid-cycle then the best way to go to market for us is with a retailer. Marketing initiatives are important – the packaging, the message, the colours, all of it. But equally important is to just get the product out and on the shelves, in a place where people can see it. That execution for us is at retail level, our primary platform for new products. Of course, it doesn’t always happen like we plan it and sometimes we find that the product never left the back of the store.”

ACME must be doing something right, however, since almost 30% of its revenues come from products that are less than three years old. And while ACME may focus on the retail channel as a launch pad, it places great importance on collaboration with the whole channel and that, agrees Brooks, is absolutely vital for comprehensive and successful product exposure.

“Too many companies just go out and sell their products on the internet. They try to create demand but the channel’s not part of the process or even aware of it, so when the end-user comes in and tries to buy the product through their channel of choice, the product is lost because the various resellers don’t know anything about it or aren’t prepared for it. So you have to have involvement upfront and you have to make sure that you’re collaborating in the early stages.” 

Wholesalers and dealer groups – especially those of the stocking variety – have become a vital link in the chain between manufacturers and the end-user. Here some real powerhouses come together and collaboration is hugely important, ever more so since a large percentage of independent dealers are reliant on both groups to fight their corners. 

And by and large, so says the general manufacturer consensus, relationships are healthy, with much progress having been made in recent  years, particularly with regards to access to the independent channel.

Independent dealers, says Quantore’s Theuws bullishly, are in fact often best placed to bring new product to market since “first of all, we have a much bigger variety of products than an Office Depot or a Staples”. Also, he adds, “the big boxes are mainly focusing on private label while we concentrate on A brands, so the opportunities for vendors are much bigger with the independent dealer channel. I’m not sure about product to market timeframes with the globals but I’m sure it’s far cheaper to have new products introduced by the independent dealer channel than by the globals.” 

The great equaliser in terms of cost as well as speed to market has no doubt been the internet and that is applicable to the entire distribution chain. Where historically product launches were at their most vibrant and ‘in your face’ in the retail space, waning consumer traffic and the convenience of the internet – and all the social media opportunities that are increasingly becoming part of the marketing mix – have changed that.  

And while the printed catalogue – the big book – is by no means dead and remains an important reference tool as well as revenue stream for customers and wholesalers respectively, it is increasingly being complemented by faster-moving, category-specific smaller catalogues (tech, cleaning, breakroom and the like), sophisticated product e-content and virtual marketing campaigns.

The internet has also given new and/or small manufacturers a better starting point since, as mentioned before, it’s tough as well as expensive to get their products listed through the usual channels. They wouldn’t typically start out on the web until they’ve proven themselves somewhat and accumulated more clout.

That said, as United Stationers’ VP of Marketing Laura Gale adds, “smaller suppliers – many of them reflecting ‘diversity criteria’ – are regularly included in the mix and we have found them to be a good source of innovative products”. 

By the same token, wholesalers are also right in the thick of it when it comes to enabling e-tailers to get product to their customers efficiently, although, explains Gale, it needn’t just be for newly launched items. “We support our various online sales channels in many different ways, an example of which is providing the ‘long tail’. This concept is especially important to e-tailers, because they can sell products that may be lower-demand and have a lower-stocking position. Those products are often higher margin and generate customer satisfaction. Providing the ‘long tail’ service can drive both awareness and loyalty.”

Preferred vendors

Wholesalers, meanwhile, while keen to provide a great breadth of products, frequently refer to their preferred vendors, many of which are the now increasingly consolidated top dogs of our industry, and give them a good percentage of their attention in terms of merchandising. 

Rob Abrahams, Purchasing Director of Spicers Europe, says: “We’ve made a concerted effort to work harder, more closely and in a more strategically aligned way with our preferred suppliers and that means you cannot do that for everyone. Over the years, we have reduced the number of vendor partners, one reason simply being that manufacturers have consolidated, and the second that we have selected and concentrated on a number of vendors that we would classify as pan-European.” That said, he adds, “it’s important that we not only run the depth of range with our preferred vendors, but also have a selection of local and other brands for our dealers to offer collaboration.”

From an exposure and go-to-market point of view, Spicers of course is beginning to increasingly tick all the boxes through its Calipage-franchised dealers in several European countries.

As the market is evolving and maturing, collaboration is becoming ever more important, Langvad sums up, and long-perceived practices need to be thrown out. “We have to quit thinking in terms of the old KPIs such as measuring the sales of a catalogue page. It doesn’t work like that anymore because the catalogue is only part of a B2B company’s go-to-market strategy now. Just because the sales per page don’t stack up anymore doesn’t mean that the manufacturer has made a bad investment. Smaller, fast-running catalogues, for example, have much more pulling power. 

“Manufacturers have to consider the picture as a whole because that’s what consumers do – they don’t differentiate between mail order and stores and sales representative. For them a pen is a pen and a file is a file – it doesn’t matter how they bought it or came to hear about it.” 

How to launch the Apple way

Looking at Apple product launches is the stuff of dreams – or nightmares if you’re a competitor – for any manufacturer. Its first iPad sold over 300,000 units on launch day, three million in 80 days and 14.8 million worldwide in 2010 alone. The iPhone 4S, meanwhile, sold over four million times in its first weekend last October and despite customer grumblings over price and a lack of new features, has become one of the fastest-selling items of consumer technology ever.

What does Apple do to make its product launches so eagerly anticipated and then, importantly, also back that up with phenomenal follow-up sales? Savvy marketing is key: 

•  Focus on customer benefits, not product specifications

•  Turn your launch date into an event

•  Take pre-orders; work with existing customers

•  Put emphasis on the look of the product so that customers will want to show it off

•  Create and sustain suspense before launch.

A lever arch file, a pen or a stapler may not have the same ‘cool’ appeal as the latest iPad, but there’s probably something that many manufacturers –and resellers in their own promotions and launches – can learn from Apple.

Marketing or innovation?

It’s a chicken and egg kind of scenario: office products – often not too exciting by their very nature – that are run of the mill and uninspiring are unlikely to ever have a tremendous shelf-life, whatever (virtual) shelf they may sit on and however quickly they got there. By contrast, you can have the most exciting product on the planet but if nobody knows about it, it’s not going to be a great seller. 

As both the yearly European Office Products Awards (EOPA) as well as North American Office Products Awards (NAOPA) events show, there’s still plenty of innovation in the industry and it’s heartening to see that the shortlists for innovative products and marketing initiatives often have a healthy overlap. Pilot Corporation’s FriXion pens, for example, made the EOPA shortlist for core office products, but in fact won the Online Initiative award for the same product range.

Whatever marketing medium you use, says OTTO Office’s Director of Purchasing/Merchandising & Business Development, Christian Langvad, what’s important is that the message is communicated to vendors’ reseller partners so that they have the product in stock when the end-user wants it. 

Langvad says: “Pilot was very active in its FriXion pen marketing. It did it all on its own and used some excellent ways to get the end-user’s attention such as Facebook and YouTube. But very importantly, from the very beginning, it kept us up to date with what it was doing and when it was doing it. So we had all the product information, we were prepared and able to introduce the product at OTTO Office through our newsletter, on our homepage and in our catalogue exactly at the time when Pilot started its marketing campaigns. The customer saw the product, liked it and was immediately able to buy it from us and a host of other resellers. That kind of collaboration and initiative is definitely not common.” 

But while marketing is important, adds Marcel Ringeard, CEO of Pilot Corporation Europe, innovation is essential and comes first: “For a product to be introduced quickly into the market, it must be innovative enough to draw the attention of the wholesalers, the resellers and the consumers. It’s definitely vital to have a strong marketing campaign, but a product that isn’t innovative is very difficult to market.” 

Do you know your customer?

Data mining – analysing customer information in order to increase revenue and/or reduce costs – has been around for years. Historically, the retail sector has had a particular interest in tracking how people shop and then using that information to its advantage. 

Walmart’s often-talked-about connection between men buying diapers and beer on a Friday evening prompted the retailer to display one alongside the other. Fathers, as a result, not only bought more beer (the diapers were a lesser concern), but were also happy to buy the premium brands since they were so conveniently placed next to each other. 

Amazon, meanwhile, has set the standard for e-commerce data analytics and personalisation over the past decade, which has increased its profit immeasurably.

Knowing what your customer likes has also been the core thought process behind the launch of a whole cornucopia of loyalty cards that now flood the market (Walmart being one notable exception). Typically, when customers sign up for the card they provide identification and possibly demographic information. When they use their card later to make a purchase, this information is recalled and recorded along with the purchased items.

Do they engender customer loyalty? It takes much more than that one might argue. What they do offer, however, is valuable information about customers’ purchasing habits that are then used in specifically targeted marketing. 

Tesco first introduced its Clubcard back in 1995. Using data collected from the scheme, it can predict when people will shop, how they’ll pay for their items and even how many calories they will consume. 

It is estimated that Dunnhumby,the data mining business behind the Tesco Clubcard (estimated to be worth about £30 million), helped save Tesco in the region of £350 million a year since the two companies joined forces (it’s now 90% owned by Tesco). Then-Marketing Director Terry Leahy no doubt benefited from the astonishing growth and went on to become Tesco’s CEO (not to mention receiving a knighthood!).

Do retailers – and anyone else in the channel that has such specific customer analysis at its fingertips – feed back that info through the supply chain? Surely, it would help manufacturers in their product development too!