United’s SVP of marketing Mark Hampton claims that dealers are missing out on a huge opportunity. While consumers’ first choice of purchasing is online, he says, only 20-50 per cent of the dealer’s average sales volume is done online.
United’s solution for business products resellers, jointly created with and hosted by SAP America, aims to "empower independent dealers to compete more effectively in an environment in which technology has dramatically changed consumer buying habits". Hampton is bullish that there will be a rapid take-up among the dealer community and that demand "will likely exceed SAP’s capacity for the next year or two."
The offering – which will support office products dealers’ key business processes, including ecommerce, order management, purchasing, logistics and financial management – will be delivered at, what SAP has described as, a "predictable and economical cost, including implementation, user training, hosting and application support".
Critical
With 80 per cent of United’s sales coming from independents, keeping dealers happy is a win-win situation for both parties. United’s CEO Dick Gochnauer said that technology is now critical for the future success of dealers and also the success of United – the reason the wholesaler is getting involved in systems again.
But Gochnauer is keen to point out that this is not United’s system, so it will not lock in dealers. Those that buy from any US wholesaler will also be able to use the system.
Seven dealers have been involved in the system via an advisory council for the last 12 months, which bodes well for it going ahead. The selection of dealers that OPI spoke to also agreed that United’s choice of SAP was good for the industry. "United has a great approach with SAP. They are willing to invest in creating a great product for the industry and will continue to invest in it for years to come," said Michael Brown of Allied Office Products.
Ed Walper of Impact Office Products added: "I am not aware of any ‘smaller’ players with the enterprise technology to match SAP’s."
United claims its choice of SAP over a third-party vendor such as ECI2 is down to an industry that now requires partners with sufficient size and strength, and which can leverage investment across many different industries. SAP, which is reported to spend over $1 billion annually in R&D, already has a system that can be tweaked for the OP industry and that can be regularly updated, claims United. The current problem, it says, is that the systems companies in the US are now tweaking technology that is 20-30 years old and doesn’t give dealers a level playing field in terms of technology.
However, not all feel that technology has hindered the dealer channel to a significant degree to date. "Until we saw the potential of the SAP front end, few of us really understood the technological disadvantage we are faced with," said Walper. "That said, we have not perceived any material ‘hindrance’ until now."
Mike Gentile at is.group, meanwhile, says he has seen the lack of updated technology impact the dealer community. "There is clearly a functionality gap among the various dealer third party provider applications and those of the big box players," he told OPI. "Significant investments in ERP and CRM applications have been made by many industry big box retailers that have given them leverage regarding operational efficiencies. These investments have hindered independent dealers by handicapping their ability to utilise data to effectively reduce operating costs, increase account acquisition, retention and penetration."
Relationship
ECI2 president Dan Pritchard claims the deal is a good move for the industry and says his working relationship with United will not change as a result. "Anyone that stands up in front of dealers and emphasises technology investment is a good thing," he told OPI. "We have been beating the drum for years that our marketplace under-appreciates technology and the expense and effort required to deliver world class technology.
"We have an excellent working relationship with United and recently announced a partnership to enhance technology between United and its dealers," he added. "We will continue our efforts on that front…ECI2 has the largest R&D staff in the industry dedicated to business products dealers – period. We are well down the path of rewriting our ecommerce platform and have hundreds of dealers that have signed up for the first version. This effort is code-named Cozumel and it will contain state-of-the-art technology."
But Pritchard admits he has his reservations about United’s choice of tech partner. "I think the announcement is bold and a little risky. I’d be a little concerned that United’s partner in this effort is so large and could fail miserably in this market…We don’t want failures across the supply chain – it’s way too fragile and ECI2’s livelihood depends on the dealers."
