Deliver Great Service; Avoid Disintermediation

Home Depot and Dayton Hudson are among the retailers threatening to cut off suppliers that also sell their products direct to consumers online.

IT industry resellers have exerted similar pressure on Compaq, HP and others manufacturers that have moved to emulate Dell Computer's direct-to-the-customer model.

These aren't the only industries grappling with new relationship conflicts created by e-commerce, and they won't be the last. Just about any manufacturer that sells through middlemen stands to get closer to its customers and improve its profit margins by selling direct.

But it's a bit more complicated than that. Both sides must carefully consider issues of brand equity and customer loyalty to avoid disintermediation. Their primary weapon in ensuring adequate differentiation: quality customer service.

It's hard to imagine a retailer with Home Depot's staggering inventories, cut-throat pricing and accessibility being disintermediated.

But when it comes to purchasing a commodity, say a Stanley hand tool or a Black & Decker Workmate, what value does any bricks-and-mortar retailer provide? Wouldn't the same transaction be at least as easy, and faster, over the Internet, perhaps at a better price, without a middleman?

The question both manufacturers and retailers must ask is whether customers are choosing the products in these retail outlets or the outlets themselves. At least in some cases, it's the former. And those cases underscore the need for a laser focus on customer service, and making the shopping experience convenient and painless. If the retailer is trying to win and maintain customers online, the same standards of service apply.

Some manufacturers may opt for a Web presence that gives customers everything--product specifications, customer support, etc.--except the ability to buy the product. Such a strategy is ill-advised. If you've done everything but close the deal, why not let customers buy on the spot?

The Web has forever altered relationships between manufacturers and the entities that sell their products. The good news is, that's forced everyone in the value chain to deliver more value to the customer.

By focusing your IT management efforts toward delivering top-notch customer service, you can help make sure your company--whether it's a manufacturer or a middleman--is not disintermediated.