Reasons why manufacturers, distributors won’t sell online


The internet and social media transformed the way we do business where conducting transactions online has become the ‘new normal’ for buyers and sellers. However, there are manufacturers and distributors who are still reluctant to list their products and services in online marketplaces which is now a necessity due to the COVID-19 pandemic.

The pandemic may have forced some companies to set up their own e-commerce operations or sell their products in marketplaces. But most marketplaces they know are designed for retail and are not capable to handle business-to-business transactions. Purchasing officers want the best prices for their procurement requirements, but you can’t attract them with rebates, vouchers, or free delivery.

We’ve been talking to manufacturers and distributors who shared with us the common reasons why they remain reluctant in getting listed in online marketplaces. Below are their common responses:

• They don’t want to upset their existing clients.
• They have a tight-knit distribution channel.
• They already have a dedicated sales team.
• They are afraid of the competition.
• They don’t want to disclose prices.
• They think it’s costly.

They don’t want to upset their existing clients. Some manufacturers would argue that they don’t need online marketing because they already have a strong business relationship with their clients for the long term. They think that disrupting the process might break that relationship. Marketplaces, on the other hand, can improve that relationship by providing more transparency and efficiency.

They have a tight-knit distribution channel. Like the relationship manufacturers have with their customers, they also have a close relationship with their logistics provider that runs like clockwork. Marketplaces can be configured to select which logistics provider they prefer and can offer tools that can provide more efficiency in the supply chain. While B2C marketplaces have a few logistics partners, B2B marketplaces are more flexible and can be integrated with any logistics partner selected by the supplier.

They already have a dedicated sales team. Sales representatives are a channel for customers – but it’s not the only channel. Distributors can easily expand their reach by bringing their business online. And even before potential customers would meet with sales rep, they will do some research online.

They are afraid of the competition. Marketplaces are a great tool for competitor research. Manufacturers shouldn’t be afraid to be compared with their competitors. Buyers now are more informed and will be able to tell which suppliers have the best products with better prices.

They don’t want to disclose the prices. B2B companies have a different pricing model which can vary for each customer. Unlike retail marketplaces like Lazada or Shopee where prices have to be shown, B2B marketplaces are better at handling wholesale pricing and can be negotiated.

They think it’s costly. Traditional marketplaces can be costly because they rely on commission and transaction fees. Modern marketplaces are shifting to a subscription model that provides suppliers better tools at a lower cost.

This article was written by Jeff Clarenz Turla, Co-founder and CTO of Burket.

Burket (business + market) is a platform to connects buyers and suppliers, digitizes procurement, and facilitates business-to-business (B2B) transactions.
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