ls E GommercG A Thrcat Tb Wholesalers..,?

Percent who agredagree strongly

E-commerce willdecrease barriers to entry

E-commerce rryill lead to a consolidation ol the wholesale dishibution industry

E-commerce will eliminate the wholesaler-distributor

Percqnt who flgree/agree strongly

E-commerce will facilitate the collection, utilization and dissemination of inlormation

E-commerce will lead to a changing role for the wholesaler-distributor

E-commerce will lead to more integrated supply chains

F-commerce will lead to strateoic alliances with suppliers and customers

DREF and Arthur Andersen, surveyed wholesaler-distributors indicated that e-commerce will have a significant impact on their businesses over the next five years, rating that impact an 8 on a scale of I to 10.

Panelists indicate that they will be driven to adopt e-commerce by their suppliers, customers and competitors, so that by 2003, e-commerce will become "tables stakes" required for all successful channel players. Early adopters may even gain a significant competitive advantage.

Among wholesalers' concerns, more than 6OVo believe e-commerce will increase competition and drive consolidation, and 40Vo are concerned that e-commerce would eliminate distributors from the channel.

During the same time, the number of customers engaged in e-commerce and of electronic sales should more than triple.

The key for wholesalers' survival is continuing to add value and, according to the report, e-commerce may provide a way to do just that; value can be derived from the information wrapped around the product, rather than just from the product itself.

For customers, this could include: a 24-hour order entry, customer service and technical support o electronic funds transfer o the ability to check inventory in real time o the ability to access and compare a wide variety of product information

"Amazon.com books are priced the same for everyone, no matter who or where the buyer or seller is," O'Neill notes. "In the lumber industry, freight is not the same, so companies have natural trading partners. So it doesn't matter if (an exchange) has 100 participants, if they don't have the l0 that are important to you."

But what about the wholesalers themselves? Do they view e-commerce as a threat or an opportunity?

According to a new study, "Facing the Forces of Change: Four Trends Reshaping Wholesale Distribution" by o the ability to check the order in transit and estimate the time of arrival

The report concludes that while ecommerce will change wholesalers' role of moving physical objects, it won't eliminate it. It's still not cost effective, for example, for customers to go to many different suppliers' Web sites, gather and compare product and price information, then revisit one or more of the sites to make purchases.

Distributors see their trading partners increasingly adopting e-commerce, as their own sales through this medium increase dramatically. They predict the number of their suppliers engaged in some form of e-commerce to double over the next five vears.

For suppliers, it might include:

. highly accurate demand forecasts transmitted in real time o accurate, quantifiable data on customer preferences or problems r marketing techniques and technical information that can help a supplier develop new products

Despite the lumber industry's slowness to change, electronic commerce is coming. The question is who will choose to use it and how.

5 5Er STft4ATING," "Quoting" and ll,r"Bidding"

are three words that to most people have the same meaning, but when used within the context of the lumber industry, they can mean completely different things.

Requesting an estimate, quote or bid to fix your car will produce three similar documents no matter where you are. But not ifyou request an estimate for lumber in New York, a quote in Texas, and a bid in California.

Within the lumber industry, the definition of estimate, quote and bid is dictated by the region and the market served. whether retail or wholesale. A contractor bidding yard on the West Coast that moves lumber in bulk would use all three of these seemingly synonymous transactions in parallel, for very different purposes.

If you ask your vendor if they provide software for estimating, quoting and bidding, chances are they'll say, "Yesl" But then ask them to define them. Now, do they really understand what these terms mean to your company and to the lumber industry?

At Spruce, we define an Estimate as something that stays on the system until the end of the day. If a customer calls and wants a price on l0 2x4 8s, three sheets of plywood, and some roofing material, and says he might be down today to pick it up, you would call up an estimate on your system.

A Quote, on the other hand, might be a price on a deck package, patio cover or even a room addition. The contractor says he should know by the end of the week if he will do the work.