February 29, 2012
Everywhere I go in this industry these days, someone asks about how the Internet is affecting dealers. Seems a lot of you are worried that this radical change in technology is undermining the core business model of many dealers.
I don’t have a simple answer to this question and, of course, I could also argue the dealer business model has been in jeopardy for decades. Distribution always finds its most efficient means. The impact of the Web and electronic media in general on how foodservice equipment and supplies gets specified and purchased is complex and emerging.
Not that everything has changed. The use of online catalogs and systems by dealers, either as pure plays or as an added capability of brick and mortar dealers, is a throw-back. The catalog model has been around for almost a century in E&S and goes back as far as the 1870s with Sears, Roebuck and Montgomery Ward. There have been many prominent “catalog houses” in this business.
I’ve also long been skeptical about whether operators feel comfortable trying to configure and spec equipment online. Buying ladles or sauce pans or cutlery is one thing. Trying to select a fryer or a combi or even a 2-door reach-in that is right for a particular operation is something else. Operators almost always need “expert” assistance. You can get that on the phone. But it’s hard to do for yourself by pointing and clicking without expensive investment in complex algorithms.
What the Internet does add to the mix is the ability to almost instantly compare prices. Several of those I’ve spoken with lately who brought up the issue of price comparison worry that operators will rely on dealers to help them spec the product, then go shop it around on the Internet. We all know this happens. We also know that younger folks are used to buying online and that the shift is just a matter of time.
But there are other impediments and structural issues to a rapid migration to online E&S buying and specifying. The growing multiunit nature of foodservice in North America is a key roadblock. The big chains and foodservice-management players exercise tremendous influence on the E&S products in their systems, as do consultants in the noncommercial segments. They control their specs and their sources of supply.
Manufacturers have also instituted perfectly legal “Minimum Advertised Pricing” and “Minimum Sales Pricing” regimes that are specifically designed to level the playing field for all re-sellers. Believe me, most manufacturers want to protect their best dealer partners.
We’ll just have to see how this all plays out. But to be honest, I’d bet mostly on the existing players.