CIO
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Reader ROI
* Find out why disintermediation didn’t happen
* Learn how companies have reflowed distribution channels in the wake of e-business
* Understand how new types of online entities compete with dotcoms
When Polaroid first floated the idea of a B2B website for its commercial imaging customers, company execs began talking about how Polaroid could use e-commerce to cut out its dealer channel. Eliminating trading partners, proponents of the B2B site argued, would give Polaroid more control over how its products were sold and, better still, pad profits by absorbing the dealer markup. Yet once Polaroid e-commerce managers started factoring in costs for things like inventory management and logis-tics, the math just didn’t add up. Polaroid was no more equipped to ship, bill and service products than its dealers were to manufacture photographic goods.
"In a matter of weeks, we realized we were not going to do a wholesale channel disintermediation," says Jim Barron, vice president of Internet development at Cambridge, Mass.-based Polaroid. "The reality of having to bill and ship goods is what we really had to think through. We quickly realized that whatever margin we’d recover from disintermediating the channel would be eaten up quickly" to cover those costs.
Instead of excluding dealers, Polaroid embraced them. Last June, the company launched PolaroidWork.com, a site for commercial customers that delivers information and demonstrations on products such as film, cameras and digital imaging equipment. Customers don’t actually close a transaction over the site. Instead, they use it to comparison shop, and a dealer locator capability provides maps and directions to three local dealers where products can be purchased.
Some business customers do want to buy online, however. For them, Polaroid used the Web to reflow its dealer channel. Polaroid accredited about 20 of its top U.S. dealers to support a "Buy Now" capability?essentially a hot link on the PolaroidWork.com site that takes customers directly to the dealers’ websites for completing the transaction.
Already, the Buy Now function on Pol-aroidWork.com has translated into about three or four sales a week for Bernie’s Photo Center, a Polaroid distributor in Pittsburgh, according to Bernie’s president, Bruce Klein. Klein says he’s not surprised that Polaroid and other manufacturers like Eastman Kodak and The Global Olympus Group are exploring programs to bring the dealers into the e-commerce loop. "It’s always in their best interest to keep the dealer structure and distribution the way it is," he explains. "They don’t want the headaches of dealing with individual sales?someone giving a bad credit card or a shipping address going bad. Polaroid is a manufacturing company, not a direct-sales company, and they realized that off the bat."
