Insights into the forces shaping our industry.
Blog, Industry Commentary
So much has changed in the past decade; political discussion has become so polarized that discussion is no longer a means to find solutions to problems; it’s a means to identify how wrong the opposing opinion is. The transformative issues in the electrical industry have changed the way we think about customers, products, services and competitors.
Amazon has announced their intent to sell all things to all people. As a corporate mission statement; that’s pretty strong stuff. As a strategy; it’s borderline useless. But it is provocative and that enables a richer discussion throughout the retail/wholesale marketplace. I find it interesting that NAED’s response to the Amazon threat is to publish regular affirmative statements from legacy distributor customers on how they will refuse to support an Amazon strategy. That is as warm as a puppy; but unfortunately, not very realistic. When Home Depot entered the electrical supply world, there were dozens of manufacturers decrying the disruption and stating they would never sell out to a large retailer and would remain loyal to supporting their wholesale supply chain. Home Depot quickly became one of the largest sellers of electrical equipment and the major players who sold to them; Ideal, Halo, Lithonia, SquareD, Leviton, etc… all thrived from the huge rush in revenue, and margins. Many distributors claimed it was unethical for their vendors to sell to Home Depot. Those same distributors probably feel the same about selling to Amazon. And for manufacturers to sell through the internet, or through ESCO’s or through Grainger, or any alternative strategy.
Ethics; “rules of behavior based on ideas about what is morally good and bad”. Is it morally wrong to sell to a competitor of your customer? What if that competitor shares only a small percentage of the same customer base of your customer? What ‘morals’ are violated if you contribute to the expansion of competition? What morals are violated if you sell your products into a market that is under-served by your current base of customers? Does ethics have a percentage of participation range to it?
The fundamental business practice of a wholesale distributor is to provide goods and services to customers. The act of creating, servicing and maintaining customers is up to each individual business entity. Is it morally wrong for ReMax to have 5 offices in the same city, or county? Is it a breach of ethics for a distributor to buy from 5 wiring device manufacturers? If one of those wiring device manufacturers sells to Amazon; does that materially harm that distributor, or do they simply move their buying emphasis towards the other 4 manufacturers? And is that ethical?
As Home Depot moved into electrical supplies, did the number of electrical supply houses decrease across the country? I think not; based upon EW’s annual Top 200 and distribution market statistics. Do we think Amazon will take away customers from wholesale distribution? I don’t believe that. I do believe that Amazon will pick up business from contractors and OEM customers based upon terms of sale: price and delivery. But I don’t believe Amazon can put any distributor out of business; assuming they do their job.
Developing customers and maintaining them is a challenge for all companies. Keeping a customer always is tied to the development of a relationship. Every company has problems that need to be resolved. The quality of a relationship is often tied to the quality of rectifying problems when they occur. Amazon’s strategy is to develop a ‘relationship’ virtually, based upon the size of their brand. Their best ability to create a relationship is to provide fast service and easy return policies; but providing customer solutions will challenge them. Local expertise and prompt and honest service will always trump price.
As recruiters, we are lumped into a very large class of ‘staffing providers’. We get painted by a large brush and we have to try every day to prove that ethics mean something. Just this week I received an inquiry from a candidate whom we placed several years ago within a company who asked me to help recruit him out. That company is no longer a client for several reasons, but our ethical practices won’t permit us to recruit a placed candidate away from the company. That company paid us for our services and we honor and respect that relationship. We can’t modify our ethics based upon what a new entrant decides to do in our market. We can modify our business strategy to address a competitive issue; but ethics are ethics.
The technological changes over the past decade or more have created serious disruptions to ethics; social media have largely wiped away standards of decorum and common sense. The expansion of media options have loosened the ethical approaches to ‘news’ as the standards of the past of verifying news prior to reporting have gone away. Our rush to be ‘first’ in repeating or starting a rumor fuels more participation. The ability to carefully discuss and arbitrate a difference of opinion is hampered by the inability to actually find credible facts in the first place. Topical has replaced trusted.
In our world of recruitment, we have to be bound by absolute confidentiality. We deal in transforming lives and companies; we treasure that responsibility. Rumors and gossip and innuendo have little place in qualifying and hiring professional talent.
But at the end of the day, ethics are personally held values of how we treat those around us. If it’s considered an ethical breach for a contractor to buy from Amazon, when his local distributor was closed or incapable of providing the product when he needed it; then the ethical relationship that exists between that contractor and distributor will be forever changed. For ethics to ‘work’; they have to be mutually communicated and shared. Open communications will thwart competitive threats far more readily than cutting prices.
Ted Konnerth, Egret Consulting Group’s founder and CEO, recruits on a retained basis, helping leaders in the electrical and lighting industry identify their next C and V-level hire. He is also the executive director for the International Retained Search Associates, allowing him to liaise with skilled recruiters around the globe. To learn more about how Ted can help your company attract talent view his biography, check him out on LinkedIn or email him at firstname.lastname@example.org.