Today’s Executive Interview features Stan Gowisnock, president and CEO of Distribution Service Technologies (DST). In the interview, Gowisnock talks about the trends he is seeing when it comes to the role of technology and e-commerce in the automotive aftermarket today.
What trends are you seeing in terms of the types of e-commerce products customers are looking for? What’s most important to them when it comes to “e-business?”
Data has emerged as the driving factor in e-business. Companies need to identify the types of “value added” content that their customers want; and present it to them in a compelling way, regardless of where that content originates. In addition, e-business solutions need to be portable in order to accommodate new types of distribution, new types of system platforms, and new connectivity methods. And, companies want these benefits without being forced to change other parts of their IT structure.
For end-users in the aftermarket, the variety of software solutions providers and the myriad of products they offer can get complicated. Can you briefly explain where DST fits into the mix?
A major challenge for e-commerce users is trying to keep in sync with their suppliers. Top tier suppliers tend to have their own e-commerce solution and when one of these suppliers changes technologies, it can adversely affect other parts of their relationship with end-users – in areas like replenishment, billing, customer service, etc. DST understands how frustrating this is for the entire channel, which is why we designed our TurboParts solution to be a technology-neutral, bolt-on “e-business” solution that can be customized to meet the needs of an organization or an end-to-end supply chain.
What frustrates you most about the aftermarket industry from a technology standpoint?
There is an unfortunate tendency in the aftermarket to adopt a technology and never re-evaluate it – sometimes for years. Six or seven years ago, it was still unclear if the industry could even get consumers to put down the phone and use the Internet to order parts. The reality is that the Internet solutions that worked fine just six or seven years ago are no longer good enough for today’s consumers. Those are e-commerce solutions; we need to be delivering e-business solutions. Today, over 50 percent of consumers, including end-users in the aftermarket, have smartphones. They expect the same kind of customer-friendly Web interfaces and functionality that they get from sites that they shop for appliances and electronics. Too many automotive aftermarket companies still treat e-business as little more than an e-commerce ordering solution. And, because suppliers tend to focus on how the solution will meet their own needs and priorities first, rather than whether it offers any value to end-users, they rarely get the ROI they expect. If end-users do not wholly embrace these platforms because their needs are not addressed, they will gravitate toward a solution that does.
You have said that you feel the aftermarket is inefficient. How so?
Too many decision-makers in the aftermarket have a limited view of e-business, and see it as little more than a way to reduce their supply chain expenses. Many distributors are forced to deal with multiple e-commerce engines as the result of multiple buying group relationships. Some of these solutions are barely a step beyond phoning or faxing orders, while others may offer the kind of supplemental content that helps installers to do their jobs more effectively and efficiently. Some of these solutions require installing proprietary software, while others are cloud-based. This creates an e-business environment where things are confusing and inconvenient for end-users. This is totally at odds with what e-business should be about. A key component to e-business should be about making it easy for customers to transact business with a supplier 24/7/365.
What makes DST different from other technology solution providers in the market today?
Standard solutions deliver standard results, and companies that do not understand this will lose ground to competitors that recognize that e-business can and should establish a strategic competitive advantage. That’s why DST delivers technology neutral e-business solutions that are customized to meet specific client needs. And, we are nimble enough to deliver them faster and more efficiently than most companies have been schooled to accept. Innovative companies allow DST to manage and drive their e-business initiatives; and then use the time and money they save to focus on their business’ core competencies.
There are a great many changes occurring right now in the space and the question of how various technology players can co-exist is on everyone’s mind. Can you address these market concerns?
I believe that it’s important for the focus to be on the simple fact that people buy from people. When we really dive into our customers’ relationships with their customers, we find that these relationships go much deeper than “do you have this part and how much is it?” Parts distributors invest a sizeable amount of money to ensure that they retain their customers, and in the end, these same customers can be very loyal. Now, I realize that popular opinion is that this world went away a long time ago; but even today, with installers having the option to buy from all the various players in the market – we continue to see the 80/20 rule in place. A good customer will buy 80 percent of their parts from their preferred distributor.
It’s my belief that it would be a huge mistake for most of this market to allow Internet companies to lead them down exactly the same path that’s left electronics retailers like Best Buy in shambles. There is still a lot of value in the relationships distributors have built with their customers. Distributors should not be so quick to replace relationships built on a foundation of product knowledge and true customer service with an Internet shopping business model built on “we can sell it cheaper.”
We hear a lot about enabling supply chain efficiencies – what does that mean to you?
In the industry, we call it the supply chain and yet historically there has been no significant technology link between the distribution tiers to join them together. DST sees e-business as being the technology that provides that link. The view up and down the supply chain is often talked up, but until now it has never really been visible. Knowing what parts are actually being installed on what vehicles is recognized by manufacturers as critical to streamlining their operations and making them more efficient, and more importantly, to helping their distributors become more efficient and profitable. DST delivers that and as a result, our technologies have been adopted by major players in this space.
The distribution channel will always be regional in its structure; it has to be in order to service customers within the hotshot window. Overnight delivery doesn’t work except in extreme cases; the service dealer will not or cannot carry any significant levels of inventory, and so having that efficiency at the local WD tier is critical. Everyone from manufacturers to program groups can now have a much more intimate knowledge of what is happening in the supply chain and, as a consequence, have the opportunity to help drive WD efficiency with focused marketing programs based on known metrics. Another example is that in the not too distant future those same metrics, gathered from e-business, could be used for much more accurate and advanced VMI programs from the manufacturers to the WD, which will drive dead inventory out of the chain and reduce the inventory investment levels of the WD. Finally on this subject, the e-business “engine” should be transparent to the service dealer. They are buying from the WD and not the technology provider. This is a key part of the DST philosophy. The end-user’s online experience should reflect their relationship with the distributor, a key part of which is being educated and receiving recommendations associated with the manufacturers the WD represents.
What do you see as the key to DST’s continued growth in the aftermarket?
Most software solution providers in our industry focus on one area of the market’s needs – for example ERP software, data analytics software or e-commerce software. In those instances where this is not the case and they produce multiple products, too often their solutions are centered on working tightly within their own offering. Because DST e-business solutions are highly concentrated outside of our own products, we have expanded the product offering to adapt to most of the non-DST platforms available in the space today. DST has grown our business over time to address all of these needs by providing solutions at all levels of the aftermarket, from end-users up to manufacturers.
Our approach has enabled DST to have a very broad view of the various distribution channel requirements and our products reflect that focus. We understand that technology must support a business not dictate to it. Therefore, we are able to help customers drive increased efficiency through their supply chains, providing them with the level of results they need from their e-business initiatives. It’s DST’s e-business solutions helping your business.