From aftermarketNews Staff & Wire Reports

A supply chain services and business development professional with 20 years of distribution and manufacturing experience, John Snowden joined Integrated Supply Network (ISN) in May 2007, as vice president of operations. After a year spent fine-tuning the company’s distribution process, Snowden is now performing the role of vice president of mobile sales. His mission is to redefine the level of experience that mobile distributors have when purchasing from ISN, bringing customer service and product excellence to the forefront of every interaction. In this exclusive interview, Snowden talks about the changing dynamics of the tool and equipment distribution model.

For many years, tools, equipment and information have been distributed through the aftermarket channel via two-step and three-step distribution. The Internet appears to be changing that model in several ways. What changes has the Internet brought to your company and how do you use it as a marketing/selling tool?

John Snowden: I think it’s fair to say that all markets, including the tool and equipment market, evolve with time, and the Internet is one of those elements that is capable of being a game changer. That said, I believe that we have not seen as much of a change in our industry as the accompanying emotions, rumor and innuendo would suggest.

There are two basic elements to be considered in any discussion around the Internet — the actual sale of p rod uct and the dissemination of information.

The Internet has most definitely changed the amount of information that is available to both the consumer and the reseller. The consumer is capable of shopping for price, comparing p rod ucts and becoming more informed about his or her purchase options. Our experience seems to be that despite this access to information, the consumer — both technician and reseller — still feels the need to interact with a salesperson.

We have an industry-leading portal in ToolWeb (www.toolweb.com), which we continue to develop as a tool to help our reseller customers manage their business. Will this become the predominant choice for reseller order placing over time? Perhaps, as technology continues to evolve, and resellers, like all businesses, look to gain efficiencies. But, I do not believe that it will change the distribution model. I believe that it will serve as a means of removing cost from the channel, but that the distributor will still play the traditional role of high-service p rod uct fulfillment and support.

How do mobile tool distributors stay competitive with the Internet tool distributors?

JS: Mobile tool distributors, stationary stores and Internet resellers have all chosen a different go-to-market strategy. At ISN, we cannot alter the different cost structures inherent in each of these models. What we can do is ensure that all channels are treated fairly and that each channel has an equal opportunity to make its choice of business model a successful one. The Internet retailer will never replace the mobile distributor, but due to the spread of information and availability to view alternate pricing, the Internet will force the mobile distributor to sharpen his or her business skills. The personal service, product knowledge, financing and the ability to warranty give the mobile distributor a significant advantage.

ISN’s responsibility is to continue to develop systems to support the high-touch/high-service model that makes the mobile distributor invaluable. Our objective is to free up the distributor from the administration of his business to allow him to concentrate on his customers. Only by achieving this, will we continue to lower the mobile distributor’s cost, while increasing his competitiveness with all forms of reseller, not just the Internet.

ISN is investing heavily in technology and process improvement that will increase the profitability of the mobile distributor. For example, ISN now offers its mobile customers a truly portable computing solution. This will allow the distributor to check stock, swipe credit cards, print receipts and illustrate new p rod ucts — all while away from the truck.

At ISN, we constantly survey our customers to determine both how well we are doing and what changes they would like to see. Our customer satisfaction ratings were recently determined to be the highest in the industry and superior to the likes of Apple and Southwest Airlines.

Listening to our customers has led to several radical transformations within the business, and by the end of the summer you will see two more significant process changes that will streamline customer interaction with ISN.

The Internet provides an anonymous screen for U.S. and non-U.S. manufacturers. This has led to an influx of counterfeit products that can be found when shopping online. How can your customers know what is “genuine” and what is not? How can they protect themselves from counterfeiters?

JS: My first suggestion is to only buy from ISN. As flippant as that may sound, I believe that the best protection is to buy from a source that you know. If you find product for sale on the Internet, or anywhere for that matter, and it is 20 percent or 30 percent below the price you’re being offered by ISN, then you should be skeptical.

ISN has built relationships over the last 25 years with the industry’s leading suppliers and can assure our customers that they are buying genuine p rod ucts. We are as committed to protecting the integrity of their brand as we are committed to the well being of our customers. I would advise anyone out there that if they are unsure about the authenticity of product in the marketplace, then call us and we will help verify whether it is real or not. It is our goal to protect this channel from the scourge of counterfeit product, and we do not want anyone, whether they are an ISN customer or not, to get burned.

Another invention of the Internet is the “blog,” where anyone can say anything they want, and can remain anonymous. Recently, ISN’s name came up on a blog about selling direct to the end-user, undercutting the mobile distributor. A mobile distributor also mentioned they could buy from ISN, AutoZone or Advance Auto Parts for the same price. Do you sell direct to end-users? Do you sell to AutoZone or Advance?

JS: Let’s talk about the end-user question. ISN does not sell to end-users. ISN has always had a policy of only selling to resellers.

There has always been speculation about ISN owning mobile trucks and competing with the mobile distributor, so let’s put this to bed once and for all. If anyone can p rod uce evidence of ISN owning mobile trucks, ISN will pay $1 million to whoever produces that evidence. We are here to facilitate the growth of the mobile distributor, not to compete with him.

We, like other WDs, sell to big box retailers. It is not products from these types of transactions that you see in the marketplace at or below ISN prices. This will only happen if the retailer is buying direct from the manufacturer. The distribution channel is simple. The distributor lays out large amounts of money to buy in bulk and then sells in smaller increments to resellers, hoping to make a slim margin in the process. Large auto parts retailers have many times the buying power of ISN and, in some instances, can buy direct from the manufacturer at prices that are lower than ISN’s. There are no instances where we disadvantage any particular channel with pricing schemes that undermine the competitive landscape.

It seems there’s a lot of dialog about quality, customer service and warranty claims. What’s ISN’s position?

JS: I referred earlier to the constant surveying of our customers, which is an indication of how seriously we take the notion of providing quality service on all dimensions.

We ask more than 100 customers a week to answer a series of simple questions to determine how they view ISN and if there are any aspects of the business that we can improve. This data is compiled and distributed to our executive team. A process of rapid continuous improvement is then begun to act on the customer feedback. Currently 76 percent of our customers surveyed would unequivocally recommend ISN to a friend or colleague (the national average is in the teens). The greatest value that this survey provides us with is that change within our company is driven not by us living in a vacuum, but by the real needs of the customer.

What do you think is the future of traditional mobile distribution model, and where is ISN’s place in that model?

JS: We believe that the winning model is one that delivers consistently higher and higher levels of “value add” to its customer. The consumer will have more and more choices when it comes to buying product as the model continues to evolve. The mobile distributor, while commanding the highest price, is the highest service, highest value-add model that exists in our space. It is our goal to help the mobile distributor continue to evolve his model by providing wider selection, simpler processes and a better pricing proposition. Programs such as LCA financing, allowing distributors to use third-party financing to extend their available credit and the Select program, which pays customers up to 5 percent rebate on select vendor purchases, all drive toward this same result.

In a single year we p rod uced more than 125 million printed pages of literature and advertising vehicles completely dedicated and designed to assist the mobile reseller. This continued commitment to give the distributor the tools needed to sell product is part of the evolution of the model.

ISN is 100 percent committed to the mobile distributor. What does that mean? It means that ISN is committed to any p rod uct or service that enhances the success of its mobile distributor customers. More specifically, it means that ISN will continue to intelligently expand our p rod uct offering beyond that of any other warehouse distributor (already the best in the country). ISN will continue to lower its cost of doing business so that our mobile distributor customers can compete and profit in a way that makes for a great living. And ISN will expand its programs and services (including on-board computer technology) that help our customers not just to sell more, but also to profit more.

I want to encourage any mobile distributor to pick up the phone and call me to explore how we can win together: 800-966-8478, ext. 1355.