Updated: May 24
Salesmen are said to be the peacocks of the corporate world; the proud self! The stylish, chest thumping suave salesman is becoming like a film based Kodak camera of yesteryear’s. The film rolls have gone but digital mode has come in! Likewise, One of the oldest and coveted profession in the modern Industrial Age, is currently undergoing a metamorphosis.
If Sales is exchange of goods, salesmen are agents of this exchange. While the exchange of goods aren’t going to stop, the agents are undergoing a change. If you look at the two broad types of sales; B2B, B2C can be furthered classified using channel sales, concept/ solution selling, industrial selling and relationship selling amongst many other things.
From a customer point of view, we don’t come into contact with a salesman for a soap or brush (FMCG items). We know for the simple reason that the company cannot afford to spend rupees to convert every single customer through salesman agents as it becomes an expensive affair.
But we certainly will have to go past them for buying a laptop or mobile (Electronic item/ white/brown goods) or any other high value item at the house. In channel sales, the company outsources the salesman responsibility to the retailer to do it for them. But then it has to be achieved through a distributor since it has to be done at a very large scale. So, there are the company salesmen who sell the products to intermediary businesses (middlemen- distributors). Then the next layer of distributor salesman who sell the products to retailers. So, three layers and three level of salesman. Company salesmen – distributor salesmen – Retailer salesmen.
Businesses are different but more or less, this is the structure that has been followed for generations now. Two layers in some case, four in some with wholesalers or even five. This is tested and proven. It has helped companies to penetrate the market.
Now, in this age, touted as the one big idea of this generation is to Cut-The-Middlemen. The common rhetoric is ‘Why are they eating margins when I can serve them directly?’. While one can easily thwart remarking it as an immature argument, not knowing the significance of the role the middlemen play in penetration and absorbing market risks, we should pause and take a look at what is making them say that? It’s the technology! which facilitates the transaction possible digitally through showing product availability (& pricing) digitally, booking order digitally, money transfer digitally, tracking order digitally and a physical delivery. Now, where do we fit-in the salesmen here? That’s the question.
Well yes, all the action is in B2C. It started with books, pen, paper and graduated to flight tickets, gold ornaments and now matured to everyday groceries. Swiggy Instamart, Zepto, Dunzo are delivery partners. Now government is creating ONDC (Open network for digital commerce) with which an entire ecosystem has emerged!
Order booking ——— Digital money ——— Tracking order ——— Delivery.
Now its only a question of time, this kicks-in B2B channel sales as well, big time! After all, Ola, Uber were B2C but soon we had Lynk for B2B. Once the system evolves to this model, all the focus is on making products available to customers, efficient supply chain, and marketing. No order taking, no sales pitch, and bubyee collections!
Then why are they not moving to this model? What’s the tipping point for the B2B channels to shift to digital mode of commerce?
1. Waiting for Innovators
First of all one cannot imagine 100% shift, not even 50%. India is a country where we have bullock carts on city roads as well Porsches. Hence, e-commerce and brick and mortar will coexist. But the sense here is the market is just waiting for innovators to take the lead here. The Set up is here. There are in fact already offshoots and hybrid models but without great conviction.
2. High manpower and travel costs
The scenario is such that the cost of manpower and travel is increasing disproportionately. One could sense we are close to an an inflection point wherein, cost of doing B2B channel sales will be become very high, and less effective. But the Salesmen in many of these businesses earn less than delivery partners of B2C e-commerce model. So the salary has not really caught pace with the sales growth or rather the sales growth is far little to cover the costs of three tier salesmen. Hence, cost cutting has lead to poorer salaries leading to possibility of future generation oblivious to this profession. Poor salaries, improper training, tough work environment and demanding KPIs are a perfect recipe for a disaster.
3. Decreasing role of distributor
The distributor served two predominant purposes; provided the required market penetration and covered the market risks for the company with respect to collections from end customers. With advent of technology, collections has become obsolete with NEFT/RTGS payments on rise without credit (ie, ‘pay and buy’ rather than ‘buy now, pay later’ model) and penetration has become a one time hectic activity of putting the app in customer’s mobile. Credit reports/ ratings could be a big fallout of covering market risks.
But, even with all these factors pointing to diminishing role of the distributor, we don’t think the distributor will cease to exist dramatically and suddenly but it’s the salesman who could possibly cease to exist in very near future in this market. The art of selling will soon become an art in channel sales. Yes! But for the industrial, concept and relationship salesman.