Let’s be clear: This isn’t meant to be a doomsday post. But denying that Amazon is making inroads in seemingly every major industry is foolhardy and a great way to bankrupt a business. Disruption is a natural byproduct of capitalism and a necessary impetus for innovation, as Amazon and others continue to prove. Complacency, especially in industries and sectors with a natural affinity for digitization and forward thinking, will inevitably lead to disaster as Amazon and other like-minded “digital” companies create new business models and paradigms that threaten the status quo.
The need for a virtual sales model has never been more prevalent in many industries for several reasons:
Classic sales models that lack digital strategies lose revenue to the competition
This concept doesn’t just apply to Amazon and retail, though it’s perhaps the most exemplary. While brick-and-mortar retail hasn’t quite reached the extinction-level event people may think it has, it’s undeniable that Amazon’s eCommerce platform—and others like it—are eating heavily into brick and mortar’s market share, and it’s leading to more and more store closures. According to CNN, citing think tank Fung Global Retail & Technology, “Retailers have announced plans to shutter more than 6,700 stores across the U.S. this year.” Similarly, a Business Insider article from this earlier this year cites a Forrester Research report predicting that “online sales will account for 17 percent of all U.S. retail sales by 2022, up from a projected 12.7 percent in 2017.” By 2021, Amazon will account for half of all online retail sales.
The simple fact is that people enjoy the convenience digitization provides. The ability to order literally anything from the comfort of your couch appeals to just about everyone. The same Forrester report indicates that “83 percent of U.S. online adults bought something on Amazon in 2016.”
That’s an astounding statistic, not just because of the number itself, but because of the implications it holds for other industries. In home remodeling, for instance, the ability to build convenience into the customer journey through digitized processes quite simply holds more appeal than the alternative.
PLNAR, for example, enables a virtual sales model to help consumers easily measure the dimensions of a room or an entire home to save them hours in scheduling and wait times and to lessen traditional frustrations in the remodeling process will increase a company’s ability to close sales. Once a consumer is aware that a more convenient alternative to a clunky, existing process exists, he or she will shift to the more convenient model every time. Being able to provide that model before anyone else gives a company a distinct competitive advantage and, to an extent, creates a defense against companies attempting to disrupt that industry through digital innovation.
Digitization allows companies to scale more quickly
We discussed this idea a bit in a previous blog post. A virtual sales model that creates efficiencies where there had previously been none allows companies to scale at rates that would have been impossible under existing paradigms.
A home remodeling company, for example, that is able to streamline its sales pipeline by up to 80 percent through digital processes doesn’t have to hire more sales reps to increase sales. Sales volume will naturally skyrocket simply because existing employees have more time to engage consumers and attract more business.
Incumbent companies that are willing to embrace these types of digital models early will face less risk and be more immune to disruption when the competition comes calling. As McKinsey writes, “Digitization often lowers entry barriers, causing long-established boundaries between sectors to tumble. At the same time, the ‘plug and play’ nature of digital assets causes value chains to disaggregate, creating openings for focused, fast-moving competitors… Digital capabilities increasingly will determine which companies create or lose value.”
A virtual sales model that doesn’t rely on legacy business practices helps to close some of those openings for “fast-moving competitors” like Amazon and others. Adopting one early, rather than waiting until disruption is a very real threat, decreases risk, attracts consumers to a new way of doing something (say, remodeling their homes) and creates new opportunities to scale and grow revenue.