Business Transformation Requirements For Office Products Resellers

Part 4 - So .... what's the web traffic development roadblock?

BANNER-DIGITAL-MARKETING.jpgWe've already established there's a $20 billion growth opportunity in the office products industry and that there's already an experienced and knowledgeable sales organization in place that could potentially take advantage. Everyone's aware massive changes are taking place to how business is being conducted, and at the core of these changes is the internet and our "new" digital environment. Clearly, digital skills and an appropriate strategy are necessary to operate successfully in this new environment.

However, many independent resellers that make up this sales organization lack the digital skills required to take advantage of the opportunity. Many are experiencing declining sales and profitability, reducing options to pay others for the skills they lack.

Furthermore, lacking these skills makes it difficult to assess whether others who claim to have the required skills for managing business transformation services are qualified.

This dilemma has numerous results and mostly failed "go-it-alone" efforts from most of the reseller community.

A business transformation solution will never be easy, and it will never happen overnight. It's hard work, takes time, and requires many new skills.

In the first three parts of this series, I made the case for the following requirements:

The successful resellers in the office products industry (as we saw, mainly consisting of a small group of prominent organizations) have all deployed strategies that contain these elements. They've spent millions of dollars and 15+ years getting to the position they currently enjoy. Small to medium size resellers do not have the resources to independently replicate the efforts and accomplishments of the large office product resellers.

To demonstrate the scale of this issue, let's put ourselves in the shoes of a small to medium size reseller that realizes it must digitize its business and starts looking into the requirements.

  1. The new website must be developed explicitly for the industry, and content marketing must be set.

  2. Business Plan to establish goals and key performance indicators necessary for measuring performance against plan.

  3. Information Technology enhancements - a successful digital strategy requires using and understanding large amounts of data.

  4. Content strategy - an understanding of a content strategy must be developed. Attempting a digital strategy and creating relevant content without a plan will fail.

  5. Social Media Platform Setup - at least four platforms will be necessary - LinkedIn, Facebook, Google+, and Twitter. Each of these platforms must be optimized for them to have any value.

  6. Social Audience Building - how to build and engage with a relevant audience is imperative. We optimize each platform, but not understanding how to develop and engage with an audience will not help.

  7. Digital Marketing must develop a solid understanding of digital marketing techniques and strategy. The scope of the field is vast, and researching and developing a viable strategy will consume a lot of time.

  8. Developing relevant and valuable content - a business must generate or outsource its content. No one knows the company better than the owner, and outsourcing to a less knowledgeable agency involves a significant risk that the content will not be helpful or respected by the target audience.

  9. Email Marketing - is one of the most critical components of a digital strategy, as this will be the primary platform for communicating with prospects and developing leads. Significant time must be invested to understand modern techniques and create successful campaigns.

  10. Leveraging social media platforms - we saw in part three of this series of articles just how valuable social media platforms are to successful enterprises. Publishing and promoting social media content is vital to a modern digital strategy. Significant time will be required to develop sufficient understanding and then to maintain efforts on an ongoing basis.

Fulfilling these requirements will require an upfront investment in the region of $45,000 and ongoing monthly expenses of nearly $8,000. That's a $140,000 expense in the first year alone, followed by recurring annual payments of $100,000. This is a cost-prohibitive investment for a small to medium size business, and even for an office products reseller with the skills to understand the concepts and risks, it's not a viable path to take.


The chart illustrates the fundamental reason for the failure of small to medium size resellers to execute "go-it-alone" digital transformation initiatives.

This significant upfront investment also assumes a business owner starts with a pretty good idea of what he will attempt and that blind alleys and drastic course adjustments are not required as the strategy is executed. The reality, however, is that it will most likely prove challenging to stay within the budget or the planned time frame.


The chart shown above was built assuming an existing business, with around $600,000 in annual revenue, executes a successful digital strategy generating new business of $600,000 in year-4. Assuming a 56% product cost and 25% operating expenses, a 4-year cumulative investment of $440,000 will generate around $270,000 of cumulative net income - representing a negative return on investment of minus 42% over the four years!

So, for a business with annual revenues of less than $1.0MM, it's difficult to see how a "go-it-alone" digital strategy justifies. Not only is there likely to be no return on the investment, but the risk of failure is far too high.

I've expanded this topic to a five or even six-part series to keep the content and explanations more manageable. Please keep a lookout for the next part in the series to be published within the next two weeks, where I'll introduce potential solutions to the dilemma for small businesses that I've explained here.

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