Entrepreneurs of the supplier type
These businesses are not good in either of two areas that frame successful business models of today.
They know neither their end customers nor these customers' preferences. They do not even have a direct relationship with the end customers. All they do is sell their products to distributors. But because searching is easy in a digital world, pricing pressures can be tough for suppliers, according to an article on the strategy-business.com website.
If we should name a typical supplier, it might be a company that produces household appliances. Commoditisation is commonplace and customers are constantly looking for cheaper vendors.
Can suppliers survive in the digital age?
They must ensure that their operations are really efficient. But that is only the beginning. Digitisation is progressing. End customers want companies to take care of their needs and solve their problems. This means that companies with little or virtually no knowledge of end customers will struggle.
Furthermore, commoditisation is another threat. To avoid it, suppliers must provide highly differentiated products. For example, Haier, the world’s largest manufacturer of white goods, is striving to differentiate its products from those of other manufacturers.
It has therefore offered a number of niche products (such as freezers that keep food frozen for 30 hours even when there is a power outage - designated for Nigeria, or washing machines convenient for easy washing of long women's gowns of the type common in Pakistan). The most recent step was opening up the innovation process to people via the Internet. By doing so, the company achieved a unique level of customisation.
-jk-