[April 6, 2004]

Innovative Marketers Turn To The Web For Cost-Effective Programs

BY MARK PINSLEY

The aviation industry looks to innovative tools for saving money, reducing overhead and identifying new business opportunities.

The downturn of the airline industry has been widely covered from the perspective of the airlines that are losing billions of dollars because of rising operating costs, sinking ticket prices and fewer air travelers. 

But very little has been said about the smaller vendors -- the ones that don�t qualify or refuse to seek federal assistance. These vendors are the true testament to American innovation and resilience. When faced with the ripple effects of the airline downturn, these companies have become focused heavily on the bottom line and increasing revenues while decreasing spending. 

Many have found the tools they need on the Internet. Maybe not in the places that most people look�you would be hard pressed to find eBay or Yahoo providing detailed information on aviation surplus or certified repair shops. So, the aviation industry has turned to companies, tools and services designed specifically for their industry to help them gain traction in a tough economy.

Many aviation companies have looked to trusted sources within that industry to help build awareness and create new business opportunities. These companies, like Soundair Aviation Services, LLC, a leading repair and aftermarket shop, are working with e-marketplaces, portals, online catalogues and e-auctions to increase their reach with little impact to their budgets. They have also leveraged new technologies to increase the effectiveness of their supply chains and get closer to their existing customers by tying together procurement and inventory systems.

Soundair Aviation Services has worked with online partners, including e-marketplaces, from its beginning and credits them with enabling it to serve customers around the world.  According to the company, �E-marketplaces deliver worldwide exposure and always make us appear bigger than we actually are.�

ONLINE SALES AND MARKETING
Web-based sales and marketing tools have the ability to increase the reach of your company without significantly increasing your costs. But, companies need to remain focused. Many online tools reach a generic audience of buyers.  Companies should think of online campaigns in comparison to traditional ad campaigns.  Advertising during the Super Bowl may get you mass exposure, but unless you are selling beer or soft drinks, it�s unlikely you will see significant return on your investment. However, if you look to a partner that targets your specific buyer within a key vertical market(s), you can be fairly certain that you are reaching people who are interested in your offering.

In the airline industry there are a number of possible venues for companies to turn to, and each has benefits and challenges.

CATALOGUE SITES
Over the last several years a number of vendors in the airline industry have deployed catalogue sites to get closer to their customers and increase visibility in the market. These sites offer customers the ability to purchase directly from the vendor, simplifying procurement and ensuring that the company is buying from a trusted source. 

Octagon Aerospace recently deployed an e-catalogue to increase its sales reach and get closer to its customers. Now, customers can order parts directly from a site that is integrated with the corporate Web site. According to Neil O'Hara, president of Octagon Aerospace, �This ensures that our customers can find parts quickly and easily with a simple search.  Then, if they choose, they can order the part online, without ever needing to pick up the phone.�

While companies need to dedicate resources to promoting these sites to their customers, they do not have the overhead of creating a printed catalogue and they have the increased reach offered by the Internet. A number of companies have also turned to online partners to create and host sites, which offer increased functionality to their users. Now, instead of simple product listings, customers can view detailed component specifications and order directly from the site.  Vendors simply upload information and receive orders via e-mail.  This creates an efficient and effective means for vendors to improve their customer relationships without having to dedicate resources to supporting the online presence.

E-MARKETPLACES REACH THE LARGEST NUMBER OF UNIQUE BUYERS
One of the most effective means in the aviation industry to reach customers is through the leading e-marketplaces. These provide a lot of the benefits of e-catalogues, while providing increased traffic and awareness. Designed to provide the widest audience of targeted buyers without requiring significant investments, the e-marketplace provides buyers and sellers with a means to greatly increase the effectiveness of their supply chains.

Because it specializes in �just in time� delivery, Octagon Aerospace uses an e-marketplace in conjunction with its e-catalogue to help locate materials that it might not have in stock. �This is particularly helpful when we have a customer who needs us to help them locate a hard to find component that is essential for them to get a plane back in the air. We simply search to find the best price and fastest delivery for that customer�s requirements,� said Neil O'Hara, president of Octagon Aerospace.

E-marketplaces are designed to bring together the greatest number of buyers and sellers possible and the companies creating these portals are incented to ensure that their site provides both buyers and sellers with the highest value possible.  Because vendors are listed side-by-side for direct comparisons, e-marketplaces can typically provide buyers with the best price possible for the item they need.  Sellers are comfortable with this model, because for a minimal investment, they are reaching a vast audience of buyers that they would not be introduced to otherwise.

Consolidated Aircraft Supply, a leading repair shop, uses an e-marketplace to list inventory and to find repair parts. According to one of the company�s owners, Steve Matza, �I can always find the parts I�m looking for, even if I don�t have all of the information. The e-marketplace allows me to search by part number, description or other identifying codes that might be used by government or commercial organizations. It�s like an encyclopedia of parts.� This ensures that Consolidated can always service its customers� repairs, which, from Steve�s perspective, is the most important part of his business. �We like to ensure that if you come to us for a repair, we fix it effectively and quickly every time.�

Until recently, one of the downsides to the e-marketplace was that buyers had no way to judge the validity of the businesses listed on the site. In many instances, buyers would choose to purchase from a known vendor, even if their price was less competitive. Recently, the leading marketplaces have added accreditation programs that help buyers identify reputable sellers and guarantee a certain level of vendor quality. This move has made e-marketplaces even more vendor competitive while providing buyers with new options.

LINKING WITH E-COMMERCE PARTNERS TO INCREASE THE EFFICIENCY OF SUPPLY CHAINS
Aviation companies are beginning to deploy back-end integration solutions to tie into their customers', suppliers' and trading partners� inventory and procurement systems. This removes manual coordination and enables them to seamlessly serve customers� needs without maintaining large surpluses. 

According to Tom Kenville, President of Mid America Aviation, �When our customers say that they have an emergency, we know that we need to act fast and get them back to normal as quickly as possible. In our business, many companies use the term �Just in Time� and we know that if we aren�t responsive, that can quickly turn into �Just in Trouble.� We prevent our customers from getting into trouble.�

By integrating back-end systems, companies can further increase the efficiencies of their supply chain and provide buyers with the fastest turnaround possible.

IDENTIFYING NEW OPPORTUNITIES
As aviation companies have integrated Web-based systems into their sales and marketing efforts, they have also been able to identify new business opportunities by measuring demand and interest from their partners and potential customers.  E-marketplaces provide the reach and the low cost of entry that entice companies to test new markets. 

In some instances, companies have used e-marketplaces to reach new customers with new or different products. 

In August of 2002, BAE�s European Logistics Centre was looking for new sales opportunities. The company determined that there could be possible sales opportunities in the aftermarket -- focusing on companies looking for used parts and components. After researching its options, the company decided to sign up for Inventory Locator Service�s (ILS) e-marketplace offering, which introduced BAE to aftermarket buyers while requiring little upfront investment. Once the company signed up for ILS� service, its products were automatically listed in the ILS e-marketplace. 

Initially, BAE expected only a few sales and they were not convinced that they could make significant money from aftermarket sales. What the company discovered was not only surprising, but it also validated the company�s entire aftermarket initiative. 

ILS enabled BAE to validate selling to this new market and provided the company with the basis for an aftermarket business plan. BAE has used the results from ILS to help them build a case and business model for a larger aftermarket initiative for the company, which will include ILS as an integral part of its sales and marketing efforts.

More and more aviation companies are following BAE�s lead to various levels of success. E-marketplaces provide a virtually risk-free method for testing the most innovative business ideas. And, because most require little investment, companies can test the waters here before investing in full-blown corporate initiatives.

In a challenging economy, companies always look for better ways to conduct business and decrease overhead. For the aviation industry, this has resulted in companies looking to the Internet to deliver on the promise of increased sales reach and purchasing power. Generic tools could not address this industry�s needs, so they have turned to targeted partners that already have relationships with the buyers and sellers that they are trying to reach. 

In a time when many companies are shrinking or going out of business, many of these innovative companies are actually growing, adding employees and increasing their market presence. E-marketplaces, e-catalogues and increased integration are just some of the methods they are employing.

Mark Pinsley, Vice President of Marketing at Inventory Locator Service, LLC (ILS). For more than 20 years, ILS has provided information via its electronic marketplace to enable subscribers in the global defense, aviation, and marine industries to buy and sell parts, equipment and services.  Started in 1979, ILS is the first, largest, and most active independent business-to-business electronic marketplace serving the defense, aviation, and marine industries. Headquartered in Memphis, Tenn., ILS has offices in North America, Europe, the Middle East, and the Asia-Pacific region. For additional information about ILS, visit www.ILSmart.com or call 901-794-5000.