Written by Trevor Wood - OpenMarkets SVP, Supplier Solutions
The Stay-at-Home Economy is for real. As Mad Money’s Jim Cramer highlights on his 2/28/17 episode, Target (NYSE: TGT) and Dominos Pizza (NYSE: DPZ) are the perfect two stocks to delineate between the at-home buyer and the traveling buyer. Technology has not only changed modern consumers shopping experience and expectations, but also their schedule by making everything you could possibly want just a click away. Cramer also mentions a couple of companies that lead the “stay at home” buying experience, crediting Amazon and Netflix for enabling consumers to find and enjoy their favorite things almost instantaneously and often for a lower price. Forget check-out lines, parking lots, and big-box stores with endless aisles. Now, you can shop for anything from the comfort of your couch… at your convenience.
The stay-at-home economy is analogous to a trend that is transpiring across the healthcare market, specifically in my sector: healthcare equipment. Breaking it down, it appears buyers have a sudden, technologically-influenced inability to stand for complexity and inconvenience. The days of old, with poor record keeping, unattended voice mails and emails is being challenged. It is not the way to care for an $80B marketplace.
I’ll start with the hospital buyer, and it is important to note that that buyer could be an individual in supply chain, a clinical/non-clinical department director, biomed lead, or finance director. These folks are inundated with paper catalogues, unannounced sales visits, aimless website hopping, and disjointed marketing and sales collateral. Like anything else, when you live in a world of razor-thin resources and regulatory uncertainty, inefficiencies wreak havoc. Similar to their at-home expectations, todays hospital equipment buyers are looking for a comprehensive, streamlined approach to their purchasing experience – similar to the experience that Amazon, Dominos and Netflix have delivered in the home. They are simply frustrated by the dichotomy between their personal shopping experience and their professional buying experience. We can’t fault them.
Contributing to this dichotomy are the bloated SG&A (Sales, General and Administrative) costs that are threatening the value chain. The on-the-ground reality of healthcare equipment sales (and I am speaking from experience here), is that there is a hefty amount of waste, time and energy associated with sales and marketing efforts. You can blame the pervasive and antiquated account/territory management models, the exorbitant trade-show budgets, or superfluous sales forces, but no matter who is at fault, it is a problem that needs to be resolved. What will win tomorrow is a strong foundation in e-commerce and a delightful experience for today’s buyer. The model delivers immense value - an informed marketplace of buyers and sellers brought together by powerful, simple software, dramatically reduces the 51% SG&A and allows those dollars to be repurposed towards R&D efforts and ultimately, the patient.
The impetus for my pitch to change the industry is because I love what I do. I have an opportunity to usher an improved healthcare equipment marketplace forward with a smooth, simple, mutually beneficial shopping experience and the inherent value it provides both buyers and sellers is especially rewarding. Beyond that, seeing our B2C counterparts taking gigantic, strategic steps toward the digital narrative (see Walmart and Jet.com) should be at the very least a powerful beacon for our industry to follow.
There is underlying movement from both Wall St. to the blue and white signs across our country that stands behind the message, “Don’t complicate this economy”. It is time for us all to accept (in many respects, what we all sell) that change is good, change is needed, and change is inevitable, or else we risk further inflation in healthcare and lower quality care for patients. Buckle up.