Buyers take tentative steps toward online transactions

 - October 14, 2009, 12:06 PM

It goes without saying that the development of the Internet is one of the most significant achievements in history. The ability to mass communicate without geographic or time limitations allows even the smallest company to have international market potential at practically no cost. Yet while a company such as eBay, the online auction Web site, has capitalized on the Internet’s potential, aviation has yet to fully embrace it. Few aircraft are traded via eBay, and those that are primarily low-value light piston singles. Certainly a high percentage of the aviation community has access to the Internet but the extent to which it uses it varies significantly.

Many aircraft parts and accessory suppliers have Web sites. Some simply list parts and require buyers to contact them, while others allow buyers to make a purchase completely online without having to interact with a salesperson.

Kathy Wrobel, president of Prairie Aircraft Sales of Calgary, Alberta, Canada, said, “I have my own Web site listing aircraft for sale but I use the Internet mostly for research. I can go to the ’net and research any aircraft that interests me. There are a lot of resources online, including articles and other aircraft sellers’ Web sites. It’s much easier with the Internet. Previously you subscribed to Trade-A-Plane (Booth No. 1815) in paper format to get that type of information; even it is online now.”

Lack of Creativity
George Zdravecky, v-p of e-business solutions and product development for Memphis, Tenn.-based parts information source Inventory Locator Service (ILS), said the lack of creativity in the use of the Internet is primarily due to policies and procedures entrenched in aviation itself. “Aviation industry assets are marvels of technology but the systems and processes used to build them are very archaic,” he said. “As a result, there’s a very slow movement toward using new technologies and collaborations to build those assets. Worse, once it is developed, the new technology becomes entrenched in industry and resistant to change.”

ILS (Booth No. 2688) provides information via its global electronic marketplace to subscribers in the aerospace, defense and marine industries to buy and sell parts, equipment and services. The 30-year-old company lists more than five billion parts in its inventory, which is accessed 60,000 times a day by 20,000 subscribers.

Zdravecky suggested that people buying parts online regularly begin to appreciate the possibilities of the Internet, but many still avoid interaction with it. “There are legions of people dedicated to the art of shopping and buying who prefer to do it through a live relationship,” he said. “They are happy with their current form of interaction–telephone, fax or even e-mail correspondence. They’re just distrustful of monetary transactions on the Internet. They see the ‘art of the deal’ on high-value assets and the resulting pricing dynamics related to the art of the personal relationship.”

According to Zdravecky, OEMs are exploring the possibility of direct online aircraft sales. “There are major OEMs that are looking to do as much as possible even to the point of selling the airplane on the Internet,” he said. “They’re studying all aspects of the process from initial contact through final sale and support.”

The idea that you can sell high-value items on the Internet isn’t lost on those who have grown up buying via the Internet. That transition is taking place as those individuals move into positions of authority in corporations.

“You’re going to see an incremental growth in Internet sales usage,” Zdravecky said. “If you look at the entire range of products and services available in aviation, I think in five years we’ll be in the 50/50 range for aviation assets. That means about half of our purchases will be done on the Internet, though perhaps not the aircraft itself. Today only about five to ten percent of aviation businesses are fully capable of e-commerce.”

There is a downside for salespeople to the increasing use of the Internet as a direct sales tool. OEMs will potentially be able to cut out the middleman, bringing the aircraft direct to the customer at a lower cost.

“Direct aircraft sales means today’s brokers and distributors will have to transform to adapt to a new way of doing business,” Zdravecky said. “To prevent themselves from becoming obsolete they are going to have to offer value-added services to the cost of the aircraft. The customer will continue to do business with the middleman if there is a perceived value. For instance, the asset acquisition could be bundled in a package including training, hourly cost maintenance or interior design and installation. They’ll have to add value to make selling an aircraft profitable.”

Zdravecky said the positive aspects associated with online transactions include increased efficiency, shorter transaction lead time, lower overhead and an increase in data integrity. But there is a downside to the increased reliance on the Internet, and you can see it in young people who are totally conversant with e-mail and text messaging.

“You lose out on developing real relationships and at some point presumably one could go over the top and start to disconnect from relating to people,” he said. “People become bold when they’re sitting in an office typing an e-mail; it becomes very impersonal and can lead to misunderstandings. Make no mistake, there’s a paradigm shift about how people interact. For instance, take texting: people in the same house are texting one another; how disconnected from reality is that?”

Peter Sudekum, president of St. Louis Aircraft Sales, Chesterfield, Mo., capitalizes on the flexibility of the Internet for promoting his business but doesn’t think it would work for selling an aircraft without personal interaction. “The ability to purchase online probably won’t happen,” he said. “There are inspections, title searches and a host of steps that must be completed prior to purchase, and some don’t lend themselves to 100-percent online transactions. However, the Internet can be used quite significantly in the process. We provide customers with online access to logbooks, detailed photos and other information that can help them determine if the aircraft meets their requirements. Previously a customer would have had to go to the airplane to do that first step.

“I think the real value of the Internet today is that it brings you more business,” Sudekum said. “Having a Web site is a key to success in this business because it has opened up a global marketplace that didn’t exist before. The Internet has definitely made the world smaller in this business; it’s now your storefront.”