By Jack Keough
Electrical distributors have been slow to establish e-commerce programs and this may cause them to limit their growth and lose market share to emerging e-commerce competitors in the future, according to a study by hybris software.
The report’s findings are contained in a whitepaper titled, The Electrical Wholesaling E-Commerce Audit, which is a study of more than 200 electrical wholesaling company web sites across the United States. The audit found that distributors come up short in offering the type of e-commerce experience their procurement customers have come to expect in the B2B marketplace. Although 94 percent of the wholesalers had websites, only a small fraction of them offered a fully functional e-commerce experience.
“There is a clear and urgent case for electrical wholesalers to accelerate their efforts to meet their customers’ e-commerce expectations,” the report said. “With the broader B2B sector embracing e-commerce as a prime channel for growth, it is imperative that electrical wholesalers respond quickly to retain their share of the business. Especially considering moves like that of consumer e-commerce giant, Amazon, to crack open B2B with Amazon Supply, after seeing the unmet needs of electrical and other industrial parts buyers.”
Just take a look at these findings:
- Nearly half of the websites did not feature e-commerce functionality
- Two wholesalers had no website at all
- Another eight had websites that were “under construction” or otherwise unavailable
- 84 websites invited customers to contact the company to place an order with forms via fax (rather than by email or online)
As startling as those numbers seem, it is reflective of what is happening overall in the distribution marketplace, says Bob DeStefano, founder and president of SVM E-Marketing Solutions in Somerset, N.J. DeStefano, who often speaks at distribution trade association meetings on technology and e-marketing issues, said that distributors are still struggling with deciding whether to implement an e-commerce program.
“Some distributors have chosen to ignore e-commerce and others have decided to sit on the sidelines and see what happens. But they can’t do that anymore,” he said. “Not with Amazon and Google Shopping for Suppliers which first targeted electrical wholesalers. Electrical distributors have to figure out what to do about e-commerce and do it quickly.”
Amazon Supply began operating a year and a half ago and it sells 14 different product categories. One study by the Acquity Group, an e-commerce and digital marketing company, found that nearly half of corporate buyers surveyed have already bought products from Amazon Supply.
The audit revealed opportunities for wholesalers to offer improvements in their catalog offerings. The study showed that 61 percent of the audited websites offered dimensions and technical specifications; just 25 percent offered prospective customers the opportunity to enlarge the main product image and only 11 percent offered product comparisons and product reviews.
In analyzing the results, Rick Chavie, vice president of OmniCommerce for hybris, said many electrical distributors with web sites were not using them as effectively as they should. “We knew that there are many companies yet to implement an e-commerce solution and were staying with traditional catalogs and sales rep approaches, supported with call centers,” he said. “What was surprising was the extent to which companies with web sites were generally not using them to transact business and were often referring people to a call center. In today’s B2B commerce world, where decisions are made quickly and orders can be placed instantly with competitors, barriers to purchase can easily mean lost sales. And the problem is, you have no insight into which customers are buying elsewhere.”
That is not to say that customers often use customer service telephone numbers to complete orders, says SVM’s DeStefano.
A total of 78 percent of the web sites clearly displayed a customer service number while 93 percent showed an e-mail address or contact form. However, only 28 percent displayed a frequently asked questions section for customers. Some research reports clearly show that having an FAQ section on their site helps drive traffic as well as provide customers with important information in choosing products.
“Our studies show that only 10 percent of the time prospects come to buy a product. The other 90 percent of the time they’re doing research,” he said. DeStefano advises distributors to make their telephone numbers stand out prominently on their websites because customers often call when they are on the site itself.
He also said that distributors should have an “ask us a question” on their site to encourage people to seek information. They should also use videos, blogs, and solid content.
He pointed to studies that show distributors will see a 5 to 10 percent increase in leads by using a chat-type program on their web sites rather than a standard on-line form.
Not one of the more than 200 sites in the study had an on-line discussion forum for industry or product discussions.
Hybris’s Chavie also mentioned the importance of content on a distributor’s web site to help its e-commerce initiatives
“Content drives commerce,” he said. “In order to make it easy, whether assisted by sales reps or in self-service mode, the content about the product needs to fit the needs of the customer. This means satisfying a variety of customer use cases: wanting visualization of the product, detailed specifications to comply with local ordinances, guided instructions on installation and/or complementary products. Or sometimes they know the part and just want enough content to do a one-click purchase.”
He pointed to other industry segments such as consumer electronics and branded fashion, which are moving quickly into e-commerce to avoid losing market share. “They have seen what happened to books, games, videos, and software products that were made available in a digitized format and were easily purchased via the web. But more industrial sectors are also in play with the emergence of Amazon Supply that is targeting a broad variety of categories from electrical to hardware to maintenance items and moving into markets regardless, or maybe even because of, the current state of B2B digital enablement in purchasing.”
In almost every other major study of e-commerce, buyers say that ease, convenience and security are the critical aspects in deciding to buy from a distributor. But this audit by hybris found that distributors should make it easier for their customers to do business with them. For example, although almost all of these websites (96 percent) accepted credit card payments, only half of the audited sites offered information about secure checking out processes.
In addition, after customers make an online purchase, they want their products to be shipped according to their specific timetables. But only 7 percent of the audited websites made shipping options visible. Nearly 90 percent of the sites offered next day shipping options but almost none offered enhanced shipping in the form of weekend, specific day or hourly time slots.
The hybris Electrical Wholesaling E-Commerce Audit also supports the findings of a 2012 Technology Benchmarking Survey conducted jointly by the National Association of Electrical Distributors (NAED), the Independent Electrical Contractors Association (IEC), and the National Electrical Contractors Association (NECA).
The NAED survey confirmed that mobile technology is growing at a rapid pace in the electrical supplies business. Transactions are frequently conducted online, and often on mobile devices. Over 86 % of buyers use smartphones, and nearly half (48 %) use tablet computers.
There are various messages that come from this study that distributors/wholesalers can put to immediate use. Wholesalers’ websites must become easier and more convenient to use. Buyers, particularly younger ones, want a consumer-like experience such as they have with Amazon or other top quality service providers. They want a site that features rich content, product reviews, videos and photos. Buyers also might want to search for a product based on application rather than product names or SKU’s.
Buyers expect an easy-to-use interface with powerful search capabilities to quickly locate standard parts numbers and enabled rapid order fulfillment.
tED magazine also checked out several electrical distributors’ home pages. On many of these sites, the content on the site had not been updated in three years. And it didn’t matter whether you were a small or large distributor: the web sites were, in many cases, lacking e-commerce capabilities.
Whether conducting an official study, or simply browsing a sampling of websites, it is clear electrical distributors need to step up their e-commerce game. And do it quickly.
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