Distributors, E-Commerce is Your Friend (Not Foe)

By Bridget McCrea

A business-to-business marketing expert shares his views on the value of e-commerce for independent distributors and how companies can best leverage this sales channel (instead of running away from it).

As he eyes the list of Industrial Distribution’s annual survey of distributor operations, John Sonnhalter isn’t surprised to see that 23 percent of companies cited e-commerce as one of their “primary concerns” for 2016. And while economic conditions, customers going out of business, price competition, and higher operating costs all ranked higher on the list, Sonnhalter says having a solid e-commerce presence should be as important as, well, air—at least for the electrical distributor that wants to stay in business and prosper over the long haul.

“When it comes to e-commerce we’re at a point where distributors need to get in, or they won’t be long for the world,” says Sonnhalter, founder of Sonnhalter, a business-to-business marketing firm in Cleveland.

And here’s why:  We live in front of a computer screen and the “I want it now” mentality that we find on the consumer side has trickled over to the industrial distribution world. “Let’s face it, some people would like to place orders after hours and they would like to know if you have it available and can have it delivered the next day.”

Contractors Like E-commerce
Citing the fact that 52% of business buyers in 2014 were planning to buy at least half of their goods and services online in the coming months—a Forrester statistic that undoubtedly has increased over the last two years—Sonnhalter says the contractor that used to be at his desk at 7AM on a Monday morning placing orders has probably changed his habits. “Contractors are much more sophisticated,” he says, noting that most are now using smartphones and tablets to place those orders from anywhere, and then expecting the goods to be delivered on time and to the right place; no phone calls or follow ups necessary.

This level of sophistication has pushed more distributors to invest in e-commerce sites, but a high percentage of them are still crossing their fingers and hoping that online sales somehow just “go away” or fade like a distant memory. “Most independent distributors are afraid of Amazon and the big boys, like the Graingers of the world,” says Sonnhalter. The good news is that even though it may look like these larger players are selling on price, they’re actually selling on convenience. This important point leaves the door open for small to midsized distributors who can mimic (or even exceed) that level of convenience without having to cut their prices down to the bone.

“The small electrical distributor has a distinct advantage over companies like Amazon because they offer the support that their larger, online-only counterparts cannot,” says Sonnhalter. An electrical contractor that needs to place an order for electrical boxes or conduits that are not “UPS-friendly,” for example, and have them delivered to the jobsite the next day, will pick the distributor that’s located a few miles from that site. In terms of support, that distributor can then provide application assistance, value-added services, and even exchanges without the contractor having to miss a beat or fall behind on a project deadline.
 
Unfortunately, Sonnhalter says too many independent distributors assume that they have to compete on price online and either steer clear of the business model or take a half-baked approach to online sales. He says the fact that many of these firms are second- and third-generation family-run companies is a key roadblock on the path to e-commerce success. “We’re definitely seeing some conflict among the various generations of ownership,” says Sonnhalter. “If I’m a 25-year-old guy and my father is still in the business at 55, then I’m probably dealing with an owner who is very resistant to change.  That’s a big challenge because the Internet, websites, and black boxes intimidate the veterans who are still holding the company’s reins.

Steps in the Right Direction
Having worked with a large number of independent industrial distributors over the years, Sonnhalter says one of the best ways a company can buck the trend and have a bigger impact on the e-commerce front is by tapping into the power of an industry buying group like Affiliated Distributors or Imark Group. “Groups like these are very good at helping their members build out their e-commerce sites,” says Sonnhalter, “and at putting up professional websites very quickly, complete with all of the products, pricing, and the whole nine yards.”

Another good strategy is to accept the fact that contractors are buying online, and that the strong relationships your firm has with those customers can go a long way in retaining them in the future. “A contractor may want to place orders online, but when there’s a problem he’s not going to go back to Amazon. He’s going to ask a reputable, experienced expert for help,” says Sonnhalter. “The distributor has to look at itself and not shortchange itself as to the benefits that it brings to the table, but it also has to remember that you can’t sell those benefits if you don’t get the order.”

 
SIDEBAR

Five Ways to a Winning Contractor Email Campaign

A recent study by Email on Acid reported that email marketing remains a top priority for companies in 2016. John Sonnhalter says he could have predicted this was the case, namely because nearly seven out of 10 companies (71.8 percent) say they are planning to spend more time on email production and more than nine out of 10 (86.7 percent) have increased their email marketing budgets this year.

Here are Sonnhalter’s five tips to a great email campaign targeting contractors:

1. Start with a great email list that includes the right people and that’s scrubbed periodically to ensure that it’s up to day.
2. Think like a contractor – What are their pain points? Give them content that provides practical solutions to their problems.
3. Always answer the question, “What’s in it for me?” Customers don’t want to know what your company is up to. They want to know how you can help them work smarter, better, and faster.
4. Talk like a human – Don’t use marketing or sales speak. Keep it conversational.
5. Give them a reason to sign up – Leverage sneak peeks at new products, exclusive product demos, and other perks that they can’t get anywhere else.

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McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.