By Bridget McCrea
A look at the evolution of automated bidding software and the impact it’s having on today’s electrical distributors and contractors
In The Rise of Automated Bidding Software, tED Magazine looked at how companies like Trimble Accubid, BestBid, TurboBid, and others were streamlining the bidding and estimating process for busy contractors that don’t have the time to round up pricing via phone or email every time they have to answer one of their own customer’s bids.
This, in turn, puts additional pressure on distributors to develop e-commerce sites and for manufacturers to supply the necessary data to the IDEA Data Warehouse (so distributors can load it onto the myriad bid software platforms). And while some electrical distributors have already tapped into this new trend, the smaller, independent distributors that lack e-commerce enabled websites aren’t as apt to provide customers with automated bidding capabilities.
Denise Keating, president of Sycamore, Ill.-based DATAgility, says she’s working with a distributor right now that wants to “more tightly integrate” with its contractor customers. As part of that mission, the company is exploring various ways to collaborate and create tighter connections with its customers. “Estimating or bidding software would play a part in that,” says Keating.
Overall, Keating says more distributors are adding automated bidding capabilities as a way to stand out from the crowd and better compete in today’s marketplace, where customers want to be able to get pricing and availability—and then make decisions—in real-time and at their fingertips. “There’s more competition out there and the jobs are going to the distributors that offer the greatest value and best levels of profitability,” says Keating. “It’s all about managing profitability on a project level; that is what’s really driving the use of these systems.”
Keith Peck, president at NetPricer Service in Hartford, Conn., says his company’s platform connects electrical contractors’ estimating software to distributors’ product pricing via the web for instant price quotations. He’s seeing more interest in that type of service in recent years—a trend that’s largely being driven by contractor demand.
“This type of software has been around for about 20 years now, but it’s gotten much more sophisticated in recent years,” says Peck, “particularly as it moved from being DOS-based and over to more user-friendly interfaces.” Over the last three to five years, the platforms have moved from being “take-off” based (i.e., where contractors used project blueprints to count the number of lighting fixtures, switches, and receptacles needed for a particular bid) to CAD or even PDF-based.
“The take-offs were laborious, labor intensive, and subject to error,” Peck explains. “Now, the programs’ on-screen take-off systems do all of the counts for the contractor. That alone is a huge time saver that’s pushed more people to invest in and utilize these systems.”
A Pretty Significant Chunk
Looking around at the pool of estimating/bidding software options available on the market today, Peck says there are thousands of different programs available and that distributors of all sizes are using them when working with their customers. Having assessed the situation at one large, national distributor, Peck says roughly 50% of the company’s revenue comes from products originally sourced and specified using a software package.
“That obviously represents an enormous amount of revenue and opportunity,” says Peck, who feels that more distributors bought into the idea of using automated bidding software when big box websites, Amazon, and others jumped into the industrial sales game. And while some distributors rushed to “beef up” their e-commerce and online shopping cart strategies, Peck says in most cases such sales represent just 5% or less of the typical distributor’s revenue.
“The amount of business coming through contractor software, on the other hand,” he notes, “can be as much as 50%. That’s a pretty significant chunk.”
That “chunk” presents an opportunity for the electrical distributor that wants to capture some level of e-commerce activity from the contractors that it’s already working with and already plugged into, Peck points out, “as opposed to asking contractors to log into a shopping cart to make a purchase.”
And while Peck isn’t saying that e-commerce doesn’t also present significant opportunities for independent distributors that want to increase their online footprints, he sees online bidding software as a more direct way to get that business.
“In many cases, the big-project business will originate from and be executed through this software,” he adds, “and not via an e-commerce shopping cart.”
Do They Get It?
When it comes to automated bidding software, some people get it and some just don’t. And while larger distributors are more apt to have the resources and tech-savvy needed to best leverage this type of platform, smaller companies are also interested in getting more closely integrated with their customers by using this type of software.
“There’s no question that the bigger players understand the value,” says Peck, “but smaller distributors are struggling with it while at the same time becoming more and more concerned with how competitors like Amazon are chipping away at their business.” To the latter, Peck says the best approach is to look at how customers are doing business—and how they want to do business—in the information age.
Consider, for example, the contractor that’s building a school, hospital, or high-rise business, and that’s probably already using sophisticated software to get the job planned, orchestrated, and completed. That’s the perfect environment to add on an e-commerce connection and software package that will allow the contractor to easily get bids and place orders without having to jump through too many hoops along the way. “That’s where distributors have the most opportunity right now,” says Peck.
Ready, Set, Go!
To the distributor that wants to grab that opportunity in 2017, Peck says the first step is to understand the makeup of their contractors or customers (e.g., Are they industrial oriented? Focused on maintenance, repair, and operations [MRO]?). This will help determine the usefulness of automated bidding software. “If you’re selling 90% industrial,” Peck explains, “then you won’t see as much impact from the software as a distributor that’s selling to a commercial contractor working on a new building.”
Peck also tells distributors to find out how tech-savvy their contractors are in terms of software usage, and whether they’re already using some form of estimating software. “The large, national distributor we worked with did that type of assessment and came away from it knowing that bidding software needed to be a part of its e-business strategy,” says Peck. “Then, it made some very specific choices in terms of promoting this kind of connectivity to the estimating software world and getting their customers onboard and engaged in the concept.”
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 email@example.com or visit her website at www.expertghostwriter.net.
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