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Ensuring Your Distributorship’s Survival in a Digital World

Ensuring Your Distributorship’s Survival in a Digital World

By Bridget McCrea

It’s no longer a matter of “if” your company needs a solid e-commerce strategy – it’s a matter of “when” – and the time is now.

Even if your top customers aren’t transacting business online, price-shopping on their iPads at the jobsite, or asking you to get your proverbial digital act together, they will be soon. Research firm Frost & Sullivan expects business-to-business (B2B) e-commerce to hit $12 trillion in sales worldwide by 2020 (up from $5.5 trillion in 2012). The firm says the migration of B2B sales to the online world is happening for four reasons, all of which are relevant to the electrical distributor:   

  1. An expectation among a growing number of companies to conduct buying and selling online;
  2. A shift from some companies to conduct procurement transactions through the Internet instead of through electronic data interchange, or EDI;
  3. The growing interest of companies in placing orders through mobile commerce devices;
  4. And the increasing popularity of e-marketplaces such as Alibaba.com and Amazon Business.

“You can delay your e-commerce strategy by a little bit – even by a month or two – but the longer the delay the more you are costing your company,” says Ranga Bodla, industry lead for wholesale distribution at NetSuite in San Mateo, Calif. “The decision distributors need to make today is ‘how fast,’ because the new arena for competition today is in B2B e-commerce and — just as we saw happen with B2C e-commerce — the B2B market is falling under the domain of Amazon.com.”

Like it or Not, They’re Going Digital
If you’re not convinced that your customers will put down the phone and take the digital route, think again. Today’s B2B customers increasingly act like consumers, with the desire for self-service tools and instant access to product information through their mobile devices. “Many consumers are beginning to buy directly from wholesalers and manufacturers with easy-to-use e-commerce sites,” says Bodla. “Additionally, both manufacturers and distributors are looking to cost-effectively increase market share and reach new customers.”
When buying online from distributors, buyers are looking for sites that engage with business customers and help them quickly find products they need to save time and do their jobs better.  In order to deliver on customer expectations, Bodla says distributors should start working “more collaboratively than ever with manufacturers, suppliers, and retailers, so that everyone involved in the supply chain shares and has access to real-time customer and product information, including inventory.”

To distributors that have either avoided the e-commerce space or developed sites that fall short of customers’ expectations, Bodla says a good starting point is to simply ask yourself, “How are my customers going to want to buy from me 12 months from now?” To get the answer, try asking customers directly via a short email survey – or, have outside sales reps pose the question during a face-to-face meeting. Expect to hear answers like, “We want instant access to product information online,” and “We want to be able to use more self-service tools on the web.”

“When you have the answer to the question, then you can come up with a good strategy for addressing it,” says Bodla, “and for getting on solid footing for your next step.”

Riding out the Waves of Change
The wholesale distribution industry is going through some changes right now. In fact, Bodla says it’s “part-way through an intense period of flux.” That “flux” is pushing all distributors to make changes to their business models and be able to better respond to customer buying patterns, partner preferences, and the economy as a whole. “It used to be that the business experience informed and drove the consumer experience,” Bodla explains. “Now, the situation is completely reversed and distributors need to step up and provide consumer-grade user experiences, particularly in relation to e-commerce as online sales continue to grow.”

For example, customers want and expect to be able to view, order, manage their account, and purchase products not only during working hours, when in the office, or working remotely, but at any time and from any location. “Based on these shifts in purchasing behavior,” says Bodla, “distributors need to be able to provide compelling mobile experiences for customers looking to buy online via their smartphones or tablets with ‘My Account’ functionality for self-service.”

Credit the rapid rise in business-to-consumer (B2C) e-commerce with driving some of the changes that distributors are grappling with. “B2C e-commerce has set high standards for the online experience, product delivery, and after-sales services including returns,” says Bodla. “Distributors therefore have to provide an equally great B2B e-commerce experience for customers, with the ability to take orders 24/7 and provide customers with access to real-time inventory and order status.” Ignore these imperatives, says Bodla, and it won’t be long before customers move along to a more agile supplier that does offer these tools and platforms.

Meeting and Exceeding Customer Expectations
No one really likes change, but no one likes seeing their top customers go out the door either. To achieve a good balance between these two elements, leading electrical distributors are investing both money and time into building out e-commerce platforms that meet their customers’ needs and accommodate their wants. Others are on the sidelines, waiting to see how the B2B movement plays out, while still others have taken a half-baked approach to e-commerce in hopes of offering enough to get by, but not enough to break the bank.

“There’s definitely some fear and uncertainty over how to put together an effective e-commerce strategy,” says Bodla, “and what steps are needed to set up a good foundation for the future.” This sentiment is especially prevalent among distributors that are on their second or third website iterations and still unsure about whether they’re doing it right (or not). For them, Bodla says the focus should be on developing an effective way for customers to research, shop for, and purchase products and services online (as opposed to just, “How do I set up an e-commerce site?”).

By taking this customer-centric approach, distributors can drill down into key points like:  Is all of our product information synchronized? How can we make sure my customers have access to real-time inventory and their order statuses? How can we make certain that people have the same online experience at midnight on Sunday as they do at 9am on Monday? And, do we have the right relationships with our suppliers to be able to achieve these goals? “Those are the big questions that distributors need to figure out,” says Bodla, “because customers are going to expect all of that…and more.”

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.


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