The impact that Amazon has had on both the consumer market and business-to-business channel has been shockingly clear:
- In 2017, Amazon accounted for nearly half of all online purchases made in the U.S.
- Amazon Business became a billion-dollar enterprise within its first year in existence; as of June 2017, it had over one million customers (and is continuing to add customers at an estimated rate of 10,000/week) as well as 85,000 sellers on its platform, up from 30,000 the previous year
- Amazon Business currently offers over 21 million products in the ‘Industrial & Scientific’ category (where electrical, plumbing, HVAC, and other related products are found)
- If Amazon penetrates the professional market in the same way as it has the consumer market, Amazon Business could achieve $600 billion in revenue by 2021
How can distributors compete with an online giant that continues to innovate, invest, and gain momentum at break-neck speed? Following, several industry experts offer ways for B2B players like distributors to evolve with Amazon, other game-changing B2B and B2C players, and their own customers in today’s competitive and fast-paced digital world.
A New Day
“It’s certainly a new day,” confirmed Dirk Beveridge, founder of UnleashWD (www.unleashWD.com), a two-day, Chicago-based innovation summit for future-thinking distributors. He noted that, among the many trends defining business today, the pace at which technology is being adopted is like no other time in history. “For instance, while electricity took 45 years, telephones 35 years, and television 25 years to be adopted by at least 25% of the U.S. population, smartphones only required five years and then grew their penetration from 5% to 40% in a span of only four years; a recent Pew study confirmed that as of January 2017, nearly 80% of Americans owned a smartphone, up from 35% in 2011,” he said. With the digital business evolution in full swing, “distributors are no longer simply competing against the traditional competitors who we understand — today, we’re competing against the boldest, smartest, most relentless, and most customer-centric players on the planet,” Beveridge said of players like Amazon and other retail giants.
Denise Keating, President of Sycamore, IL-based data management services firm DATAgility, Inc. (www.datagility.com), agreed. “When Amazon first announced the launch of a website for B2B buyers, their initial marketing was focused on ‘small’ business and a limited number of product categories, just like Lowe’s and Home Depot did a couple of decades ago,” she said. “Now, Amazon, Lowe’s, and Home Depot are all targeting ‘every type of business and every size organization,’ a statement which Amazon recently shared on its website. Make no mistake that, along with Lowe’s, Home Depot, and many others, Amazon is serious about targeting the distribution channel and the categories that channel sells,” Keating said. “For example, Amazon recently placed a two-page ad in a major magazine to entice more contractors to their B2B site and we’re seeing more of these types of print and online marketing efforts from Amazon Business designed to take market share away from the distribution channel. Remember, the market for these types of products is only so big, so the growth that Amazon and other outlets are experiencing comes largely at the expense of those who have traditionally served those customers.”
According to Keating, B2C companies have a strong desire to enter the B2B marketplace. “In the first place, B2B is five times bigger and growing twice as fast as B2C,” she explained. “In addition, B2C customers typically have a lower ticket size and more sporadic purchase patterns than professionals. By contrast, professional customers tend to have higher transaction values and predictable, recurring sales patterns — all compelling reasons for Amazon and other companies to work hard to attract more pro customers.” Keating added that Amazon and other companies understand that they have gaps to fill when it comes to serving a B2B audience and are working diligently to close them in order to attract the B2B customer, with Amazon now offering such targeted services as customer-specific pricing, ERP integrations, and extended payment terms.
Secrets of Success
Below, Beveridge, Keating, and other experts offer sound tips to help distributors stake their claim in the evolving B2B e-commerce marketplace, which is increasingly being serviced by colossal B2C competitors:
- Supply Quality Content – “Whether you’re a B2C or B2B buyer, users expect an engaging, interactive experience that’s easy to use, serves their specific need, and/or solves their problem,” Keating said. “Knowing what your customer needs and the problems they require answers for is the most important and first step when developing or improving your website. Then, high-quality content will help buyers find you online, keep them coming back to your site, and build your reputation as a trusted brand. Too often we see the same content and the same exact ‘look’ among many distributor websites. The fact is, your website is an extension of your brand and should be used to differentiate you from competitors. If your website’s look and content is all the same, what will compel customers to choose you?”
Part of a high-quality site also includes the provision of accurate, reliable, and current product data. “Data is the new currency and the digital world is where tremendous growth opportunities and future success lie,” Keating confirmed. She noted that data needs to come from manufacturers in the form of a digital download, not a redirect to a manufacturer website. “As a distributor, the last thing you want a customer or prospect to do is leave your site and go somewhere else. We need full collaboration between manufacturers and distributors to leverage technology and data to better and more effectively serve their mutual customer,” she said.
Tune in for more secrets of success in Part 2 of ‘Evolve or Dissolve,’ running on January 10.
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