How to fine-tune your distributorship’s fulfillment and delivery approach in an e-commerce-led selling environment.
Independent distributors have always been known for their willingness to jump through hoops to get their customers what they need, when they need it, and where they need it. It’s just part of the wholesale distributor’s (or now, the B2B distributor’s) DNA. When e-commerce came along—bringing the whole B2B space right along with it—it pushed distributors into hyperdrive as they scrambled to find newer, better, faster ways to fulfill and deliver customer orders.
To compete effectively, distributors have had to come up with some pretty creative ways to get their products into customers’ hands. Not willing to wait around for Amazon Business to claim more of its market share, for example, Rexel in San Diego last year installed lockers of various sizes (up to 10-feet-high) on the front of its building to make after-hours pickups more convenient for its buyers. “We give them a code to the locker,” says Max Gabin, branch manager, “and they can come and get the orders at midnight if they want to.”
Another electrical distributor talked at a recent NAED conference about how it had just rolled out a program whereby it would do the majority of its deliveries overnight. Here’s how it works: the distributor asks customers for keys to their trucks, sets out delivery pods, and/or gains direct access to the buildings. Then, when a contractor arrives on a job site at 7:00 am, all of the supplies needed for that day (and beyond) are already on site and ready to use. That means no standing around and waiting for deliveries, and no calling to find out when the delivery vans are going to arrive.
These are just a couple of ways electrical distributors are getting creative with deliveries in a world where the span between order placement and final delivery is whittling away to literally nothing. “Customers expect their purchases to be delivered right away. If distributors can’t meet those expectations, repeat business is unlikely,” says Faith Kubicki, content marketing manager at IntelliChief, an enterprise content management (ECM) provider.
The bottom line is that lead time has become a critical supplier selection point for customers, which means that reducing it can have a major impact on your business. “Of course, that tends to be easier said than done,” says Kubicki, “but with a few strategic changes, distributors can effectively reduce their lead times and optimize their entire supply chains—leading to more satisfied customers and a stronger competitive advantage.”
Put Some Elbow Grease Into It
Across the B2B and B2C landscapes, we see good examples of how companies are stepping up to compete with rivals like Amazon, which have (and continue to) invest millions in their fulfillment, distribution, and transportation strategies. In a recent WSJ article, Jennifer Smith writes about how True Value is retooling its hardware supply chain in order to “respond more nimbly in a home improvement market that is being buffeted by e-commerce and competition from big-box retailers.”
The company, which supplies thousands of independent hardware stores around the U.S. with tools, lawn care equipment, and other home improvement goods, is in the midst of a $150 million initiative to overhaul its distribution network and add new software to improve how it manages inventory and forecasts demand, Smith reports. For example, it’s using a hub-and-spoke model to use inventory more efficiently.
“Instead of stocking each warehouse with every product, the wholesaler is placing slower-moving goods in large central locations and pushing inventory that turns over more quickly out to satellite facilities closer to customers,” Smith explains. “Orders drawing from the hub are sent out to the spokes, where they are matched up on the loading dock with items pulled from those distribution centers.”
Borrowing a Page from a Different Industry
Daniel Saunders, senior solutions manager at U.K.-based marketing agency Blueclaw, says he’s been working with a growing number of B2B and B2C companies that want to find faster, more efficient ways to get their goods into their customers’ hands. Looking outside the industrial sector, for example, he says one small startup fashion retailer that he works with is using technology to create “shadow profiles” of customers (with their permission) that essentially follow them around the store and pay attention to how they interact with and react to store merchandise.
“Tiny cameras located on the shelves pick up on the shoppers’ motions,” says Saunders. If she’s looking at a $20 blouse made from cotton, those cameras register how she reacts to the color and the feel of the product. Then the merchant, which also uses augmented reality (AR) mirrors for trying clothing on, can suggest similar styles, matching purses, complementary shoes, and other products. The customer places an order and—even if the store doesn’t have the goods in stock—receives it at home within a 24-hour delivery window.
Saunders says electronic distributors can borrow a page from these types of retailers, which have worked hard to put their customers at the center of their sales and marketing efforts. “There’s a lot of talk about how people see Amazon and Google as these big data hubs, but what a lot of people don’t realize is that the algorithms they’re using are designed to react rather than to be proactive,” Saunders explains.
“They take user intent—namely in the form of keywords used to find specific products—see how users interact with them, and then change the algorithms accordingly,” says Saunders. “It may sound like a long shot in today’s selling environment, but if you know your customers better than that, and if you really understand what drives them, then you’re already ahead of the curve.”
Of course, getting goods into the hands of those customers takes an extra effort in today’s same-day/next-day delivery world. To fine-tune that aspect of their businesses, electrical distributors need to focus on keeping stock levels ample, solidifying supplier relationships, using drop-shipping, and implementing some creative logistics strategies. “Expedience is obviously a big factor,” says Saunders, “but distributors also need to understand their cost of delivery and make sure that they’re actually generating a profit on their sales.”
In Part II of this article series, we’ll outline a laundry list of strategies that electrical distributors can start using today to improve their delivery, fulfillment, and transportation strategies in an e-commerce-led selling environment.
Tagged with B2B, best practices, delivery