By Bridget McCrea
With Forrester Research Inc., projecting business-to-business (B2B) e-commerce sales in the U.S. to hit $1.13 trillion by 2020 (up from $780 billion in 2015), and with e-tailing behemoth Amazon Business setting its sights on the commercial/contractor market, independent electrical distributors can’t afford to ignore the power of e-commerce any longer. And while some have already made strides in this area, the typical small- to midsized distributor has yet to fully leverage the online channel.
In this article, tED magazine looks at how two different NAED members have approached e-commerce, their long-term strategies for online selling, the challenges they’ve faced along the way, and what’s ahead for 2016.
Getting it Right
It’s been 16 years since Springfield Electric Supply Company in Springfield, Ill., made its foray into e-commerce. Starting out with a “canned” system attached to its Enterprise Resource Planning (ERP) system (i.e., a boxed web order entry system), the distributor later invested in a customized, third-party system that was more robust and capable of handling the firm’s growing e-commerce channel. “We moved away from the boxed system,” says Pamela Nation, the distributor’s e-commerce solutions coordinator, “and really made it our own.”
That new platform would serve as the firm’s online e-commerce hub until 2008, when it was upgraded to a more customized version to “match our regular website’s look and feel,” says Nation. “Then, two years ago, we added a new search system.”
In 2015, Springfield Electric Supply took its e-commerce strategy to a new level when it launched a brand-new platform that combined both its company website and its e-commerce site (which previously was housed at a separate URL). “This year, we launched our new website,” says Nation, “which is even more out of the box and customized to our business.”
As the distributor’s website went through its various iterations, the company kept its customers’ evolving wants and needs as its focal point. “We decided to combine our two sites into a single, user-focused platform that leads with e-commerce right on our home page,” says Nation, who joined the company in 2005 and who has had e-commerce as one of her many responsibilities over the last 10 years.
“As our company and our use of technology has grown at an enormous pace, the company has invested in more marketing staff which has freed me up to focus solely on e-commerce,” Nation explains, noting that e-commerce is now a company-wide focus and one of the distributor’s main initiatives. “Our new website is the perfect reflection of this mission.”
Measuring the Investment
In assessing how much Springfield Electric Supply has put into its e-commerce platform over the last 16 years, Nation says the effort requires a continued investment in data fees, web customization, and functionalities like a new mobile application. “E-commerce is not a cheap investment,” Nation says. “You have to be willing to do what it takes to succeed in this space. However, we have noticed that the more resources we put towards it (i.e., time, people, and money), the greater our return.”
In addition to the cost involved with online sales, Nation says data quality is an ongoing issue for distributors like Springfield Electric Supply. “The biggest struggle in our industry as a whole always has been and continues to be the data,” she points out. “There are several efforts underway to address this, with both manufacturers and distributors taking action to work on data quality.”
Asked to estimate just how much money and time the company has invested in its e-commerce strategy over the years, Nation says “we can’t really put a number on it.” She says the time required to develop and maintain the platform outpaces the actual investment dollars, and feels strongly that having a dedicated employee handle the task is the best approach. “We get data in a very generic manner that’s not always useable for searching; we’ve had to do a lot of data customization to make it applicable for our site,” says Nation. “That’s probably the most expensive aspect of running an e-commerce site in this industry.”
“Data drives your whole system,” Nation continues. “If users can’t find what they’re looking for, then they will not buy from you and you’ve lost the opportunity to service them.”
Favorable Response from Customers
So far, Nation says customers have responded favorably to the company’s newest online selling platform. She says integrating its two prior websites was a good idea, namely because customers can now find everything they’re looking for in one place. Nation says the company also reduced the number of “clicks” necessary to navigate the page – yet another plus from the customer perspective. “Now, I’m enhancing the search features and improving the data even further,” says Nation.
To NAED members that want to do a better job of leveraging e-commerce in a world where B2B online sales are growing at 7.7 percent annually, according to Forrester Research, Nation says the first step is to figure out exactly what your customers would like from the online buying experience. “The site needs to be focused on how they want to use it, not how you think they should be using it,” says Nation. She says distributors should also take the time to plan before launching (or, revamping) an e-commerce site.
“Know what your goals are with the site before you build it,” says Nation, “and realize that without strong data – or a plan to get to good data – the site will fail.”
In it for the Long Haul
It’s been about two years since Codale Electric Supply launched its first e-commerce platform to accommodate its customers’ changing purchasing habits. Based in Salt Lake City, the 13-location distributorship has been using the same platform since then, and has upgraded it and added features and functionalities along the way. Recently, for example, the company added punchout capabilities (i.e., the interaction between a vendor’s web storefront and a buyer’s procurement application) to its site.
In most cases, the modifications came about after customers requested the changes – or, as employees like Nathan Jolley, e-commerce project manager, discovered the opportunities and decided to add them to Codale’s e-commerce lineup. “We went through and fixed our checkout process to make it a lot simpler for customers to make purchases,” Jolley explains. “Our process was fairly lengthy at first, but we saw an opportunity to fix that and have seen great results from that fairly simple fix.”
According to Jolley, Codale’s hybrid e-commerce platform (which is part out-of-the-box software and part proprietary systems and ideas), is designed to attract new customers while also helping existing clients quickly search for and acquire parts and equipment via the web. This multi-pronged approach has helped Codale build its customer base while ensuring that its existing buyers have a state-of-the-art tool for purchasing, checking orders, making payments, and handling other tasks online.
Headed up by Jolley, the distributor’s e-commerce effort costs one full-time salaried position plus about $25,000 annually to maintain. Much of the latter goes toward development fees that come into place when Jolley hires outside IT help to tackle specific jobs and tasks. In return, the company has been able to continually hone and finesse an e-commerce strategy that it knows will pay off over time.
“Certain market indicators out there tell us to keep going; we don’t see e-commerce as something that we can just drop now that we’ve started,” Jolley says. “We’re in it for the long haul and plan to continue with it based on the feedback we’re getting from our customers.”
Three Steps forward, two Steps Back
Looking out over the next six to 12 months, Jolley says Codale will focus on improving its site’s search capabilities and data quality – two elements that he sees as being “extremely important” to any distributor’s e-commerce strategy. After all, when the next competitor is literally just one or two clicks away online, putting the extra effort into creating an informative site that’s easy to navigate is extremely important. “We’re always asking our customers what they want from our site, and then using that feedback to make improvements. In a lot of cases, that means making it easy for them to find what they’re looking for on our site,” says Jolley. “Most not only want a portal for purchasing, but they also need a resource for researching products and information. Our goal is to make sure they get all of that on our site, and not from outside resources.”
Looking back on the last two years, Jolley says the best lesson he’s learned from Codale’s e-commerce experience can be summed up in two words: be patient. “This isn’t an overnight process; it’s the kind of thing where you’re going to take three steps forward and two steps back,” says Jolley. “That’s just the nature of the beast. So while you may experience some setbacks, just address them and focus on achieving those bigger gains over time.”
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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.
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