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Is Your Distributorship Hitting its E-Commerce Milestones?

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Is Your Distributorship Hitting its E-Commerce Milestones?

If your company isn’t where it wants to be on the e-commerce curve, this is the year to bring it up to speed.

 

Much like kids who watched The Jetsons in the ‘60s figured that by now we’d all be flying around in cars, using jetpacks to get to work, and relying on Rosie the Robot to do all of our housework, most distributors probably thought they’d be a lot further along with e-commerce than they are right now. Or, some may have been hoping that it went away by now…who knows.

The fact is, business-to-business (B2B) e-commerce in 2019 is not only very much a reality, but it’s also growing by leaps and bounds. After hitting $954 billion in sales for 2018 and expected to surpass $1 trillion this year, according to Forrester, B2B e-commerce will account for 13.1% of all B2B sales in the U.S. by 2021.

Those numbers and percentages are getting harder and harder for distributors to ignore, yet many appear to be unphased by the rapid shift over to online buying. According to the recent Digital Transformation & B2B E-Commerce Report 2018/19 from Sana Commerce, most distributors are falling behind in their e-commerce maturity, and few are overly concerned about not meeting their online selling milestones.

Currently, just 52% of distributors have an e-commerce site (versus 82% of B2B organizations overall) and 80% have no plans to set up a web store within the next two years. Sana Commerce also found that 71% of distributors continue to invest in e-commerce in order to drive sales (versus drive business transformation).

“Distributors that don’t offer a satisfactory e-commerce experience could lose 2-4% of their online revenues annually,” the company notes, adding that distributors, manufacturers, and wholesalers are all feeling the pressure of increased competition right now. Forty percent of distributors feel competitive pressure against manufacturers and wholesalers rising as a result of digitization, Sana Commerce reports, while 50% feel more pressure to compete against other distributors.

“E-commerce is forcing B2B organizations to level up and take a more sophisticated approach to sales; one that incorporates both offline and online channels – and does it well,” the company adds. “For distributors in particular, the threat of competition is coming from all sides.”

 

Good, Better, Best

Accustomed to combatting threats from different angles—and often at the same time—electrical distributors are a mixed bag when it comes to e-commerce. Some have jumped in with both feet, investing in both the technology and the manpower needed to support their e-commerce storefronts. Others have taken a half-baked approach that, in some cases, is actually working for them (mainly by supporting a growing desire to conduct product research, check prices, and place orders from their tablets or mobile phones). Still others are on the sidelines, waiting for an invitation to join the game.

The fact that some electrical distributors fall into that third bucket doesn’t really surprise Ninad Raikar, who has seen B2B companies across all industry sectors struggling to reach their respective e-commerce milestones. He points to customers’ growing demand for data, disruption from e-commerce marketplaces (i.e., Amazon Business), and changing B2B customer behaviors as three of the main challenges that distributors are grappling with in 2019.

Plus, he adds, the B2B market as a whole has been very slow on the digitization curve. “There was no business imperative so far to change,” says Raikar, VP of global professional services at global software provider Riversand. “There is an inflection point in the industry in terms of data and customer engagement and many companies are finding themselves underprepared to handle this.”

 

Shoes on the Ground

It wasn’t that long ago that the “shoes-on-the-ground-approach” was the strongest mode of selling in the B2B world. Today, with the advent of online commerce and changing customer behavior, electrical distributors now know that they need to offer their customers both online and offline channels.

However, the acceleration to digital is a journey and not an easy switch. “There needs to be a commitment from leadership to embrace it,” says Mihir Kittur, co-founder and chief commercial officer for retail analytics firm Ugam. Kittur, who keeps his finger on the pulse of the distribution environment, says key challenges that companies operating in it are facing right now include a lack of basic digital capabilities; no team structures to effectively support their digital/e-commerce initiatives; and no scalable and flexible platforms and product information management systems (PIMs)—all of which have slowed the distributor’s e-commerce journey to a standstill.

But all is not lost. In fact, Kittur says there’s no time like the present to start working toward renewed e-commerce milestones. To achieve them, he says electrical distributors should start investing in the right talent—namely, the kind of people who understand how to drive digital transformation. “2018 saw some distributors hiring from B2C companies, and this will likely continue this year,” Kittur says.

Distributors should also focus on getting to know their customers better, and on improving the experience that they offer those customers. “This means strengthening their e-commerce platforms to support better search and find, across both web and mobile platforms,” says Kittur, “and giving customers sufficient and relevant product information to inform their purchase decisions.” Kittur also tells distributors to kick off any new (or renewed) e-commerce strategy with a true understanding of business objectives, and then validating whether or not those initiatives really matter to your distributorship.

“Electrical distributors should also be using data to make decisions around pricing, merchandising, e-commerce, private label, and fulfillment,” says Kittur, who adds that all distributors should embrace the idea of learning from past mistakes and then applying those learnings when making e-commerce-related decisions. “Create a clear process map to get yourself from Point A to Point B, and don’t forget to celebrate the small wins.”

 

Read the SIDEBAR to this article: Getting Back to E-Commerce Basics

 

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Bridget 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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