The NAED Eastern Regional Conference had a little bit of everything, including the comparison of the online strategies of distributors to frogs in a pot of boiling water.
DataGility founder Denise Keating explained to the crowd at her education session that if you put a frog in a pot of water and slowly heat it to boiling, the frog will never jump out. Along those same lines, not taking on an aggressive online strategy will also leave distributors in serious danger if they do not do anything while competitors build their online presence.
“Your web strategy needs to be a relationship building tool.” Keating told the crowd.
For more than an hour, Keating pointed out that other online “giants” like AmazonSupply.com and Alibaba.com are raising the level of expectation from the people who use them. If the online shopping experience on a distributors’ website is less than that expectation, it can damage that relationship between the contractor and the distributor.
Keating also pointed out that the DIY chains Lowe’s and Home Depot have both re-launched sections of their websites that are targeted at contractors. Lowe’s reported more than $1.1 billion in online business last year, and Home Depot reported more than 30% of its online business comes from electrical contractors. She also pointed out that while many distributors do not want to target those “small” contractors who use the DIY stores, the amount of money they are spending outside of our traditional supply chain should be a concern.
When it comes to AmazonSupply.com, Keating was recently able to take a tour of a distribution center in Indiana. She describes the warehouse and huge and located in a very remote area.
“They have inventory stacked to the ceiling, but the technology inside is not unlike any other distribution center,” Keating reports. “It was a lot like Dorothy from the Wizard of Oz. Toto pulls back that curtain and the Wizard is a mirage. A lot of what we hear about AmazonSupply and technology appears to be a mirage.”
But, Keating also said that while Amazon has reported large losses in the last few quarters, and the price of the stock has dropped, AmazonSupply still has the capability to be a strong threat to traditional distribution based on the number of products that it supplies and can deliver within 24 to 48 hours.
“It’s not really about which product categories AmazonSupply wants to carry any more. It’s about which product categories they want to attack first. And theyare actively looking for big and small contractors, not just small contractors,” Keating said.