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Top 20 Stories of 2015: #16 Going Head-to-Head With Amazon: Leveraging E-Commerce and Data

Every weekday in December, tED magazine is counting down the Top 20 Stories of 2015. Below, the #16 most-viewed story of the year, originally published on May 15, 2015.

 

In April, Amazon announced that it was moving one step closer to providing everything for business owners via Amazon Business, a new website for business owners that will expand the AmazonSupply brand and provide business owners with a place to shop for all of their business needs. From office supplies to wholesale products, Amazon Business is expected to be even bigger than AmazonSupply. As part of an ongoing series of stories looking into the future of electrical distribution, tED Magazine explores some of the key points that NAED members and suppliers should be thinking about as this online retail behemoth continues to make its way into the B2B marketplace.

By Bridget McCrea

In the war against huge online B2B retailers like Amazon Business, distributors have two underlying challenges to contend with. On one side of the equation, customers have an expanded array of buying choices – some of which are offered up at discounts higher than what the typical independent distributor can extend. On the other side, suppliers may be tempted to skip the traditional distribution channel altogether and instead sell their wares via Amazon Business – a site that boasts “hundreds of millions” of products (versus the typical distributor’s 40,000-SKU lineup).

One way to ward off both of these hurdles is by setting up an e-commerce presence that establishes the distributor as a go-to entity in the electrical distribution supply chain. This hits both challenges at once:  not only will customers see the online-savvy distributor as a viable source of information, education, products, and value-added services, but manufacturers will benefit from the expanded/joint sales opportunities being generated via the web. Much like huge distributors such as Grainger who have effectively harnessed the web as an additional sales channel, even the smallest of firms can have a “huge” presence online without having to spend an arm and a leg in the process.

And with Amazon Business using taglines like “Supplies for Organizations and Businesses” on its online advertising banners, there’s no time like the present for distributors to step up their e-commerce games. “When Amazon Business started using those types of taglines, it really showed that it was no longer limiting itself to specific product categories anymore,” Denise Keating, president of Sycamore, Ill.-based DATAgility, point outs.

While the threat being posed by a huge retailer like Amazon is real, Keating also notes that in some cases electrical distributors become their own worst enemies in their quest to overcome such nemeses. “Many times, the biggest threat to the electrical distribution industry is a lack of commitment to taking action, staying current, and remaining relevant with the times by leveraging available technology,” she adds.

Here are five ways distributors can utilize effective ecommerce and data management strategies to rise above foes like Amazon Business online:

  1. Focus on consistent and accurate information and data. There’s nothing worse than pulling up your favorite supplier’s website and having to spend 10 minutes wrangling around with the site’s search function in a desperate attempt to find what you’re looking for. With the next competitor just a click away – and with large online retailers like Amazon investing huge amounts of time and money in pay-per-click advertising and search engine optimization (SEO) that gets them front-page Google listings – the independent simply can’t afford to have this happen. Keating says distributors can avoid this issue by populating their sites with normalized data (i.e., the process of organizing the attributes and tables of a relational database to minimize data redundancy). The word “black” in relation to a product color, for example, should be spelled one way (not blk, black, and misspelled as blak) in a description. “The data must be structured and presented in a consistent manner,” says Keating. “The more normalized and structured the data is, the easier it will be for you to work with the information and put it to use, and it also provides an improved customer experience.”
  2. Go one step further by personalizing the data. While normalized data is a foundational element for a solid e-commerce presence, personalized (or unique) data is equally as important. In fact, Keating says that if all but one distributor uses only the normalized data provided by a supplier – and if that one takes the time to personalize the data – Google rankings for the sole outlier will be much better than for the rest of the pack. “To get to the top on Google, your data really has to be both relevant and unique,” says Keating, whose firm provides support in this area (particularly for manufacturers who want to “see” what their data looks like within a distributor’s system) and is also working on a related, industry-centric initiative that will be announced later this year. “So while normalized data is important, it certainly doesn’t mean that you can’t personalize the content.”  
  3. Commit to change. No one really likes to change, but the industry shifts that have been taking place over the last few years necessitate a new mindset around selling channels, customer service, and other issues that are core to a distributor’s business model. Rather than beating your head against the wall, wondering what Amazon is up to next, why not commit to changing in a way that positions your firm as the de facto resource for products, information, technical expertise, and value-added services within your niche? “It’s one thing to talk about going up against your larger competitors online, but doing something about it is a whole different step,” says Keating, who advises companies to make the adequate time and money investment required to establish (or, revamp) an e-commerce presence that’s robust, consistent, updated, and useful for customers.
  4. Establish a data management budget. Don’t forget to allocate the right resources to the data – the Achilles heel for distributors that are juggling 40,000+ SKUs online at any given moment. “Set a data budget just like you would establish a sales and marketing budget,” Keating advises, “knowing that data management is a critical and ongoing component of any good e-commerce approach.” Put simply, it’s not enough to gather the foundational data for a site and then use it for years to come. Start with basic elements like images, key attributes, and extended descriptions, says Keating, but realize that the foundation you’re establishing will need further honing and tweaking over time. “From there, it’s a matter of stepping up your game, up-selling and cross-selling, adding video, uploading more technical spec sheets, and so forth,” says Keating, who points to IDEA’s 43-data fields guideline as a good starting point for manufacturers who need help in this area.  
  5. Get your manufacturers onboard sooner rather than later. As the perpetual “middlemen,” electrical distributors are well positioned to serve as valued members of the selling channel regardless of how this whole Amazon Business initiative shakes out. That’s because distributors not only have the “men on the street” selling their suppliers’ goods and services, but they also have decades of technical and product expertise that few other entities can touch. Add those two elements together – and throw an excellent e-commerce presence into the mix – and the distributor becomes that much more valuable to current and potential suppliers. One way to get manufacturers involved and engaged in the process, says Keating, is by working with them to establish good data management practices and governance. “Right now, manufacturers generally have a good handle on their own internal data systems, but they don’t necessarily understand what distributors need or how those distributors are using data in the marketplace,” says Keating, who again refers to IDEA as a good resource for companies that need guidelines in this area. “The goal should be to create a product data set that works not only for suppliers, but that also works efficiently and effectively for their distributors.”

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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