We use Google Maps to find our way around, check Twitter for breaking news, use Uber to get from place to place, and order lunch through apps like GrubHub. These are just a few of the platforms that make up what is known as the “on-demand economy,” or the economic activity created by technology companies that fulfill consumer demand via the immediate provisioning of goods and services.
What started out as a business-to-consumer (B2C) phenomenon has since penetrated the business-to-business (B2B) arena, where companies must be able to meet their customers “need for speed”—an expectation that doesn’t go away just because an electrical contractor happens to be in his jobsite trailer. Put simply, a distributor’s B2B customers are just as impatient as someone who places an order for vitamins or ear buds via Amazon, whose Prime program guarantees 2-day delivery.
“As more devices and apps deliver instant gratification, the more it sets a new standard for customer expectations,” writes Marketing Land’s Brian Solis. “Now, businesses in every industry will have to cater to ‘right now’ consumers in mobile-first micro-moments or risk missing these critical engagement opportunities.”
Keeping Pace with the Change
What does the on-demand economy actually mean for electrical distributors? For one, it means that they have to start thinking more carefully about how to adopt B2C delivery models, most of which are focused on speeding up deliveries. And while most distributors can get products to their repeat customers within a 24- to 36-hour window, is that actually going to be fast enough to keep up with the on-demand economy?
Through its Flex program, Amazon is borrowing a page from Uber and Lyft and using independent drivers to get its packages delivered even faster. Billed as an “on-demand delivery service,” the company is currently recruiting drivers to instantly deliver packages to customers around the country. Drivers deliver items from Prime Now, with the goal of getting those orders from warehouse to customer in as little time as possible. For now, the four types of delivery options offered include: Amazon Logistics (regular, 2-day, and same-day items), Prime Now (deliveries to customers within one or two hours), Amazon Fresh (groceries), and Amazon Restaurants (fast-food delivery service).
Seamless Transactions, Fast Delivery Times
In tED’s The Changing World of Electrical Distribution, distribution industry veteran Jack Keough discussed the need to improve logistics capabilities and speed deliveries to customers who expect same-day or next-day delivery. Citing Sonepar U.S.A.’s Halsey Cook, Keough noted how the need for delivering products faster is putting pressure on distributors to change their business models. That could mean being able to take an order up until midnight and having it delivered to the customer by 5 a.m.—a feat that competitors like Amazon Business are already achieving with improved logistics, big data, seamless transactions, and fast delivery.
Justin King, co-founder of the DigitalBranch, and senior partner at B2X Partners, says the on-demand economy’s shift over to B2B is simply a result of changes in customer expectations. In other words, if a contractor can sit at home and order personal goods online and have them at his doorstep within 48 hours—or use an app to have a car pull up to his door within 10 minutes to take him to the airport—then the same expectations will transfer to his work life. “I always joke that there are things I never even knew I needed within two hours before,” says King. “Here in Baltimore, I can have paper goods at my house within two hours—with Amazon delivery here averaging about 38 minutes.”
King says when he takes that mindset over to another online vendor, only to learn that he has to wait 24 hours for his order to be delivered, he’s almost instantly let down. “I now have a negative response when a company can’t meet those new expectations,” King says. “The same thing is happening on the B2B front, where buyers are starting to expect their orders within 12 hours, one hour, or even 30 minutes, versus the standard 24-48 hours.”
White Glove Treatment
Besides selling through Amazon and leveraging its logistics network, King says electrical distributors that want to get up to speed with the on-demand economy should explore the Uber business model. In other words, find independent contractors that want to make a buck delivering your goods to customer locations throughout the course of the day.
“You can publish a craigslist post that says, ‘Hey, we’re looking for driver. Work your own hours for a minimum commitment of X hours per week,'” says King. He suggests testing this approach with a single driver and two or three customers who order on a daily basis. Don’t forget to use a contract that exalts your company from risk (“put the risk on the driver,” says King), and grow the program from there.
If hiring an outside driver isn’t an option, then King says distributors could use a current warehouse worker to run a “beta” delivery program. “Use a car or a small van and start doing some basic pick-up and drop-off with certain customers,” says King. Once the program has been active for a few weeks, be sure to gauge customer response to it. Do they love it? Are they using it? Do they want more of it? If so, can you charge a higher price for such deliveries?
King says distributors should also consider a Prime-like arrangement for these on-demand deliveries, where customers shell out a certain amount of money per year to be able to access the “white glove” service whenever they need it. “Start small and run it as a beta program first to determine how customers respond to it,” says King. “If they’re willing to pay a little more to have this white glove treatment—and particularly if no one else is doing it in your area—then it’s probably worth your time.”