Why Aren’t More Distributors Getting E-Commerce Right?

Here are some very valid reasons why your distributorship isn’t hitting its e-commerce milestones, and what it can start to do about it.

If there’s one thing electrical distributors have learned about e-commerce over the last few years, it’s that e-commerce can be downright difficult. In a world where it’s no longer enough to just slap together a basic website and shopping cart and hope that customers will use them (or, just keep buying from you the way they always have), distributors have to do better.

“Today’s buyers are used to having detailed data on everything from product availability and pricing to their order’s precise location en route,” Frank Isca writes in Why Distributors Need to Think More Like E-Commerce Companies. “Anything less is quickly becoming dissatisfactory.”

Distributors have long had a reputation for great customer service, Isca adds, but if you want to prevail in the digital era, you need more than great service—you need to make life easy for your customer. “People no longer have the time or desire to hear a sales call or flip through a dense paper catalog,” he writes. “Instead, people are leaning towards performing their own research, inquiries, and purchases online and at their own convenience. Hence, e-commerce’s rapid success.”

E-Commerce Benchmarks

When he surveys the electrical distribution space, Justin King says the number of companies that are hitting their e-commerce benchmarks is comparatively low. President at B2X Partners and author of Digital Branch Secrets, a playbook for distributors that want to compete effectively in e-commerce, King says that all electrical distributors should be crossing the 10% of revenue line. In other words, at least 10% of their overall revenues should be coming in via the web.

King says companies should also have dedicated “digital branch managers” who are leading the e-commerce charge—something that would be within financial reach for the distributor that is hitting its 10%+ benchmark. He says distributors should also be using established key performance indicators (KPIs) to track the movement of customers onto the company’s online platform. Those KPIs can include (but don’t have to be limited to): number of registered users, number of customers that registered for the site in 2018, number of customers that are logging in, how many times they’re logging in, and how often those online sessions result in a conversion and a sale.

“The best approach is to gather that information at the point of sale, and then use it to attribute revenue to these different channels that are adding to the sale,” King says. For example, the customer that did all of his research online for a complex sale that also required phone support from customer service—which wound up booking the sale—then e-commerce should get attribution (i.e., 20-30% of the sale) for that transaction.

Wrapping Digital into Your DNA

According to King, too many electrical distributors treat their e-commerce sites like pets. In other words, when those channels bring in an extra $500,000 in sales for the quarter, the company’s leadership pats it on the head and says: “What a cute little web store.” This is an approach that needs to be replaced with one that literally wraps digital into your distributorship’s DNA, King says.

That means including digital strategies, team members, and concepts into every meeting; getting everyone in the company talking about digital; and constantly asking yourself questions like, “How will this process or decision impact our digital strategy?” and “How can digital positively impact this process?”

Skip this important step, and your website will be nothing more than an additional revenue-generator that gets patted on the head every month, quarter, or year. “When you start to talk about digital at every meeting, people will start to realize that its part of your company’s DNA,” says King, “because you’re talking about it at branch, sales, corporate, and IT meetings.”

Missing the Boat

When it comes to service, support, and expertise, independent distributors know they have a leg up on Amazon Business and other big online sellers. It’s the same leg that they use to successfully ward off the big boxes and those companies encroaching on their turfs, and they usually know how to leverage those competitive advantages in the offline world.

Now they need to do the same thing online, says Barry LaBov, president and CEO at LABOV Marketing Communications and Training. He says distributors should continue to capitalize on the expertise and knowledge that they bring to the table—the stuff that big e-tailers like Amazon Business don’t have (yet). “Amazon can provide the parts and a commodity solution for distribution and sales, but it doesn’t have the expertise,” says LaBov. “Independent electrical suppliers and installers still have that leverage, and they should be using it—especially in electrical, where you’re dealing with complex systems and parts.”

But they’re not using it. In fact, Denise Keating, CEO of DeKalb, Ill.-based DATAgility, says a lot of electrical distributors are missing a viable opportunity to set themselves apart online. “Right now, a lot of companies are selling the same brands and same SKUs at different prices, which opens the door for distributors to show what they do to go above and beyond those basics,” says Keating. “And while they may use their home pages to talk about the value they bring, as soon as the customer starts searching for a product, those services just disappear.”

But why wouldn’t you want to continue to highlight the services that go along with those products, Keating asks. For example, some distributors may offer extended warranty services with certain products or may sell products that require an expensive tool for installation, the latter of which creates a tool rental opportunity. Or, if you’re selling huge spools of wire online…why not highlight your wire-cutting services right on the page where the product is featured?

The answers to this question may seem obvious, but Keating says that most electrical distribution sites feature a distinct separation between product information and value-added services. “Distributors need to bring those together because that’s what will really help differentiate them from the pure online retailer that’s selling parts,” says Keating.

“Distributors are offering these services, but they haven’t figured out how to translate those in-store services—or the services that they sell through their salespeople—for the digital environment. That’s a key consideration for any company that wants to elevate its digital presence and start hitting its own e-commerce milestones.”