• President of North America and Europe John Caplan outlines three types of e-commerce platforms — marketplace, SaaS and wholesaler/retailer.
• When developing a platform plan, start with the most basic elements: What do you want to sell through e-commerce and who do you want to buy it?
• The right strategy can result in the development of a global reach for new customers.
If you haven’t embarked on your digital transformation journey by moving to an e-commerce platform, the time is now. That was the advice from Alibaba.com’s John Caplan recently when he spoke at ISA21, the Industrial Supply Association’s annual conference. The president of Alibaba.com in North America and Europe shared best practices and advice on finding the right type of e-commerce platform.
Caplan noted that global B2B e-commerce is six times larger ($23.9 trillion) than B2C e-commerce ($3.8 trillion) and added that the onset of the pandemic accelerated the need for e-commerce platforms. “By utilizing e-commerce, industrial wholesalers, manufacturers and distributors are able to get more customers, more effectively work with those customers, and keep moving their inventory and moving their products on their own terms,” he said. “That’s really important because in a digital environment, in a one-to-one relationship with your customers, you can manage precisely how you want to price, sell and value the products you offer.”
Through an e-commerce platform, distributors can build best practices while connecting with their customers via online storefronts — especially important during the shelter-in-place and quarantine days of the pandemic. “B2B e-commerce can give any business, a big one or even a small one, a competitive edge,” Caplan said. “Over the last 13 months, we’ve seen how accelerated and rapid the movement from the traditional way, the analog way, businesses was done to an even more digital way.”
Thinking of when a customer searches for a distributor’s name online, Caplan said to make sure there’s fluidity between branding across different e-commerce channels as well as third-party marketplaces. Ensuring the branding, product photos and content is uniform across all platforms is critical, he said.
Three types of E-commerce platforms
Not all e-commerce platforms are equal, according to Caplan, and distributors can perform due diligence to find the best fit for them. Caplan highlighted three different options.
The first was a marketplace e-commerce platform, such as Alibaba.com. A marketplace e-commerce platform has annual membership fees and can provide marketing for its distributor, manufacturer or wholesale customers.
“The membership on our platform includes all the tools you need to have for online storefront in the largest B2B trade show in the world. That’s the simplest way to think about it. … There are 20 million people shopping on the platform and you have a storefront. You get access to the logistics and payment terms and all the sort of ingredients you need for massive success. And of course, you get requests from buyers,” he said.
The second e-commerce platform that Caplan spoke about was the software-as-a-service model. The SaaS e-commerce platform includes membership packages, digital storefronts and access to value-added tools. “It provides you the tools to build your online store, but it doesn’t provide any of the customer demand,” Caplan said. “All of the marketing to get customers is up to you. These platforms have amazing customization options. You can design your storefront and put up your photos and do all that jazz that you want to do.”
The third e-commerce platform is the wholesaler or retailer model. The prime example of this e-commerce platform is Amazon. Companies such as Amazon have their own inventory and inventory from third-party sellers. Amazon is a B2C platform that owns customers’ data. “It’s a channel that is effective at reaching some customers, but I would be cautious about using that as your only digital strategy. All of that data that they’re gathering about customer preferences, behaviors and trends, they use that information to inform how they serve their customers,” he said.
Caplan spoke to Scott Vaughn, president of BRAH Electric Mfg. during the presentation. Vaughn said his company — an aftermarket electric parts, manufacturing and distribution business — uses a combination of eBay, Amazon and Alibaba. “Each of them has totally different purposes, the types of customer you’re going to get, and the type of order that you’re going to receive,” Vaughn said.
Vaughn said his company’s sales on eBay tend to be for older, obsolete products for industrial customers while Amazon generates business for newer residential products that include fast shipping with Prime. Alibaba allows BRUH to get more exposure both domestically and abroad at scale, while also leveraging data that Alibaba provides.
Tips for a successful e-commerce platform
Some distributors may be leery of moving to a full e-commerce platform because the rush to stand up websites during the pandemic often fell short of customers’ expectations. “There’s so much that goes into digital, and there’s a lot of people that fake it,” Vaughn explained. “There are so many pop-up websites, that I think it really disrupted people’s confidence in general. There’s a lot of skepticism when people buy online. So that’s a hurdle that you have to overcome.”
Caplan said it’s important to start with the basics. Think about what products a distributor wants to sell on its e-commerce platform and who the potential customers would be. In addition to defining what types of products to sell, distributors can also consider whether they want to sell customized or finished products and whether they want to take the B2B or B2C approach.
Caplan said he spends a lot of time with CEOs going over the basics of how to communicate with their customers in an online environment, and how to merchandise their products appropriately. “Are you communicating clearly? Do you have the photos you need? Can you use video to bring to life the unique attributes of your business, your customer service, the service plans you offer, and the history of the company,” Caplan said of his checklist for launching an e-commerce platform. “The more you can communicate authentically what you sell, who you are, and how you do business, the more effective the online channel will be for you.
“Things like payments, financing and photography, video, all of that work is really important. But at the end of the day, the more open you are, the more engaged you are and the more curious you are to learn this new way of engaging customers the more effective you can be at growing your business.”
In addition to pictures with multiple angles of a product, BRUH’s Vaughn said it was also important to provide accurate descriptions, especially when customers are buying online.
“For your front-end e-commerce, it’s all about consumer confidence,” Vaughn said. “How do you present things? It’s not just about a good description or cut sheet and solid price. There’s so much more that goes into being successful in e-commerce. You’ve got to put yourself in the customers’ shoes when you don’t have the ability to go to the counter and deal with the rep, –hold this product in your hand and compare it to the other one you just pulled out of service. You need to provide everything you can imagine that would make you comfortable buying something that you’re unfamiliar with.”
Vaughn also said running a successful e-commerce site requires constant iterations of search terms, descriptions, photos and touchpoints across various social media sites. “For us, it’s constantly making upgrades and updates to our database, and to the front-end website,” Vaughn said. “We’re selling direct replacement components. It’s really ensuring that we have all the right language in there so that when the consumer is going to look for a product that maybe they don’t have the part number for they’re going to find it when they do a general search. Make sure that your content is well described.”
The market advantage that distributors have with e-commerce is being able to provide customer services to their buyers. “On Alibaba.com, you are selling physical goods. That’s what trades on our platform,” Caplan said. “But when a customer comes to Alibaba.com and requests a quote, they get bids from multiple different providers. The fact that you have a service that provides the aftermarket support is often the reason why you get the order. I think distributors are essential because the folks who are experts at that kind of service are really the most important value proposition in the B2B supply chain. It’s not the cheapest price, always. But it’s a fair price, with excellent service and high-quality goods.”
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