With very few exceptions, every sector of wholesale distribution is highly fragmented. The markets distributors serve are themselves fragmented with unique needs and characteristics. This is so much a part of the DNA of high-service distributors – particularly specialty distributors – that it is often taken for granted, and its value diminished. Balderdash!
By definition, suppliers leverage distribution channels because these fragmented end-markets are difficult to effectively serve through traditional direct sales channels. Some think this is why Amazon and other digital-based channels will disrupt the traditional value chain. It already has to a point, but as we continue to hear, the actual dollar impact on most distributors is small.
The most significant impact is in those areas that have become the most commoditized, the same channels that were under siege before the arrival of Amazon and its ilk.
This foundational aspect of how specific distribution markets are defined, served, nurtured and grown is key to understanding the best way to integrate digital platforms into traditionally relationship-driven businesses. This is far from a binary problem that can be solved with a few sound bites about the prowess of Amazon and adjectives like juggernaut.
Amazon mastered and defined what an optimal B2C experience feels like, setting high expectations for the B2B digital customer experience, as well. Now consumers universally expect one-click service and response, rapidly raising the bar even in the most lagging of B2B customer segments.
As our pages have emphasized often, the answer is not to throw all your e-eggs into the e-commerce basket. It’s about crafting a plan around a multichannel or omnichannel strategy that leverages the strengths your company has that the alternate channels don’t – technical and application expertise, the reliability of a phone call away, the voice of a trusted adviser. But you also need to serve your customers the way they will increasingly want to be served, and that’s not some one-size-fits-all solution that may be more B2C than B2B friendly.
It’s time to move beyond a defensive mindset for how to invest in a digital strategy. How can you strengthen and grow your traditional business, grow new markets and transform into a more competitive business via a more adaptable and customer-centric core? These are the common-sense questions that will define the winners from the survivors over the next few years.