The New Reality for Distribution eCommerce

As MDM’s latest webcast discussed, the mere existence of eCommerce is no longer a competitive edge, as customization features are now expected by many B2B buyers.
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Before 2020, I visited dozens of distributors in my time as a trade publication editor. And when doing background research on a company before visiting them, one of the first things I would seek out is whether or not they offered eCommerce. Most of the distributors I visited were small- or mid-sized, so it wasn’t terribly surprising to learn that some of them didn’t yet offer online buying to their customers.

But of those that didn’t, it was often surprising to learn WHY they didn’t offer eCommerce. At least a few times, top executives for those distributors told me “We’re not involved with eCommerce because our customers haven’t asked for it yet” as their company stance, or something very similar. Others said they were already offering electronic data interchange (EDI) and they were content with that channel. If that was the case, I would follow up by asking if they had any plans to pursue eCommerce in the immediate future, and almost all of them said no.

On the surface, it makes sense. Why devote all the time, manpower and financial resources toward something your customers haven’t demanded?

I would love to ask those same distributors today if they’ve changed their stance on eCommerce since then, given the impacts that the COVID-19 pandemic has had on accelerated B2B buying behaviors considerably more toward a preference to buying online. Were they caught flat-footed when the pandemic arrived? Do they offer eCommerce now? If so, do they regret not getting involved sooner? I can’t help but wonder.

A research report released Sept. 21 by integrated payment solutions provider Billtrust found that 88% of wholesalers and suppliers to the contracting, electrical, HVAC, Jansan and plumbing trades have deployed an eCommerce ordering option, with the majority of trade orders (52%) now flowing through eCommerce. Further, 30% of service providers say they order solely via eCommerce portals.

I brought up this same topic in MDM’s Sept. 15 webcast, “Adapting to Expectations – Differentiate the Buying Experience with eCommerce,” sponsored by Adobe. The event featured panelists Ed Kennedy, product marketing manager for B2B Commerce at Adobe, and Jason Capshaw, senior consultant for digital strategy at Dorn Group, and both strongly advocated for distributors’ embracement of eCommerce.

Ed Kennedy

“I wring my hands at this one because it’s just so obvious. The (forecasted) growth of EDI is eclipsed five-fold by eCommerce sales,” Kennedy said, referring to Forrester Research’s estimate that EDI sales in the U.S. will grow 4% CAGR by 2027, compared to 10.7% for eCommerce and a miniscule 0.5% growth rate for offline sales. “EDI used to be the big thing, and I think it still plays a role in high-scale, data-intensive order processing. But for the buying groups that are making these purchase decisions and placing orders, you want to get that out to as many users as possible at your customers’ location.”

Jason Capshaw

“One of the main reasons you need to have those (eCommerce) services available is because your competitors are going to have it,” Capshaw added. “Ultimately, your competitors are going to go online, and you’re going to be behind.”

But just having eCommerce doesn’t cut it today. As one of the discussion points at MDM’s SHIFT Conference Sept. 25-27 in Broomfield, Colorado — where Capshaw is one of 30+ expert speakers — eCommerce in distribution has evolved from its initial phase of merely existing as an additional channel for customers to place orders, to a source of differentiation for distributors in how they craft the buying experience.

Customization and personalization in eCommerce can be a differentiator today, but Kennedy and Capshaw emphasized that distributors don’t have to have all the bells and whistles of artificial intelligence-driven customization that buyers get on Amazon. There is a more basic level of customization that provides valuable conveniences for B2B buyers.

“We put a lot of other glamorous things on it, but fundamentally, it’s that I can see my products, my price, my sales reps and my orders all in one place. That’s the most basic level of personalization,” Kennedy explained. “There’s some things in that bucket that are really valuable, like being able to target which promotions you’re eligible for or what products you want to put on sale based off of that data or being able to look at your margin across certain product lines and automatically recommend a higher margin product when someone’s looking at something that’s easily substitutable.”

“Beyond that, there’s a lot of data that you capture when someone starts logging into your buying portal or your eCommerce website like what categories they visit most often or what they’re searching for,” Capshaw added. “And those pieces of data can be used to create a personalized experience when they come back.”

Our webcast, which was a running Q&A throughout, also dove into the topic of whether sales reps should earn a commission for web sales, what leading distributors are doing in eCommerce today and how eCommerce can be leveraged to make sales teams more effective. It was an interesting and fun discussion, and I highly recommend giving the webcast a watch.

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