This is a part of the 2014 Distribution Trends Report. The annual report was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this report.
2014 Distribution Trends Report
This article is a part of MDM's 2014 Distribution Trends Report. The article analyzes the impact that e-commerce is having on the industry, and how companies are adapting to what online buyers want while improving their own online interfaces.
Distributors have the potential to create more value for their customers with a comprehensive e-commerce interface, but building one that works from both ends for everyone who needs to use it is a challenge. Many companies still see the importance of the human-to-human interaction in sales, and striking a perfect balance of customized support and online convenience is an art that has not yet been perfected.
“More and more of our customers want to transact [online],” says Jessica Yurgaitis, vice president of sales and marketing at Industrial Supply Company, Salt Lake City, UT. “They’re on computers, they want to see what they’re buying, they want to have an image, and they want to be able to just click and buy, put it in a cart and have it delivered the next day.”
Having a simple process for buying products online involves lots of time and costs to implement an intuitive system. And many say that providing the online catalog doesn’t actually make the need for salespeople go away.
“There’s always going to be a need for somebody to come out with a toolbox and show you how to make it work,” says David Parks, executive vice president, Hydradyne LLC, Fort Worth, TX.
And Yurgaitis says that others simply want to make a connection with a real person. In some cases, they just want to chat with the people whom they have been talking to for years.
“We still have customers that want to call, and they want to talk about the weather and their grandkids. There are relationships there,” Yurgaitis says.
Jeff Haggard, vice president of sales at industrial distributor Haggard & Stocking in Indianapolis, IN, says that the younger generations are driving e-commerce, but traditional sales techniques are still needed.
“We’ve got to be able to find a balance of traditional sales. We like to provide value on the floor, but yet we have to make the product available to [the younger generation]. If we don’t, we’re going to get left behind,” Haggard says.
Customers don’t care where the product they order actually comes from, they only care that they receive the order … and quickly, says Eric Lamphier, senior director at Manhattan Associates. The focus needs to be on connecting all of those sales nodes to provide the product to that customer, regardless of how or where the sale originated.
To achieve that balance, many distributors, including Grainger and MSC Industrial Supply, are adopting a multichannel approach to sales that includes e-commerce. As one respondent noted in a recent MDM survey, “[We’re] slowly looking at online and offline tools to improve efficiency in transacting and operating business.”
Data is one of the biggest challenges for implementing an effective e-commerce platform. Haggard said that he knows how vital e-commerce is to his company’s success, but connecting the right product image with the right product name, SKU and price is a precise logistical undertaking. And each manufacturer has their own way of presenting the information – some better than others.
Providing the online buying option isn’t the only reason for distributors to embrace e-commerce.
“One of the things in e-business is that your own employees end up using your e-commerce site for information,” says Jonathan Bein, managing partner of Real Results Marketing, Boulder, CO. “If they’re on the phone with somebody, there’s no faster way to find out what you have than to go onto your website.”
By offering more than just a transactional site, an e-commerce platform can double as an efficient sales tool – one that younger salespeople will understand and are more likely to use.
Talbot Gee, executive vice president and COO of Heating, Air-conditioning & Refrigeration Distributors International (HARDI), agrees that some demand for online buying is generational. As millennials move into buying positions, they tend to automatically go online for everything they need. And distributors are increasingly seeing higher revenues from online purchases.
There is no one-size-fits-all approach to B2B e-commerce, according to Tom Dorosewicz, president of Whitestone TEC, a provider of e-commerce solutions based in Denver, CO. Every company has a unique set of business rules for working with customers, and it is essential that an e-commerce platform be flexible enough to incorporate those rules.
Linda Taddonio, chief e-commerce strategy officer at Insite Software, agrees distributors cannot simply replicate retail’s online strategy. “In B2B e-commerce, there’s more complexity,” she says. “There are many different personas, maybe a manufacturer or a contract or someone else, that a company may be serving, and they all have different needs that need to be met by that platform.”
E-commerce, as a result, can’t just be an add-on strategy, she says. “Distributors need to recognize that it needs to be a core part of business.”