In “Distributors Beware of AmazonSupply.com?,” my previous article, I suggested that wholesale distributors recognize the threat presented by Amazon in the B2B marketplace and find ways to compete. This article recommends strategies and tactics to remain competitive and mitigate AmazonSupply’s impact on a wholesale distribution business.
Most distribution companies in the U.S. have historically sold to other businesses through a combination of direct sales representatives, independent dealers, and catalog operations. Some — primarily companies that sell maintenance, repair, and operations supplies and equipment — also have brick-and-mortar stores. Their businesses rely on direct relationships with customers, with high levels of support.
Many distributors are investing in creating their own branded products. This is a solid strategy in certain industries, where distributors can manufacture their own products. But, that only will take you so far. There is still a need to market and sell those products in all channels, including online, since this is where buyers are researching today.
Most distributors are historically light in the marketing department — in both budget and in personnel. Sales representatives inside and outside the organization historically do most of the promotional work.
Many distributors have discovered the potential of email marketing, but few are really leveraging ecommerce or other types of digital activities to aggressively grow their businesses. As such, their ecommerce solutions tend to trail those in the direct-to-consumer marketplace for user experience, merchandising, and acquiring customers through online channels.
To compete against AmazonSupply.com and competitors that are digitally enabled, distributors need to invest in ecommerce sites, search marketing, social media, and email marketing. They also need to hire people to plan and manage those activities. In many cases, they should consider retaining outside agencies to assist.
Where to Start
First, many distributors should recognize that they are behind in digital enablement. They should seek experts who understand it and can help analyze and develop a roadmap for success. To compete for the attention of the millennial buyers in their customer base and target accounts, distributors should first launch an ecommerce site that supports the B-to-C experience that buyers prefer, as well as a feature rich site for business buyers. I’ll focus here on the ecommerce investments that will help distributors stand out in supporting their business customers.
Key ecommerce functions that distributors should enable include the following.
- Self-service portals that offer order history, order status, return authorizations, online payments, and other user friendly features that let customers to manage their own accounts.
- Self-administration features that allow customers to create, edit, and manage their own users and procurement workflows.
- Full, personalized online catalog that includes most or all of inventoried items that is personalized for each customer and customer location, if applicable.
- Custom pricing that delivers every customer’s unique prices.
- Customer personalization that goes beyond catalog and pricing and includes co-branded websites, personalized product recommendations and landing pages, personalized promotions by buyer or company, and workflows customized to support their procurement processes.
- Procurement punchout (i.e., integration) to support the use of existing systems to input valid orders quickly and accurately and reduce the errors incurred in electronic submissions.
- Real-time inventory availability that allows customers to plan for accurate lead times.
- Competitive pricing that accounts not only for traditional competitors but new online only competitors, like Amazon.
- Competitive shipping rates that do not gouge customers with handling fees or markups, yet offer flexibility to select the transit time required to meet their needs.
- Online chat so that shoppers can communicate in real-time with a customer service representative.
- Incredible product content that represents your core expertise and value added to your target customers. Don’t settle for manufacturers descriptions. Add your own commentary, reviews and ratings, and Q&A sections. Add video, alternative images, and more detailed product specifications.
- Quick orders to allow customers to rapidly recreate previous purchases or simply add new items by importing data or inputting part numbers.
- Supporting customer part numbers. Many customers assign their own part numbers for generic or UPC items. Make sure you can allow your customers to use their own part numbers when placing orders.
- Support subscription orders for regularly replenished items to encourage repeat business. Offer appropriate discounts to justify long-term customer commitments.
Beyond these ecommerce features, distributors should also invest in digital marketing activities, such as the following.
- Search engine optimization and search advertising. Business buyers typically start searches with Google today. Make sure you are visible in your marketplace by investing in SEO and pay-per-click advertising as appropriate
- Blogging. If a differentiator in your industry is product expertise, demonstrate it to your customers and target market
- Social media. This is more hard to justify, but a necessary part of a digital strategy. Invest in appropriate social media venues for your type of business by posting relevant content, responding to inquiries and customer feedback. Many businesses find social media to be a good venue for customer support.
- Content marketing. Beyond blogging, get your message out any way you can by delivering rich content to your reseller and customer network, industry experts, the press, and anyone else who might actually reach your target market with your messaging
- Digital advertising. This is an evil thought for many distributors that viewed print advertising as a wasted investment. Digital advertising is at least measurable and highly targetable. If you have any questions, research the return on ad spend being seen by companies that heavily utilize digital advertising (like Grainger) and you may change your mind.
Finally, invest in the human resources required to be successful in ecommerce and digital marketing. Find experienced personnel — there are plenty of B-to-C experts available. Don’t attempt to teach your existing staff. There is too much complexity and divergent skills needed. Invest in the following personnel areas, at a minimum.
- Online merchandising
- Email and social marketing
- Customer experience design
- Search marketing and digital advertising
- Content development (descriptions, rich media, attributes)
- Web development
To be clear, the total investment that I’ve described in this article is not small. It could run in the high six to seven figures. But, it may mean the future of your business. There are many CEOs and owners of distributors who are approaching retirement and are afraid to make the necessary investments to compete with Amazon or larger competitors for fear it may be disruptive. Those businesses are at risk. The bold move is to invest and keep investing in digital commerce. That is the future of the distribution business.