eCommerce, yes, it is here to stay

Yes, I know, it is not a revelation that it is no longer a fad. Just check your front door. Something is keeping FedEx, UPS, and USPS very busy this year. While eCommerce was trending to become more integrated into business, its growth as a tool for electrical buyers has accelerated.

While it remains a small percent of electrical distributor sales, with most reporting low single digits and the holy grail being 10% of total sales, its role in supporting customers is more than ever before and growing.

In 2018 we conducted a State of Electrical Buyer eCommerce study. Over 1200 contractors, electrical buyers and electrical influencers participated. That study hinted that the eCommerce opportunity was focused around being an online resource … providing information (and if you’d like a free copy, for a limited time, email us by January 15th.)

Recent anecdotal information from end-users and quantitative insights from distributors affirm that electrical buyers are seeking information on distributor websites.

We recently wrote an article for MDM that further highlights a trend that is accelerating.

Manufacturers Differentiate Distributor Support Based on E-Commerce Investment

In the words of a manufacturer and echoed at an industry advisory council Channel Marketing Group recently facilitated, “COVID has accelerated manufacturer and distributor eCommerce initiatives by three years.”

Further, in a recent survey conducted by Channel Marketing Group, over 30% of distributor respondents shared that their eCommerce activity (website visits and sales) was up. And this is with 50% of respondents stating that their website is not commerce-enabled.

Manufacturers are also investing more into driving sales via technology. They are spending more on digital marketing than ever before, are investing in syndicating content to distributors who request (and those whom they want) customized, or more, content and, in some cases, manufacturers have personnel dedicated to supporting selected customers’ eCommerce initiatives. What this means is that manufacturers are differentiating their support between those who have invested in digital initiatives and those who have not.

With this as a background, beginning, or accelerating, an eCommerce initiative is more critical than ever … if you desire to grow your business long term.

We are not saying those who do not will go out of business. Their goals may be different – to continue to serve their local market, serve existing customers and make a nice living while supporting their employees. There is nothing wrong with this if this is ownership’s goal.

For others, COVID should essentially be the starter’s gun to evaluate your eCommerce strategy.

First, eCommerce is not all about a webstore and “hunt and peck” ordering. eCommerce is about helping your team, inclusive of your customers, electronically conduct commerce.

For distributors it is about:

• Developing an omni-service approach, enabling your customers’ access to information how and when they want.
• Providing robust product content to support their product searches, answer technical questions, download spec sheets to support their bids, providing access to supplier videos and so much more.
• Embracing multiple electronic ordering platforms that your customer may desire, such as eProcurement and other system-to-system capabilities that are being deployed. Inclusive of mobile ordering as well as text ordering.
• Enhancing your sales outreach by digitally marketing the benefits of doing business with you, highlighting your services and successes, and reinforcing products that add value to customers.
• An informative website that has new product information, videos and customer service via chat, and highlights your services and showcases how you have helped others profit.
• And if your ERP system is capable, making access to account management services easier.
• Additionally, depending upon your business model, it can enable the creation of new services that can help you help your customers increase sales, enabling them to offer replenishment services.

For suppliers, eCommerce represents different opportunities.

Most suppliers have concluded that trying to disintermediate distribution via eCommerce is not a winner. While the allure of picking up a 20-25% distributor gross margin is appealing, when they recognize the cost to pursue this business as well as the risk of what they would lose, practically all realize it is not worth it.

Instead, suppliers are investing in:

• Syndicating content to those who request / have invested into robust eCommerce offerings.
• Working closely with commerce-enabled “preferred” distributors to develop special promotions.
• Developing eMarketing content for eNewsletters as well as social media, much of which can be co-branded with the distributor.
• Expanding their channels to market to pursue customers who are choosing to purchase online or search for material. In some cases, this is sales driven; in others the primary goal is increased brand awareness and sharing product content.

The role of a supplier’s business strategy is to ensure that the company is visible where the customer wants to make a purchase. A sales organization devoted to a channel wants that channel to win. Senior management, however, needs to ensure that their company wins.

For distributors there are considerations regarding development of a technology stack to support eCommerce.

Assuming you have a “brochureware” website, the most basic next step is having an eNewsletter and perhaps a social marketing strategy (at least a presence).

Next comes identifying opportunities to commerce-enable your business or, at a minimum, offering an online catalog. Few distributors are generating a significant percent of sales via their website. Those reporting double-digit eCommerce percentages are typically including other “system-to-system” capabilities. The key question here, for most, is “can the system integrate with my ERP system?” If it cannot, quickly and cost-effectively, then consider alternative solutions if an eCommerce system is a “nice to have” and not part of the longer-term strategy for your business.

And, as an aside, you probably do not know what business you are losing to others online because your sales organization is not asking, and most customers will not tell you. We recently conducted an online focus group for a distributor who was not doing much business online with the participants. Without the distributor present, all admitted that they buy online from the sponsor’s primary competitor, as well as other online distributors.

The most important part of your website is your product content as basic site functionality is assumed. Whether you use BigCommerce, WooCommerce, ES Tech Group, Second Phase, Kyklo or more expensive packages such as Episerver (formerly Insite), Magento or others, they will all accept an order. The key is building a robust presence powered by much content (after all, there is a reason why leading distributors typically have over 150,000 SKUs on their site).

You want:

• Content sourced directly from your manufacturers.
• As much content as you can get (none of this 80/20 stuff! Do you want to tell your customer, “we only want to serve 80% of your needs for this project?” Are you going to send them to your competitor’s website?)
• Content that has all the suppliers’ available .pdfs, images, videos, MDSD sheets, long descriptions, CAD files (if applicable) and more.
• You want the content sent to you to ideally be matched to your supplier list.
• You want to easily ingest it into your eCommerce platform, so the data feed must be customized.
• You want a content resource that tailors resources to your needs to reduce the demands on your staff. (This gets to easy, fast and cost-efficient as “time = money.”)

Consider product content as your virtual sales organization. It needs to answer customer questions when a salesperson is not available.

For suppliers, this means you need to unleash the power of your content to make sure that it is on as many distributor websites as possible.

While a vaccine for COVID reportedly is on the horizon, its impact will be lasting. Curbside pickup is here to stay. Customers are recognizing that they added hours to their day by no longer entertaining salespeople doing milk runs. Our comfort level, driven by experience in our personal lives, for searching online for products, and ordering them, will all remain. This, coupled with a desire for increased productivity and accuracy (hence system-to-system ordering) and generational workforce changes, mean that the importance of eCommerce will only accelerate. If you want to grow longer-term, eCommerce needs to be part of your strategy.

What to do, where to go

With the calendar turning, some eCommerce thoughts for distributors:

• If you’re in the industrial or OEM segment, you need a robust website.
• Regardless of your size, if you’re thinking about your business longer term (say 5 years), you need to be on the eCommerce path. Your customers will expect it. Your key suppliers expect it now. There are reasonably priced resources for all size companies.
• It’s okay if your site is not commerce-enabled initially. Your customers want you to be an omni-channel informational resource. Have an eCatalog on your site with a minimum of 100,000 SKUs. The more the better (this is where quantity and quality counts).
• If you can integrate with your ERP system, the most important elements are, in no particular order, are product availability, customer-specific pricing and account management services.
• Content on your site enables you to do digital marketing. The goal of digital marketing is not to sell (after all, is a contractor or industrial account waiting for your email telling them you carry a specific fitting so they can purchase it now?) The goal is mindshare and education. Content marketing is the key (and call us if you need ideas). Your digital marketing person should be excel in sourcing content to market as well as in SEO. Don’t spent money on Google or Facebook ads. Focus on organically driven inbound marketing.

And consider this, if you were searching for a job, would you want to work for a distributor without a robust website?

Seek Customer Insight

• While Channel Marketing Group is not an eCommerce provider, we can help guide you to implementation resources as well as provide customer insights and eMarketing and content strategy.
• If you’d like to participate in our next end-user eCommerce study to be conducted in Q1, let us know.
• We also have helped distributors gain insight from their customers about their eCommerce activity as well as solicit feedback on their current eCommerce services and their website.

And manufacturers need to ask their distributors what additional support they want as well as identify ways to help their reps enhance their sites to be local content sources to support demand generation.

COVID has jump-started a change in sales techniques. The days of “stopping in” and “milk runs” are being significantly curtailed. Aside from COVID concerns, contractors are busier then ever. People want information “when they want it” and faster. They need to know whom / where to turn. Being an omni-resource and aligning with local, trusted, brands (people and companies) will be essential to supporting the sales effort. This becomes the essence of sales and marketing. Relationships will matter but information will be a currency.

Distributors, don’t go into 2021 without being able to answer, “what is your eCommerce plan”?

Manufacturers should be prepared to answer, “how can you help me promote your product on my website / digitally?” (and remember, your regional managers and reps need to know the answer or whom to talk to within your company.)