Retail has been heavily disrupted by eCommerce and most retail companies that don’t have a strong eCommerce presence have either gone bankrupt or are struggling. In-store sales are still in the majority but are heavily influenced by eCommerce and online methods such as buy online – pick up in-store, or simply just research. Therefore not being top of funnel online for research can kill your in-store sales.
Distributors have not quite felt this level of pain yet but I believe they will in the coming years. You don’t see distributors going out of business like the big name retailers. However, most distributors are not well-known brands to the average consumer and are often family-owned private businesses so its hard to even know if they are struggling or not.
At the Inbound conference in 2019, Hubspot CEO Brian Halligan talked about how the new disruption is about how you sell. The reality is that consumers and businesses want streamlined experiences that are heavily automated. Hence eCommerce.
Fewer businesses & independent contractors will tolerate bad user experiences or weak online eCommerce stores by distributors. Competitors will continue to strengthen their offering and major options like Wayfair, Amazon, and Walmart will also get stronger with B2B eCommerce.
When Will It Be Too late?
My prediction is that by the year 2025 it will be very difficult for companies with a weak or nonexistent eCommerce presence in the distribution space to have size-able market share. Similar to companies like Sears, distributors that don’t adapt to eCommerce will start to fail.
Of course, there will be exceptions but the reality is that distribution is mainly selling product in large quantities. This can be heavily automated via sophisticated eCommerce sites and users will enjoy the benefits of automation.
What Is Stopping Distributors?
Lack of Technical Understanding: Most distribution companies are run by nontechnical people. Therefore it’s very hard for them to manage and grow a technically focuses company that relies on a website to take orders versus personal interactions and calls.
Without the appropriate technical people, it’s hard to even build a requirements document or manage a project even with the help of third party experts.
If it is unrealistic for you as the owner of a distributor to become the technical guru you need to hire folks that are, especially ones that you trust to lead this process.
Lack of eCommerce Experience: eCommerce is its own animal. Just being technical isn’t enough. There are so many things that go into it from customer service to user experience and product data. You have to understand the ins and outs of eCommerce and have some experience in this area.
Change Management / Sales People: This is probably the single biggest reason. Companies don’t want to change or adapt. Unfortunately, the reality is this is not something you can hide from.
Change management requires thinking about your eCommerce website as your paper catalog and also as a system to take over orders versus manually entry or fax etc. This might require salespeople to transition to customer acquisition and account management and less order taking.
It will likely also require you to figure out a commission structure that works with eCommerce. Most companies neglect these issues and don’t have a good model for this.
Finding a way to incentive sales reps to use the eCommerce website as a tool to grow customer sales versus it being their competition is key. They should be showing customers how to make the most of the website and use it as a sales tool.
Integrating Their ERP for Inventory & Real-Time Pricing: Without real time pricing and availability why would you ever buy online when you can get more accurate pricing etc by calling in. You have to find a way to manage pricing accurately and typically this means integrating ERP pricing into your eCommerce platform as well as inventory and other critical sales data.
Platforms like Celigo can help with this.
Real Time Shipping Quotes: Real time shipping costs can be a barrier of online sale and is critical to eCommerce. This can get complicated if you use your own shipping methods and trucks but other third party carriers for certain types of orders. You need a platform like ShipperHQ or some sort of shipping platform to manage this.
Getting Accurate Product Data: I have talked to many distributors that are overwhelmed by the amount of product data they would need. There are many ways to overcome this. One is to normalize it into your eCommerce platform or a PIM solution like Salsify.
The other is to use third party vendors or even the manufacturers themselves to provide this data. There are many vendors that will help you normalize and aggregate all this data and easily upload it to your eCommerce platform.
Business buyers are not as simple. You may sell to a large chain that has one main corporate account and a tree of buyers underneath them that have managers approving orders. Modern platforms like Magento Commerce have this functionality built in.
B2B Order Work Flow: You might need some sort of approval workflow to allow your buyers to manage orders. This might require them to build lists of products and submit for approval from their manager. Every company might want to manage this a certain way but ultimately this is typically a feature b2b companies want.
Online Quoting: Your customers might want to get a quote on a large order. Tools like Cart 2 Quote can allow you to do this and many modern B2B eCommerce platforms have this built in.
Customization: Typically we find there is no eCommerce platform that will do everything you need. You need some level of customization to fit your distribution business model. This requires understanding how to manage agile projects and launch new features continuously. The best sites are constantly launching new improvements.
eCommerce is taking over and more and more of the sales process whether it be for researching a product, buying, or buy online pick up in-store. It can also be effective for self serve online quoting.
Ultimately customers want efficiency and to save time. eCommerce is one of the best ways to do this. Not offering a competitive eCommerce site will become a huge detriment for distributors and eventually become something they cannot come back from.
eCommerce is the type of thing that is a continual investment. If you fall too far behind there will come a point where the sheer investment in technology, people, and process to catch up is literally insurmountable.