Instinctively everyone knows why companies have websites – to generate sales by sharing information.
Given this, it then begs the question of why more electrical distributors do not have websites that have product content on them and why are not commerce-enabled. It’s two different questions.
Consider, that, according to a recent CMG survey, 65% of contractors have purchased some material, online, to support a project.
Further, the number one reason why contractors go to websites is for product information. Other reasons include access to spec sheets, viewing their pricing to help them do estimating and checking inventory.
Purchasing online is down the list and this is supported from information reported via the NAED PAR report where 99 distributors reported minimal online sales (website only). The average was 4% but the median was 1% with high profit distributors at .82%, those less than $50M at .07% and from $50-100M at .29%. Even those over $400M reported only 4.56% on average.
So, purchasing is for selected customers. And product content is the key.
COVID accelerated digital demand, and interest. This, coupled with generational change and, more likely, people’s desire to seek information on their own as it can be easier, is driving the change.
Many report increased website traffic, indicating customers are visiting websites to gather product information and then completing the transaction off-line. Why? Because if they are ordering more than a few items, it is easier. Or maybe they have other questions. Or maybe they only needed information for a quote or to check on something?
(And now, for many distributors, financially, may be the best time to make the investment given that sales and gross margin increases created by price increases generates higher taxable income … so end of year investment dollars may be available.)
A recent Gartner webinar asked an interesting question – “What’s at risk if you don’t have a plan for a digital-first world?” Which, in the eCommerce context could be rephrased as “What’s at risk if you don’t have a product and commerce-enabled website?”
6 Reasons Should Not Have a Product and Commerce-enabled Website
Some things to consider. You risk:
- Losing customers – as at least some of your customers are seeking information online. How do we know? We’ve helped distributors ask customers the question because frequently your salespeople won’t ask, or the customer won’t tell them … because they are having their needs satisfied elsewhere. A quick, low cost, survey can be launched to understand their e-needs and validate the need for a customer-oriented website.
- Lose sales – if customers are going to websites and you don’t have content, they are not buying from you.
- Lose market share – less sales = less market share, or consider this “death by 1000 cuts”, without realizing it.
- Lose profits – less sales, less gross margin dollars, less funds to cover operating costs. It’s the power of the marginal profit dollar.
- Lose supplier support – suppliers gravitate to more progressive companies, those investing to grow their business.
- Reduced staff and/or lower quality staff – it is easier to retain and recruit people when they feel they are working for a company that is investing for tomorrow and that is providing them the tools to succeed. The first thing most due when thinking about a company, or researching it, is go to their website.
And a reason to improve your site … improve your brand.
5 Small Distributor Excuses
Some reasons why smaller distributors do not have product and/or commerce-enabled websites include:
- The challenge of integrating with their ERP system and the potential inability to extract customer-specific pricing, let alone inventory information. This is understandable but 1) it may be feasible with the right technology partner and 2) there are workarounds that will be acceptable to your customers.
- The investment cost. Many are deterred when they hear big budgets for eCommerce projects. Hundreds of thousands of dollars. It’s true. It can cost this … if you are of a certain size and want a certain system. But there are viable, distribution-focused alternatives (we have 3 that we’d recommend people talk to) that have affordable initial investment costs and reasonable monthly models that are a combination of low maintenance cost plus a percent of sales (but the NAED information highlights this aspect of the investment would be nominal.)
- Not understanding the steps, so it becomes daunting (and then hearing it can be a 9–12-month endeavor.) It doesn’t have to be. We’ve boiled it down to a 7-step process (for small manufacturers and distributors). The key to not taking “forever” to launch is understanding what you can launch with (realistic expectations) and iterative planning and launch process. Consider the Microsoft product development approach of version 1.0, then 1.01 and then 1.1 then 1.2. You can continually launch “new” features.
- Not having the staff. Yes, this can be a challenge as there needs to be someone internally who is the champion as well as someone who is responsible for supporting the initiative. Remember, we’re not trying to boil the ocean. We want a functional website that adds value to customers and supports the business. We’re not going to be the next Amazon (although, there is some interesting functionality that can be added to further differentiate the business and generate sales and/or engage suppliers.)
- Having bad product content in their ERP system. Honestly, this is inevitable and occurs with large companies. There are ways to get around this. Your inside people are used to the bad content in your ERP system. Customers can’t. But UPC codes can get matched and either the ERP improved, or a product-content web experience can be a standalone initiative.
The question becomes, does a company want to provide a better experience to its customers and better position itself in the market?
(Or, and this is real, perhaps the owner needs to ask themself, “do they want to continue answering why they do not have a product / commerce-enabled website?”
So, what’s the risk of not having a product / commerce-enabled website?