What is Amazon Business\’ true impact on the electrical distribution channel?
It isn\’t \”point and click\”?
Over the past few years it\’s been said \”if you don\’t have a commerce-enabled website you\’ll be out of business.\” The mantra has been repeated in industry meetings and trade publications. Analysts such as Forrester Research and Gartner predict that B2B purchasers (i.e. electrical buyers) will buy online and give the impression that Amazon will capture significant share in the industry and infer Amazon electrical sales will be greater than national chains. And others say the only way to compete is 1) have a site that can \”rival\” Amazon Business and 2) focus on value-added services.
So lot\’s of money has been invested by distributors. And manufacturers have invested much in product content (which was and is needed for many reasons) and have learned about Amazon Business to determine if they should sell direct or through Amazon Business.
But for many electrical (and construction and industrial distributors), eCommerce, defined as online ordering (point and click) is still a ways away.
Yes, it is prevalent in a number of other industries. Yes, Millennials may change this. And yes, online ordering is restructuring the retail industry. But, the question is \”where are your customers on their eCommerce journey?\”
In the words of Sonepar\’s chief digital officer, Jochen Moll, \”Digital is important, but you can’t push it too far.\”
Many may have noticed that Grainger has redefined their definition of eCommerce. They focus more on the customer buying experience … the customer\’s journey … and hence include point / click, eCommerce, marketplaces, e-marketplaces, direct connections, vending machines, mobile and more in their definition. This is what their customers, medium to large customers either want or need (consider, will a maintenance person go to a website to order MRO materials? will purchasing?) whereas Amazon appears to be more focused on the small to mid-sized company.
And Moll further said, at the Internet Retailer Conference, \”Sonepar’s top management is behind the transformation to digital commerce, but everyone in the organization needs to understand it’s a journey, not a one-time project,…
And then there is the Amazon purchase of Whole Foods and Walmart\’s acquisition of Jet.com and Bonobos, both eCommerce companies. So, Amazon moves into the physical retail space (and they are doing it into the book industry also) and Walmart expands its presence into the online space … omni-channel initiatives.
What it comes down to is being ready to serve your customers the way they want to buy, when they decide that they are ready. In fact, Brady, the labeling / ID company\’s distribution philosophy is \”to be available how and where the customers want to buy their product.\”
Implementing some eCommerce solutions can take close to a year, others can be as short as 3 months. Getting started sometimes is more important than thinking you\’ll have it 100% \”right\” as this is a journey. Ongoing commitment, and funding, is necessary (and the website / eCommerce site is the beginning of your expense!)
Customer buying behaviors are, and will continue, to change. Tomorrow\’s customers will want an omni-channel experience and this is defined as identifying all of the potential ways that they may want to transmit an order to you. The key is customer insights and vision … are you talking to them and thinking about how to make their purchasing experience easier?
Rather than rely on Forrester, Gartner and eCommerce companies that predict distribution\’s demise, Channel Marketing Group is conducting a survey to better understand how eCommerce is affecting distributors. Key areas include:
- how you defined eCommerce and what elements you offer to your customers
- how you are resourcing and marketing this initiative
- the ROI that you have received from your investments
- the impact Amazon Business has had on your business and what you think it will have on the industry
- and what you need to be effective in this area
The survey is confidential and anonymous. Respondents will receive a free copy of the survey results.
And perhaps Amazon\’s most significant impact to date, and that of the greater topic of eCommerce, is:
- Generating discussion about changing customer habits
- The need for product content
- Marketing … and digital marketing
- The need for customer information
- Expansion of technology outside the IT department
- Thinking about new business models / ways of doing business
- Increasing the speed of decision-making
Progressive distributors of tomorrow will have two core attributes. They will be disruptive and they will be agile. These attributes will enable them to continue to adapt to changing customer needs, deliver on customer expectations, support their staffs and suppliers, compete and remain profitable.
But it is important to start the journey.
2 thoughts on “eCommerce & Amazon Business … Driving Change?”
Great article David. I am interested is seeing the results of your survey. I think there is still a hesitancy in the electrical distributor space in betting on technology. If you look at Amazon they are not a product company, they are a technology company and they sell products. Electrical distributors are product companys and many times they find it hard and expensive to invest in technology. Electrical distributors know their product better then Amazon and many times even better than the manufactures. What they are getting beat on is technology. Tech is making it easier and easier to quickly find and buy the product they know they need. Distributors need to give their customers and their sales teams tools to allow them to compete. We do not have to look to far to see the impact technology is having on traditional product companies Sears and Kmart are two that are making news right now. Traditional non-tech industries can find help with technology either from hiring direct or partnering with tech partners. Change is happening.
I really value this post in many ways. It shows how the industry is starting to look at Amazon as a competitor and not just a online bookstore or homeowner outlet.
I am surprised you have not said anything about Platt electric supply. We are one of the leaders in the technology of online purchasing in the electrical distribution market.
If you have the time I really suggest you look at Platt.com and our Platt app on Android and ios.