4 Essential Ecommerce Strategies for Manufacturers and Wholesale Distributors
I was recently having coffee with a friend of mine that has pretty deep experience in running what he calls “old school” manufacturing companies. He’s a young guy so you can forgive his term for manufacturers that have been around a while, sometimes decades.
Anyway, we were talking about how it still seems that most manufacturers have a really difficult time with adoption of modern technology, especially anything in the “sphere” of Ecommerce.
We talked about everything from actual Ecommerce platforms, to lead gen on channels like Facebook, to tablets and phone based apps for field level service people (i.e. — plumbers, electricians) to CRM and customer service.
He felt there still wasn’t enough knowledge share on the B2B side of commerce and asked if I had anything I could send his way. Well, I decided to start digging through some of my own writing on the subject and pulled this article from the archives, updated it and am sharing it here today.
These are just a handful of different topics and strategies that I think are worth exploring if you’re a manufacturer or wholesaler and aren’t sure where to go next with a broader digital-first strategy.
This article appeared in a slightly modified form on the Demac Media blog in August of 2015.
Pervasive Online Research — Just Embrace It Already
Your customers are researching their businesses purchases online just as much as they are purchases for the home. There is no industry or vertical where this isn’t true. Perhaps some more than others, but there is no indication that this trend will be slowing down.
If you are willing to accept this as reality, then it isn’t a stretch for me to ask you what your search engine strategy is. Are you investing in rich content at the product level? If not, why? This is the stuff that search engines love, the stuff that people are actually out looking for.
B2B distributors and manufacturers seem to be the slowest adopters of modern day digital marketing. I have actually lost count of the number of times I ask key stake holders at these companies about search engine marketing strategy and they scoff at the notion. The typical goto response is something like “not relevant in our business”. I’d be lying if I said this wasn’t frustrating to hear so frequently in 2015…
Many manufacturers and distributors are selling product that will ultimately land in the hands of a consumer. It might pass through a few steps in the distribution/supply chain, but it will end up in the consumers hands. If you are one of these companies, you especially have no excuse for not investing in better content.
A lot of my friends are retailers, and not just small main street retailers, but also the type that have multiple locations (sometimes hundreds). If I ask them about their distributors and manufacturers and where things need improvement, they almost always go to product photography and other data. Yup, just good quality photos would be enough to make these merchants happier. Kind of sad right? The fact that the companies that actually make the products on the shelves (physical and digital) of retailers aren’t willing to provide those same merchants with decent quality photography makes my head hurt.
Why would you not want to supply your retail customers with better product data? Do you not think that it will help them sell more product?
It’s 2017 and this is still a real challenge for many manufacturers.
Do you want to own the relationship with your customer? If so, an easy win as a manufacturer or distributor is to invest in the content that search engines are looking for. This is where your customers are beginning their purchase journey. Perhaps you should meet them there?
Equip Your Direct/Field Sales Force With Better Tools
Having grown up in a retail family (primarily in home decor/furniture) I was quite used to seeing sales reps for manufacturers and distributors entering our stores with binders of information and huge amounts of fabric samples.
While I get the need for fabric samples (touch & feel is important), I am shocked when I still see sales reps pulling out giant print catalogs to walk their customers through the latest line of products. Binders…really!?
Too many B2B focused companies are stuck in a time warp and the tools their sales teams are using is a clear sign of this. By comparison, B2C companies have evolved at an almost breakneck pace through significant investments in technology. B2C’s adoption of digital commerce as a channel is largest signal that these are companies that fully understand the need to re-invent.
As a B2B company, your sales team is the sharp edge of the sword. They are often your first impression and probably your most established sales channel. Does it not make sense to divert investment to making sure they are armed with the latest and greatest in tools? Instead of binders / cataloges, why not have your sales team use iPads (or other tablets) along with a B2C-esque user interface for working with customers one-on-one?
This is also a matter of alignment. If you are going to make a larger digital commerce push, ensuring that your sales force is embracing and actively involved in these initiatives is imperative. For example, your sales team could drive adoption of your digital technology investments (i.e. — commerce platform) with smaller customers, allowing those sales people to focus on higher value customers. Imagine getting more business out of both small and large key accounts without having to increase your head count.
There are a great many challenges for most B2B companies wishing to adopt new technology, not least of which is legacy systems and processes that have been around for years and quite possibly decades. Integrating new technology with these legacy systems is difficult at best. Replacing them is incredibly expensive. I have one question. What’s the cost of doing nothing?
Simplify Pricing Structures
Last week I sat down with a large (> $100M in sales) wholesale distributor to discuss their B2B eCommerce strategy. One of the topics I always like to discuss is product pricing. In fact, I like to start here sometimes as pricing can become an incredibly complex topic of discussion.
Many manufacturers and distributors have very complex pricing structures. Many go as far as having customer specific pricing. If that sounds scary to you, it is! Customer specific pricing actually means that these companies are setting product prices at the customer level. If you have 5,000 customers and 1,000 products, that’s a lot of prices to manage.
One of the strengths of digital is automation. In order to use digital to create economies of scale, there needs to be some reduction of complexity in business processes. Maintaining customer specific pricing is a laborious endeavour. In fact, when I ask these companies to walk me through their pricing model, most of the time they can’t. The best have some random person (and only one) in the business who truly understands how pricing works. Pretty scary point of failure.
I fully understand that some of these customers might be 20 year accounts, and that changing their pricing (for better or worse) might be difficult. How long is this going to be the anchor you drag around as a business? I’ve actually seen complex pricing structures stop companies from investing in new technology. Why? Usually because the cost of customizing software to meet their existing business needs is absurd. This isn’t because software development is expensive, it’s because their business processes are ridiculous.
Nobody building a brand today would ever allow customer specific pricing into their business. It creates way too much organizational debt for absolutely no return.
If you want to modernize your business, you have to simplify your business. For many B2B companies building out their eCommerce strategy, how they handle pricing could be a major stumbling point.
Automate & Nurture Replenishment Opportunities
Quite a few B2B businesses sell product that is consumed on some regular interval by their customers. I’m thinking of things as basic as office supplies, food, or even equipment or parts for machines that get worn out.
For these companies, one moderately easy win could be investing in the necessary technology to build a more automated replenishment sales channel. Make it easy for your customers to re-order products they buy frequently.
Auto-Ship (aka — Replenishment) programs can be complex, so my advice is to start with the nurturing portion. Setup automated email campaigns that go out at the appropriate interval to remind customers that it might be time to place another order. If you track the success of these campaigns properly, they should indicate the level of success and subsequent investment into better technology to further support and automate your replenishment business.
This could very well cause you some internal political strife amongst sales and service staff who see this as their “job”. Calling on accounts and soliciting repeat business has historically been a human powered effort. The reality is that today you can accomplish much of the same tasks using modern day email marketing tools and eCommerce platforms, especially if you sell relatively simple products that don’t require a ton of customer education every-single-time.