There’s a lot of talk these days about the Amazon effect, or the disinflationary force of online retailing that drives down the price of goods. To be sure, Amazon is a master at using its logistical prowess and brand to tilt consumers in its favor. But the Amazon effect also influences what the B2B buyer wants these days: a wide array of easily obtained products bought and shipped (almost immediately) at low cost.
Industrial distributors say it’s tougher to stand up to digital competition from the likes of Amazon. Walk any industry trade show floor and the conventional wisdom would have you believe Amazon has pushed distributors to the digital precipice, and there’s nowhere to go but a free fall to extinction. Scary, yes, but that overstates the threat and belies a distributor’s strength.
Distributors aren’t in the business of inventory and price; they’re in the business of expertise and location. And while Amazon can build brick-and-mortar storefronts, distributors have something that Amazon and its kind do not: a deep understanding of the industrial world. Distributors are right there with customers, even to the point of visiting the job site and huddling over the work at hand with a contractor, superintendent or engineer.
Here’s a consumer example of the power of sharing expertise as a competitive advantage: On November 20, the Financial Times reported that competition from Amazon was pummeling shares of big name U.S. retailers like Target. The notable exception was Best Buy, whose shares rose 3 percent, in part, on a strategy to give “free in-home consultations to consumers.”
Industrial distributors often convince themselves that the B2B buyer doesn’t care if the ordering system’s UX is clunky as long as the data is all there. They’ll assuage any concerns about a gruff support and delivery team at the business with thoughts that these folks are knowledgeable. With heightened online competition, tackling a bad user experience and customer service is the opportunity for innovation, now more than ever.
At a conference last summer, Dirk Beveridge, founder of the UnleashWD Innovation Summit and author of a series of books on sales strategies for distributors, said intensified competition from the likes of Amazon will force the distribution industry to adopt innovative models. That’s a good thing because it also plays to a distributor’s strengths: advice and hands-on support.
Faces of innovation
For a large distributor with many regional branches, innovation could be about using its hundreds of branches as a business platform. From that launch pad it could hire up contractors and staff teams with the competency to tackle any construction problem. That would surely increase throughput and sell more material.
By making the distributorship look more like its customers’ business, the distributor can meet the client at the point of need. Amazon, on the other hand, is a repository; it’s a methodically organized grab bin from which buyers can efficiently fetch and pay for what they want, when they want.
But if you’re a contractor or builder and you’re looking for more than a part and a debatable set of reviews, then the future is the distributor who comes to where you are (figuratively or literally) and consults with you.
To turn distributors into consultants, owners and managers should explore digital tools that develop and amplify their employees’ know-how and reach. Putting in place collaboration tools and online learning can help employees at a distributor’s central location link up with counter clerks, warehouse staff, back office staff and workers on a job site. With tools like Slack, for messaging and file transfer; GoToMeeting, online video conferencing; Trello, for project management; and Google Docs, any one person can find, share and store what the organization knows.
As new products and solutions emerge, distributors can turn to their online learning platforms to bring staff up to speed quickly. Interactive training, in small chunks, via mobile devices is how employees want to learn. And digital learning is foundational to acquiring expertise at the pace of marketplace innovation.
Once distributors embrace the consultative approach, they should then take that know-how to the customer. For instance, Grainger employs a strategy that brings its distribution arm into a facility, stocks the “store” with millions of dollars in products and adds a counter person. Other distributors, too, have an approach where they bring a portable storehouse to a job site, setting up a temporary shop.
Creating your future
The author William Gibson said, “The future is already here — it’s just not very evenly distributed.” And distributors should understand Gibson’s words as a call to make their future now. Distributors should create a future where they partner with, say, the American Institute of Architects and develop the know-how and consultative approach to make an architect’s life better.
With this sort of partnership, which some distributors may already be creating, an electrical distributor, for example, could make available a series of branded electrical templates that specify components (e.g., a certain type of gang box, cabling, etc.) for specific construction jobs available via the distributor’s online portal. It’s a model that distributors can use to mitigate the Amazon effect because they begin selling an entire solution, tailor-made for a customer and delivered at the point of need.
Distributors have to meet their clients at the point of need with consultative service and consistently replenish their well of knowledge. Distributors can win against companies like Amazon. But, more than ever, they have to compete on expertise.