Businesses’ unrelenting shift toward digital transformation is being praised as a game-changer for success. Driving more sales, streamlining purchase journeys, and boosting customer loyalty are among the long list of benefits offered by the cross-industry trend toward digitization.
But for distributors, more digitized industries means more pressure.
What Makes Digital a Problem?
The shift toward digital poses a threat to the vitality of distributors’ role within the supply chain (especially if they are not evolving alongside these changes).
In fact, many suppliers are already eliminating the need for distributors by selling directly to retailers or end-consumers, thus forcing distributors to respond by specializing their services and fighting to prove their value. If distributors do not adapt —and quickly— they run the risk of becoming obsolete.
However, if they do manage to capitalize on this digital disruption, distributors can leverage digital to make themselves invaluable. With a $6.6 trillion opportunity —and their staying power— at stake, distributors need to pay attention to how the commerce ecosystem is changing around them and get ahead of it (or, at the very least, keep pace with it).
In this blog, we will explore why and how distributors must adapt to digitized industries, but first, let’s dive into how this threat came to be:
Why Digitization Has Challenged Distributors’ Resilience
The pressure to obtain and retain a competitive edge fuels organizations’ drive to keep their products, service and customer experience top-notch. This often translates to cutting costs on any processes and resources deemed extraneous in the name of efficiency (like taking distributors out of the supply chain equation entirely.)
The list of potential disruptors —which will only make competition that much steeper— continues to grow. The adoption of modern, packaged ERPs and e-commerce play a major role, but there is also considerable disruption being caused by advances in mobile technology, VR-enabled improvements like virtual stockrooms, and IOT-driven capabilities like real-time remote inventory sensing.
The key to turning this trend around for distributors will be leveraging digital assets and tools to create value and ensure distributors are anything but extraneous.
How E-Commerce Can Become Distributors’ Golden Opportunity
Distributors are currently at a crossroads: redefine your roles, services, and value proposition, or be replaced by the innovators who will. Most distributors have already caught on, and are actively making the shift to digital themselves. Data from B2BecNews shows that those that don’t currently have an e-commerce site are already planning to (and a whopping 80% plan to have one within two years or less.)
It also tells us that two-thirds of distributors do have a B2B e-commerce site, and most plan to use it to continue to grow online sales and traffic:
It’s clear that largely, distributors aren’t just going digital to stay afloat; they’re also actively understanding the benefits of e-commerce, independent of the current threat to their role. They’re not just investing now, either. Many are planning to increase their investment in e-commerce in 2019.
Take a look at the breakdown:
Still, while e-commerce is obviously becoming a priority for distributors, it’s not necessarily a direct path to a revitalized and future-proof value proposition. Distributors’ approach to digital must be tactful and strategic. Read on to learn how.
Tips to Tackle the Distribution E-Commerce Landscape
- Get Both Pricing and Service Right: B2B buyers want to complete self-service purchases online, make purchases at the best value, and get pricing transparency when they’re hunting for the best deal. But increasingly, e-commerce is taking customers’ primary focus off pricing. Customers will want an even stronger customer experience, omnichannel strategy, and more support throughout the full buying journey (as well as the best deal or lowest-priced offer). Here’s your first tip: don’t just offer what customers want now; anticipate how digital will change their needs and react accordingly.
- Use Online Channels to Make Offline Processes More Efficient: For more complex purchases, e-commerce is still the most efficient medium, but distributors can add even more value by reducing the manual resources required to make and process these sales. At the same time, they will be driving down the cost of serving customers as well. Tip #2: Don’t get pressured or bogged down by digital-only strategies: a blend of online and offline touchpoints, executed together, tends to work best.
- Future-Proof Your Approach: As the distributor market becomes even more digitized, current markets are likely to become more robust, and new markets that were previously too expensive to service will come into reach. This is great, of course, but only if you’re ready to take it on. Tip #3: When you adopt your digital strategy, leave some bandwidth to grow and scale your business and processes as needed.
What Does This Mean for Digital Distribution?
E-commerce isn’t a death-sentence-in-waiting for distributors (as long as you maneuver change the right way). Distributors who embrace digital are actually likely to see huge benefits as spending increases for omni-channel customers (and many are already seeing success).
Ultimately, thriving in an increasingly digital age is not a question of offline versus online or price versus customer experience. It’s about the making your workforce more efficient and your business more streamlined by treating digitization as a tool rather than viewing it as a roadblock.
Ready to get started? Read our white paper for insights on how to execute the strongest B2B omnichannel strategy.