By Bridget McCrea
From his vantage point as senior partner with B2X Partners in Ashburn, Va., and founder of ecommerceandB2B.com, Justin King understands the challenges that small- to midsized distributors face when developing and running effective e-commerce sites. When working with these and other companies, King focuses on helping organizations understand and build e-commerce strategies that are visionary, tactical, and that have a meaningful business impact.
Unfortunately, not all companies "get it." In fact, many companies are missing the e-commerce boat completely by either not using good e-commerce platforms, not driving more traffic through this growing channel, and/or by simply putting their heads in the sand and hoping customers will go back to the "old ways" of doing things.
"When it comes to e-commerce, most distributors don't know what they don't know," King writes in Small and mid-sized distributors, you CAN compete online."Distributors need to spend some time figuring out how their customers want to interact with them online. You can't afford to customize your e-commerce platform until you know what you should be customizing according to your expected return on investment."
Think Beyond the Web Shop
King, who recently released a report evaluating seven different e-commerce platforms for manufacturers and distributors with revenues between $25 million and $750 million, says many firms have tackled the e-commerce challenge by simply tucking a "web shop" into a corner of their traditional business operations. "These companies aren't treating e-commerce as a strategic initiative," King points out, "whereas in retail and other industries, organizations are using digital as a transformation vehicle for their entire companies."
Acknowledging the fact that business-to-business (B2B) e-commerce is a "radical shift" for most electrical distributors, King says doing it right requires a significant shift in thinking and a willingness to allocate resources (i.e., money, effort, and manpower) to the task.
"In looking at traditional distributors—and manufacturers, for that matter—there's a definite lack of internal resources to put towards a good e-commerce effort," King points out. "The best e-commerce pros are probably working for large digital advertising agencies and not for a distribution firm. Drawing that kind of talent away from those 6-figure incomes is basically impossible."
The problem is that without the talent, small to midsized firms wind up on the short end of the stick when it comes to digital knowledge, expertise, and education. These shortfalls can quickly translate into a company that can't achieve its e-commerce goals, fulfill customers' growing demand for web-based ordering and other online interactions, and keep up with those companies that do have the resources to allocate to the task.
Giving Customers What They Want
In most cases, distributors already have an enterprise resource planning (ERP) system that serves as the backbone for their operations. According to King, integration to the ERP system(s) in a B2B e-commerce project will likely represent a significant cost, both initially and in the long run. This is an important consideration because the ERP contains details regarding multifaceted customer relationships such as pricing, product mixes, credit terms, and much more.
"All of this has to be reflected in the end site to support a consistent customer experience," says King. "Tight integration between your e-commerce system and ERP will ensure real-time inventory availability across warehouses, pricing per customer contract, order status, order history, and more is presented accurately and consistently for each customer."
This is an important point that can't be ignored, says King. "As you look at e-commerce, there has to be a tight integration between it and the distributor's existing ERP," he says. "This is because the e-commerce system provides the ‘customer-facing' channel of the ERP." Historically, your customers didn't have access to your ERP—other than to call someone and ask him or her to retrieve information from it. That person, in turn, would look up the information and provide the answer.
That scenario is changing as e-commerce sites provide more information to customers—information that would have normally been reserved for the ERP. The shopping cart is just one simple example of this shift in action. "With shopping carts, we've moved functions once handled by inside sales or customer service out to the web," says King, "where customers can place orders (that go right into the ERP), and get ERP-generated pricing and availability."
Going a step further, e-commerce sites can also provide customers with contracts, terms, conditions, and other pertinent pieces of information that are housed in the ERP. This is just one more example of how electrical distributors can leverage e-commerce to help make their customers' jobs easier.
"The ERP itself is ugly and clunky; customers never need to see it," King concludes. "However, if we translate its valuable content and data into something that's actually meaningful for the customer, and present it via the web, it enhances the entire e-commerce experience and keeps buyers coming back for more."
Meeting Changing Expectations
The question is, how can a distributor achieve its online goals in an environment where new challenges and requirements are lurking around every corner? King says the first step is to understand that your customers are probably quite proficient at—and comfortable with—online shopping. They've already shopped for homes, applied for mortgages, researched cars, and purchased a wide variety of goods from online merchants. With this in mind, King says the best way to appeal to these customers is by giving them the e-commerce experience that they've come to expect.
"Your customers expect to be able to go to Google and find the products and services that they're looking for," says King. "Then, once they're on your site, they would like to be able to quickly access the information or products that they want." To fulfill this basic need, King says distributors need to design e-commerce platforms from the customer's point of view—and not just based on what they think their customers want. The best way to dig up this information is by asking buyers what they want from an e-commerce site (i.e., via a simple email survey, having sales reps talk to customers about it when they're out in the field, etc.). The focal point for this research should be one question: How can we make your job easier?
Once you've gathered that information, the next step is to develop or purchase an e-commerce platform—preferably one that incorporates some form of e-procurement software. In his report, for example, King evaluated solutions from CloudCraze, Four51 OrderCloud, NetSuite, SecondPhase, and others. He looked at key features like ERP integration, customer experience, and on-site search, and then offered detailed recommendations and comparisons.
King also looked closely at the relationship between e-procurement software and e-commerce platforms. For the most part, he says e-procurement software is somewhat "clunky" and doesn't provide a very good customer experience. It doesn't work for buyers who want to search for products, for example, but the software does complement an e-commerce platform to create a more well-rounded experience for the customer.
Using a punchout (by definition, a punchout allows a buyer to access a supplier's website from the buyer's own procurement application), for example, buyers can shop on a distributor's site, find what they're looking for, and complete the transaction. The platform then transfers the shopping cart back into the e-procurement software. The buyer hits "submit" and the order is placed. "This is one example of how e-procurement software and e-commerce can be very complementary," says King. "It's an area that distributors should definitely put time into when addressing customer wants and needs in the online space."
3 E-Commerce Steps Every Distributor Should Take
In assessing the key areas where electrical distributors should focus their e-commerce efforts, Justin King sees these three steps as most critical:
Integration with the ERP. The ERP, or enterprise resource planning system, is the lifeblood of most B2B organizations. The e-commerce site is an extension of your organization and, therefore, must be tightly integrated into your ERP system, says King, which includes software for managing product information and pricing, inventory records, customer orders, inventory records, and financial accounting.
Creative design. Invest in creative design to make your site look good, instead of just relying on software developers. Creative design is worth every penny because it will make you look professional and credible. "Good creative design will help you build online trust with your customer," he says.
Product data. "If your product data is lousy, your operation is not unusual," says King. To improve, pick the top 5-10% of your most popular products and invest in building unique descriptions and attributes for those products. Have your staff or third parties keep them accurate and up-to-date as you import new product data from your suppliers. Make the data on your important products as rich as possible.
Publisher's note: Justin King's report evaluating seven different e-commerce platforms is available here. If you want to save hours of research time looking for the best platform for your needs, you can download the complete report for $149.
King has agreed to work with tED magazine as our expert on e-commerce matters. He is the founder of ecommerceandb2b.com and a Senior Partner of B2X Partners, a B2B eCommerce agency. King has worked with distributors to develop an e-commerce strategy in a wide variety of fields, including NAED-member electrical distributors. Additionally, he is called upon as a speaker at a number of events, including Internet Retailer, B2B Online, HARDI annual meeting, American Supply Association, and Oracle Open World. King can be contacted at email@example.com.
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at firstname.lastname@example.org or visit her website at www.expertghostwriter.net.