By Bridget McCrea
How electrical distributors can take ownership of their e-commerce efforts by developing their own product attributes, descriptions, how-to videos, and quality images.
In July, tED magazine published Amazon Business Vs. Large Distributors—What's the Threat?,whichassessed the impact of Amazon Business on large electrical distributors through the eyes of Alex Moazed, CEO of New York-based advisory firm Applico. In the article, Moazed said the food industry remained "front and center" for the e-tailer on the consumer side, while the top five on the business-to-business (B2B) front include industrial, food, electrical, auto parts, and medical supplies.
Moazed mentioned e-commerce as the ticket for large electrical distributors that want to ward off this threat while also maintaining their own growing, thriving businesses. "The only way to beat them—and it took Walmart 22 years to figure this out—is to have your own marketplace," Moazed said. "Just doing more e-commerce, or doing it better, isn't going to work. We've already seen this with Grainger and other industrial supply [companies]."
Jason Hein, a partner with B2X Partners, says there's more to the story than that. Hein, who prior to becoming a consultant worked at Amazon, launching many of the current categories for Amazon Business, says that while marketplaces can be "very powerful tools to help distributors ramp up selection growth and provide competitive pricing," they also present a new set of challenges for distributors.
"Marketplaces can present hurdles for companies, and particularly when it comes to managing the product content that drives the customer experience," says Hein, who points out that each seller and every new SKU that's added to a marketplace increases the complexity of managing the associated content.
"SKUs need to be matched to existing selection to prevent duplicates," says Hein, "and the values supplied for product attributes need to be vetted and normalized to prevent inconsistent formatting and 'blowing up' faceted search (i.e., a search mechanism that uses a hierarchy structure that lets users browse information by choosing from a predetermined set of categories)."
In addition, different seller contributions of images, copy, and descriptions must be qualified and ranked to determine which ones are shown to the customer on the detail page for each SKU, according to Hein. "Amazon already struggles with these issues and devotes significant technical resources trying to manage selection," Hein reveals. "Even on Amazon Business, their efforts have far to go to achieve a unified, high-quality customer experience."
Theoretically, Hein says Amazon could decide to build out an "authoritative master catalog" of products—pulling product data in from public sources like manufacturer websites to build out SKUs that they don't even yet have sellers for. "This would simplify life for sellers, who could then only have to supply a price and inventory feed (rather than supply all the details of the SKU)," says Hein, "but that speculation would require significant resources that Amazon has not shown interest in supporting."
Building a Solid Foundation
As electrical distributors of all sizes come to see Amazon Business as a real threat, and as other competitive forces chip away at their margins and revenues, some are looking for new ways to compete in the e-commerce world. Many are turning to content as the solution. The problem is that selling conduits, controls, and fuses is a lot different from selling books and video games. While the latter requires a picture or two and a short description to get the point across online, the former needs a much more detailed, thorough approach. Without this level of detail, return rates and customer dissatisfaction rates will both increase exponentially.
Justin King, co-founder of the DigitalBranch, and senior partner at B2X Partners, says the electrical distribution industry is challenged by the sheer number of product attributes, descriptions, and other details needed to fully explain its products on the offline world, where buyers can touch, feel, and assess their options in person. "It can take 25 bulleted points and 40 attributes to describe an electrical component," he says. Amazon Business has yet to figure out the perfect formula for managing this, King notes, but it's probably working on it.
Of course, electrical distributors have had access to the IDEA data warehouse for years. With the mission of becoming "a single source of complete, high-quality data delivered efficiently and cost effectively," the organization bills itself as a "preferred partner in the electrical industry, that contributes to the industry's responsiveness to dynamic economic conditions and industry trends."
Calling IDEA a "starting point for data," King says IDEA offers a service that many other distribution sectors lack (e.g., neither plumbing nor industrial have this type of data repository to build on and work from). "I don't think any distributor is going to win solely on this data, but it can definitely be used as a foundation," says King. "Product content isn't a project; it's a program. And programs get better every week, every month, and every year."
So, using IDEA as a "data foundation," electrical distributors can take their top 1,000 products and add their own product descriptions, how-to videos, attributes, and images to their online selling platforms. "Then take your next 1,000 products and do the same," says King, "while also going back and improving upon the first 1,000." It's a continuous cycle that never stops, he says, because the web isn't the stagnant selling space that it was 10 or 15 years ago.
"Build out a content foundation that never stops improving, and strive to make it better," says King, who points to video as a particularly important tool for electrical distributors that want to "show" rather than "tell" buyers how a certain part works or why a specific product is better than another for an application. "Use this content to create differentiation online," says King, "and to provide real value to your customers."
Putting Some Muscle into It
Going back to the marketplace catalog, King says Amazon Business is currently in the process of building its own electrical supply platform. "[Amazon] is the beast, so it can demand more [content] from its suppliers," says King, "but at the same time, the e-tailer is building its own CAD drawings for products, taking its own pictures, and building out its own product descriptions." (A quick search on Amazon Business reveals a definite work in progress. Click on the 2X2-inch cable raceway duct with cover, for example, and the page includes a single photo, four bullet points, and basic application info like "screws into wall to provide a protective channel for cables.")
Electrical distributors should take the initiative in the content game, says King, instead of just "throwing up their hands in the air and using whatever content their manufacturers or IDEA provides." He sees the best starting point as the distributor's sales force. "Take a half-day out of the week for inside sales to sit down and update all of your company's product content," King advises. "And remember that if your 'digital branch' is to serve as an extension of your physical branch, then the content on the page has to be as good as your branch manager talking directly to a customer about a specific product."
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 email@example.com or visit her website at www.expertghostwriter.net.