Welcome to the first deep dive in our review of the major disruptors facing distributors in 2019. As we mentioned in our first blog in the series many manufacturers are taking a hard line when it comes to the digital readiness of their distributors. Market competition continues to accelerate, and it’s forcing manufacturers to require – rather than merely reward – distributors to build robust B2B eCommerce capabilities. While none of us enjoy additional pressure, this disruptor can be used for more leverage to further digital transformation where it may have slowed, or even stalled completely.
In 2018 we began to notice a trend in which large manufacturers seemed to be assessing their distribution channels for digital readiness. But they weren’t necessarily just looking for those B2B eCommerce systems that were designed to generate more revenue or find new markets. In many cases, manufacturers were trying to determine whether their distribution partners are, to put it simply, easy to do business with.
This makes sense. For manufacturers to remain loyal to a particular channel, the channel must demonstrate that it is taking advantage of new technology, with the purpose of ensuring the best possible customer experience. That means being able to achieve the real goals of B2B commerce – making customers more efficient throughout the buying cycle, including having the flexibility to let them buy the way they want to buy.
As competitive pressure continues to rise, manufacturers cannot risk losing brand equity – or revenue – because their distributors lack digital readiness. In years past this may have been an attribute that manufacturers merely encouraged within their channels. Today, manufacturers are choosing to cancel even the longest relationships with distributors who can’t demonstrate they have a digital-ready business model. Or at least a plan to get there. Many distributors may be the exclusive channel for a particular region. Losing a manufacturer relationship could actually be life-threatening to their business, making this disruptor business critical.
For that reason, distributors are beginning to re-evaluate their current B2B commerce capabilities and the C-suite within these organizations may open up the purse strings a little more generously as well. While you need to maintain forward momentum, it’s still important to proceed with caution. This is not the time to throw a chunk of money toward a massive tech stack that may or may not fit your company and your goals. (We’ll talk more about tech stacks later on in our disruptor series)
As you build a strategy to meet this disruptor – and turn it into a major opportunity – there are some key aspects of B2B eCommerce you should be considering:
- Make sure you understand the main differences between a B2C user experience and that of a B2B buying cycle. Many B2B commerce platforms were actually created to meet the needs of a B2C environment. Don’t fall for the bells and whistles! First, ensure that the goals of your new B2B commerce efforts meet the needs of B2B in terms of efficiency and productivity as well as revenue.
- Not all solutions are designed to handle integration into an ERP and other critical backend systems. Although it’s definitely an unglamorous point, many B2B eCommerce projects have been completely stalled by obstacles to integration, particularly if those systems are older. You must be able to create accurate, streamlined processes for accessing, pulling and updating data between the commerce system and the backend.
- Ignore any solution that promises “simple customization” to meet the core functional needs of your B2B eCommerce system. Core B2B functionality needs to come out of the box, not created once the software is installed. Take time to assess those required core functions, and use them to evaluate your potential options. This includes things like catalog management, which continues to be an important part of any distributors’ business both traditionally and digitally.
- As the rate of change within the industry continues to pick up steam, it’s important to not only be flexible, but also stay current and that can only happen easily with cloud-based solutions. Manufacturers are not going to assess their distributors just once. Digital readiness will be measured on a continual basis, and trying to keep up with internal software is a lost cause. Cloud technology goes far beyond hosting, and helps easily update software when and how the distributor chooses. It’s typically also a much more cost-effective choice for a small to mid-sized distributor.
If your manufacturers have announced they have begun to assess the digital readiness of your organization, the pressure can be intense. But it can also provide the necessary incentive to kick start your B2B eCommerce initiatives this year. Just make sure as you work to harness this disruptor, you do it carefully and strategically. Reacting too quickly, causing a poor choice of technology, can be disastrous. We’ll learn more about this in our next disruptor in the series.