Once again, the Internet has proven itself to be the Great Equalizer and the Great Complicator for modern merchants. And makers of industrial products are not immune to the disruption.
These companies are finding it cheaper and easier than ever to engage directly with the end customers. And buyers, when given the choice, prefer to purchase directly from manufacturers. That’ll all fine and good unless you’re a distributor struggling to survive in the fast-paced world of ecommerce.
It’s not so easy. Direct-from-manufacturer selling has created an entirely new division of competitor. Meanwhile, purchasing managers — especially Millennials — are now digital natives who make decisions differently than their predecessors.
UPS’s Industrial Buying Dynamics study shows 53 percent of large industrial distributors claim that differentiating themselves from competitors is their greatest barrier to growth. And 48 percent of mid-size and 41 percent of small distributors find it challenging to separate themselves from their competitors.
The speed and scope in which industrial products buyers have adopted e-commerce is without comparison. Never before have industrial products buyers had so much information so quickly. E-commerce has caused customer behavior to change so rapidly that businesses are completely reevaluating their play books, sometimes throwing them out completely.
According to the UPS study, 72 percent of buyers said they would change distributors for a more user-friendly website experience. Once the decision is made to change vendors, 34 percent of those buyers said they would go outside of their existing supplier base to make their first online purchase. So much for loyalty.
Established industrial distributors have long relied on a predictable sales approach that involves face-to-face visits with potential customers. But it’s not so simple anymore. Customers who are new to buying directly from manufacturers are wondering what makes each seller stand out. New entrants who sell via the Internet offer appealing price structures, easy online ordering and fast delivery.
What these new competitors cannot replace, however, is the distributors’ greatest asset: value-added services that come from industry expertise with multiple manufacturers. Distributors have knowledgeable, insightful customer representatives who provide prompt and friendly service. So it’s important for these distributers to rely on their online sales mechanisms to process routine orders and allow customer service representatives to solve problems and structure complex sales.
Meanwhile distributors can offer added value through repairs, training and technical support. Surprisingly, only 25 percent of buyers rate distributors as performing ‘somewhat well’ or ‘very well’ in offering these value-added services. This level of customer service is critical to shaping brand perception and differentiation.
Change Up the Routine
These are challenging times for industrial distributors. Pricing pressures abound, and warehouse space is at a premium as more stock keeping units are maintained for quicker response to customer orders.
E-commerce has made it substantially easier for buyers to compare pricing. It also provides them with equal opportunities to assess value. Among industrial products buyers who are 21 to 30 years old, 45 percent research new distributors on blogs, forums and social media.
These are prime locations to show your company’s character and capabilities. Small distributors can emphasize their expertise in a niche market. Midsize distributors can separate themselves from the pack with speedy delivery. Large distributors can line up their wide selection of products. But it’s the value-added services and superior customer service that truly distinguish one seller from one another.
Online commerce has ushered in a new era that presents as many opportunities as it does challenges. Success requires a deeper analysis of your abilities. Now is the time to change up your routine and amplify your strengths.
Simon Bhadra is the marketing manager for UPS’s Industrial Distributor customers.