Executive Summary: “Digital Transformation in Wholesale 2016: The Magic in the Mix”

 

This brand new 43-page whitepaper, written by leading freelance consultant Chris Jones for IMRG, sponsored by Maginus and Wolseley focuses on the current position of the Multichannel Wholesale industry with eCommerce giants such as Amazon and Alibaba entering the B2B space.

The report looks at how wholesalers can stay ahead of these new market challengers by becoming truly omnichannel operations.

This blog examines the key findings and recommendations, providing an executive summary of the report.

 

The Magic in the Mix

Amazon Business launched in the US in 2015, it’s sales are already over half a billion pounds a year, growing 20% month on month with over 300,000 customers. Should B2B businesses be afraid? It is coming, Amazon Business is currently in UK beta - the threat is indeed real.

How do you stay ahead? Amazon does the basics very well - they make it extremely easy to do business with them, be it their delivery offering; their personalised approach or their extensive stock and low prices. However, they remain fundamentally a single channel, an online pure-play business.

The secret to staying ahead of such a beast is simply by doing great digital B2B wholesaling.

Yes, having a strong online presence and having the evermore standard next-day delivery and returns options are pivotal in this day and age, but what separates you from the pure-play giants is the combination of these modern functions with the traditional roles such as trade counter, call centre and account managers, to maintain the personal approach that a business with 300,000 customers will struggle to achieve. In a B2B context, ‘multichannel’ or ‘omnichannel’ is about connecting multiple touchpoints with the customer in one experience, traditionally relationships between people rather than just execution channels.

Wolseley have seen great benefit of on-boarding their existing customers to their eCommerce platform in order to allow their call-centre staff to do what they should be doing: Selling to customers.

68% of Wolseley’s call centre staff’s time is being spent on tasks which in theory customers could self-service via digital such as price check; stock availability; product information or placing orders.[1] Since training and on-boarding their customers to self-serve digitally, Wolseley has seen rapid growth in take-up of online and reduced customer churn.

 

Winning New Customers

Naturally, digital can be used as a way to attract customers. The key to this is personalisation - this can be difficult in the B2B space as typical B2B wholesale/distributors are complex, especially when it comes to the purchasing process. Most online B2B transactions involve more than two stakeholders and 28% involve more than 5. [2] This demonstrates the need for software to not only match products to customers but also to discover new people to sell to.

Winning on Google is essential: in order to do this, you must be category-driven, by offering high quality content which answers questions and establishes industry knowledge. It is difficult for entities like Amazon to have industry expertise when they are the one-stop-shop for everything. Customers want to learn on their own terms, so it is important to communicate / market to them on their time / through the channels they seek rather than when you see fit.

 

Digital Transformation means changing work ethics and staff mentality rather than merely digitising existing business processes. To succeed digitally requires all staff to be on board and this comes from the top downwards - not to reduce costs but to drive incremental sales.

 

Proposition

When inputting product information to your B2B eCommerce platform, the data quality is key. With such large catalogues, it is expensive and time consuming and thus it is vital to make the data precise and relevant. RS Components for example have 60,000 new SKU’s each year, presented in 8 languages for the 26 countries they sell to. Suppliers give you a specification, you need to display SEO-optimised and customer-purchase-optimised data.

 

“Show me the ports on the back”

While B2C platforms need to sell the idea of the product to the customer, B2B platforms require practical information and images showing it to be the right product for the job. [3]

 

"Engineers are literal people, solving practical problems, not buying into aspirations. They want facts to solve problems, and people process images faster than they process text."

 

Product information, specifications are obviously essential, backed up by supplier data sheets, application guides, 3D pictures and videos, and (curated) Q&A.

Pricing online in the B2B environment can also give you the edge over pure-plays such as Amazon.Though Amazon Business does have account functionality and bulk pricing offers, omnichannel B2B businesses can hold the advantage where relationships come into play - contract/ job based pricing / personalised contract specific pricing etc. However, many companies have decided to use Amazon Business as another sales platform due to the ease and brand exposure available.

 

Execution to Existing Customers

It may sound obvious, but it is imperative to do the basics well. According to a Gartner survey, 89% of companies expect to compete mostly on customer experience in 2016, up from 36% in 2012.[4] Having a great looking website is one thing, but B2B customers need information fast. Oftentimes engineers seek product information outside of 9-5 office hours so having relevant and specific product information can be invaluable - this all comes down to knowing your customers’ habits and having the right information in the right places, at the right time.

Plumb-Center, one of Wolseley’s largest customers, has for example their award-winning solution PartsArena [5]- a search tool to help identify the correct parts, available only to those customers with trade accounts. It is desktop, tablet and mobile compatible and offers product information, images and stock availability with option to add to basket. Tools like these add huge customer loyalty due to their time saving capacity.

Stock availability and back-office transparency in the B2B environment are fundamental. This relies highly on tight integration between the two platforms, and on accurate back-order timeframes. Succeeding in this gives great confidence to the customer. Order history, credit limit visibility and recommended purchase can act as account management functionality on websites, as well as numerous industry specific tools such as calculators or regulatory compliance advisories - again aspects that can keep you ahead of the generalist pure-plays.

 

Conclusion

Amazon Business is coming to the UK and it will seek to take over B2B distributors and wholesalers need to embrace innovation and get ahead of the curve to ensure a future for their business. The Magic is in the Mix is about combining innovation with the traditional values which have made your B2B business successful until this point. Do the basics well, make your content easy, relevant and accessible and be sure to self-evaluate as often as necessary.

 

For more information - you can download your free copy of the 43-page report here.

 


[1] Jeremy Maxwell, multichannel director at Wolseley UK, interview with Chris Jones, May 2016

[2] Endeca, 2012 B2B e-Commerce Survey

[3] Guy Magrath, Chief Digital Officer at RS Components; interview with Chris Jones, April 2016

[4] Gartner Marketing Spending Survey, 2015

[5] See http://www.plumbcenter.co.uk/PartsArena/

 

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