Top 4 Risks and Struggles of Distributors in eCommerce
To maintain their place in the supply chain, distributors must keep thinking ahead of the market, at the very least – try and keep pace with the everchanging market realities and continuous shift toward digital technology. However, as the recent pandemic has shown, more than 60% of B2B companies were unprepared to immediately and smoothly switch to digital, primarily because their ecommerce solutions lacked essential capabilities that would have otherwise allowed the switch. To avoid making such mistakes in the future, B2B companies, and distributors, in particular, need to start paying careful attention to digital market trends and develop a strategic approach toward embracing ecommerce. Still, many B2B distributors struggle with implementing even the most basic digital changes. In this article, we discuss the top 4 main risks and struggles distributors might face on their digital journeys and offer advice on how to address them.
1. Underestimating eCommerce & Choosing Not to Go Digital
Before we jumpstart the explanation of why going digital is important, consider the following statistics.
According to Google, 90% of B2B customers start their buying journey with an online search. Moreover, as Gartner research shows, B2B buyers are unlikely to contact an agent without conducting preliminary online research first. In fact, they spend as little as 17% of their time talking to a real person, preferring digital channels over face-to-face interactions. As a result of the pandemic and ensuing quarantines, 80% of B2B ecommerce journeys were said to occur online with limited buyer-seller interaction. McKinsey’s investigation into the market provides even more convincing numbers: 96% of B2B sales teams have shifted to remote selling. While pandemics and quarantines end, we expect the online selling trend to stay and continue to grow.
Major shifts in B2B buying behavior as estimated by major research companies. Source: Google, Gartner, McKinsey.
For distributors, pursuing online operations is a matter of life and death: in the foreseeable future, we predict that there will be countless attempts to get rid of distributors as ‘men in the middle,’ topple them over, or leave them with small operational functions such as logistics.
The brightest example is Hyundai going digital. It is the first major auto dealer who decided to sell cars online, leaving auto distributors with only a few appendix-like functions that involve showing an actual physical product and providing maintenance. Hyundai now profits from insurance benefits, accessories, and various other add-ons leading to the transformation of the distributor market as we now know it. According to an ex-CMO of Hyundai Motor America, Dean Evans, the decision was cemented in 2017, when the company noticed a huge shift in buying habits of their customers:
While emphasizing that the overwhelming majority of car sales started online, Evans didn’t deny that almost 90% still concluded at the dealership. Having foreseen an even greater shift to online sales, Hyundai was well-armored to face the COVID-pandemic, thanks to already established online operations. Additionally, as a response to the pandemic, Hyundai Canada was the first to launch a new at-home test drive program.
Another example is Heineken, who, in an attempt to reach the end customers’ data, launched an online portal, which allowed the company to bypass various ‘men in the middle.’
By not pursuing online operation, distributors risk:
- Losing full control over end customers because customer’s data belongs to the owner of a B2B ecommerce platform.
- Going out of business or significantly curtailing their business operations as someone else wrestles away a part of their business.
Although some distributors might bet on personal relationships, it doesn’t mean that there’s no place for ecommerce, or that ecommerce can’t strengthen their already existing relationships. Thinking that customers don’t need ecommerce is erroneous – it radically expedites the work, cuts costs, and increases their satisfaction and loyalty.
2. Overestimating eCommerce while Ignoring Other Factors
On the other hand, placing too high of a bet on ecommerce is also a perilous strategy. Adopting an ecommerce solution is just one step out of many. B2B ecommerce demands an omnichannel experience, so integrating ecommerce doesn’t automatically imply disposing of salespeople. What we’ve come to identify as ecommerce extremism is an unproductive strategy that can drive customers away just as no ecommerce would.
We’ve written extensively on organic user adoption, which we believe is a sensible answer to most problems that ecommerce adopters face. Gradual implementation of self-service functionality means introducing new features one at a time while also helping your customers on their shopping journeys. Instead of laying off essential sales personnel, we recommend transforming their roles and expanding their responsibilities to embrace digital operations. Salespeople can become customer advocates addressing and solving their platform and order-related issues, or in any other way, assist customers in embracing the online channels.
Since 80% of B2B buying decisions are based on a buyer’s customer experience and only 20% on the price or the offering, it makes perfect sense to invest in the technological part of the CX and in people who can make the customer buying journey smoother and easier.
3. Assuming eCommerce Adoption is a One-Off Business
Many companies assume that an ecommerce solution is a silver bullet that solves all the problems, with little to no maintenance or investment afterward. What those businesses have in common is a superficial approach to choosing a B2B ecommerce solution: they pick up a platform, check a few minor things and features, and start adopting it without thinking of the future challenges. However, if distributors approach ecommerce as a long-term strategy, they will invest in good and modern technology right off the bat. Our experience has proved that the best way to adopt an ecommerce solution is to start small, adopt technology quickly, and then build on top of it, whatever modules the business might require. A B2B ecommerce platform needs to be flexible and easily adaptable to the current market realities. It should not impose limitations or confine business operations in case it requires scaling up, modernization, or extension. If it turns out that the adopted B2B platform cannot be easily updated or extended, businesses might need to re-platform, which is a costly and arduously tiresome endeavor.
4. Letting Chips Fall Where They May
One of the biggest strategic mistakes is adopting a laissez-faire approach, assuming that customers will ‘work it all out’ by themselves. Continuing the argument on organic user adoption, it’s worth stressing that educating and assisting customers (especially in the early days of adoption) must be businesses’ top priority.
Too many websites resemble front doors into a company’s ERP system, failing to deliver any substantial value to customers or those employees working with online operations. It’s no wonder that a whopping 80% of ecommerce businesses fail and 73% of enterprises report failed digital transformations. Indeed, many of the B2B ecommerce platforms are dubbed as ‘stillborn’ because customers don’t use them, use them in a way that is not intended, or use only a couple of features they understood how to work with.
Low tolerance for change and a reactionary attitude toward additional workload differentiate B2B customers from B2C, who regard an ecommerce shopping experience as entertainment.
Since B2B customers approach ecommerce as a responsibility and a B2B ecommerce platform as a business app rather than a webshop, the distributors’ job is to create such a website that will convince them that it saves time, cuts costs, and is much easier to deal with than offline paperwork.
Distributors need to look at ecommerce not as a defense mechanism but as an opportunity for growth and expansion. In chasing opportunities that ecommerce offers, distributors can unlock new revenue streams and explore new markets. The opportunities are truly endless, so you better start chasing them now.