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Montag 19 März 2018

Adapt or disappear:
The disruption of the B2B distribution industry at lightspeed

Have you seen the movie Moneyball, an interesting example of how a digital transformation journey can fundamentally impact an entire organization? In the movie, a disruptive baseball team manager tries to assemble a team by employing computer-generated analysis to acquire new players. And even though his attempts are initially ridiculed and his staff revolts against his blatant disregard of their lifelong experience and intuition, he sticks to his beliefs - or as Brad Pitt puts it “Adapt or die!”
He then goes on to win the championship and silence his critics.

“Adapt or die” would also be my advice to any business operating in the B2B distribution industry because the rapidly evolving market conditions and customer expectations can no longer be ignored. Yet I keep coming across B2B companies that are still sitting on the fence when it comes to changing their (digital) strategy.

When fragmentation is high, transparency is low

Business customers are shifting away from classical purchase processes and moving towards digital-oriented solutions and even pure e-commerce. And those customers have come to expect an online experience that matches the well-known B2C web shops they are using privately, meaning everything needs to be easier, faster and preferably also cheaper.

This forces B2B organizations to step up their internal efficiency and at the same time rethink, automate and streamline the processes that underpin their different customer touchpoints: sales, support, marketing, etc.

Against this backdrop, there’s a renewed sense of urgency in the wholesale industry and the term ‘disintermediation’ has gained a lot of traction ever since the big marketplaces (Amazon, eBay, Alibaba, etc.) started extending their reach beyond their traditional B2C retail audience. In a market that until recently was largely depending on the wholesalers to serve as distribution point for products, those global players are disrupting the classic supply chain model by providing small, medium and even larger enterprises with the technology to cut out the middle man and interact directly with manufacturers.

Moreover, marketplaces are pressurizing the margins for wholesalers since they facilitate and simplify information gathering, product discovery and price comparison and thus increase the transparency of the pricing and cost models applied by those wholesalers.

Adapt or die!

The good news is that organizations can adapt and even leverage their digital transformation to enhance operational efficiency, increase digital business effectiveness and identify new opportunities for growth.

Yet the most important motive should be an improved customer experience. Simply because - unless there’s a strategic choice to become a price-fighter - the smartest way for any organization to beat the (digital) competition is to offer more value than others can. And that added value can come in different shapes but by consistently exceeding customer expectations, a wholesale distributor can prevent customers from churning for mere pricing motives.

  • 1. Be(come) a trusted advisor

A marketplace can offer any product for sale, but can’t be knowledgeable about every product – even with AI evolving at a rapid pace.

By enhancing and leveraging their existing relationship with customers, wholesalers can demonstrate a good understanding of specific customer needs and combine that with their product expertise and broader market knowledge. Customers will be less inclined to switch to alternative suppliers if they risk missing out on the solid advice from a trusted advisor that will make them decide and buy with confidence.

  • 2. Help customers become more efficient

The ultimate goal for any organization should be to have a maximum amount of information that is readily available, at any time, through any channel and for any process.

Imagine the productivity gains by having customers in control of finding the product-, service- or transaction-related information they need, upon request or even better, as a self-service. And in turn customer service operators will no longer need to respond to simple and repetitive information requests and can instead focus on providing added value advice. Moreover, organizations can build their knowledge of how, when and where customers collect and leverage that data and use that knowledge to further improve user experience.

To centralize information about products and integrate departmental product knowledge into an enterprise-wide asset, organizations typically choose to implement a Product Information Management (PIM) system that allows them to feed consistent, accurate and up-to-date information to multiple distribution channels (web, print, email, customer service, etc.).

Making customer and transactional data accessible requires a tight Integration of complex back-office systems such as Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Inventory & Manufacturing systems, etc. with the front-end systems that feed the customer touchpoints.

  • 3. Unified Commerce Experience

Yet there is a risk to consider the online channel as the answer to everything. A customer-centric approach shouldn’t merely revolve around the digital touchpoints. Customers don’t actually care about channels no more than they care about a company’s internal organizational structure or hierarchy.

Most B2B companies are willing to invest heavily in customer loyalty and have a very clear view on their most valuable customer segments. Yet, once a prospect buys a product or service, the experience changes drastically – and for no good reason. For example, the in-store or customer service experience doesn’t look, feel, or sound anything like the online marketing and sales content that enticed and convinced customers to engage.

That's why organizations that recognize the importance of a unified customer experience have started to consider the entire customer journey. Interactions and customer engagement from the front-end must be mapped to the back-end as well. The entire organization should consolidate around a common goal of delivering a seamless, individualized customer experience.

A new way of doing business?

Innovative technology typically follows an adoption curve that takes quite some time. And while some organizations may be bold and ready to experiment, the majority will be more conservative and see how things play out before making an investment. Yet time is up for wholesale distributors. Omni-channel platforms have passed the hype cycle. The technology has proven its broad market applicability and relevance and is clearly paying off.

So, commit and start thinking differently!

Frederik CLAESSENS
E-Commerce Manager
SQLI

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