Trailblazing e-businesses, convenient technologies and the COVID-19 pandemic have sparked a global surge in online B2B and B2C sales. How do distributors remain relevant in these chaotic times? This article examines the key challenges for distributors and explains how a Product Information Management (PIM) solution can help them to adapt — and thrive.
Old Ways on the Way Out
For distributors, the good old days of door-to-door selling are vanishing. First websites created a new channel called ecommerce. As customers adopted ordering from the desktop, along came mobile devices — cell phones and tablets — and the birth of ecommerce apps specifically tailored for them. With each new gadget, customers demanded the same access to their favorite brands.
Distributors know too well just how daunting the landscape is. The biggest players play hard: In November 2020, Home Depot announced a major initiative to expand in the MRO ecommerce space, capped by its $8 billion acquisition of online distributor HD Supply Holdings. This marriage of a major big box chain with a Top Ten industrial distributor further complicates the scene for smaller B2B distributors.
The arrival of marketplaces such as Amazon changed the game significantly, too. These online “virtual stores” brought sourcing power, high-quality content, ease of use and exceptional delivery to lure customers away from their old favorites. Today Amazon is the gold standard by which the rest of the ecommerce world is measured.
And then, earlier this year, the pandemic literally shut down the planet for a short time. Countless businesses shuttered, millions of workers were stuck at home and market segments were tossed upside down. But life had to go on. Consumers and companies needed products. Agile businesses ramped up their online capabilities to meet these demands. While industries like Travel have yet to recover, Supermarkets countered the drop in store traffic by expanding online ordering and adding delivery service and curbside pickup. Many B2B companies pivoted their sales teams to encourage customers to order via their website or marketplace store.
Measuring Ecommerce Growth
Data shows the growth and impact of digital sales for distributors:
- In 2019, 17% of all distributor sales ($957 billion of $6 trillion) came from an online ecommerce or marketplace site. Trends indicate that online distributor sales could crack the 20% threshold in 2021.
- Yet 53% of all distributor sales are still done manually via paper, fax, email or telephone. This means that tremendous opportunities remain for distributors to adopt digital strategies.
Digital growth is not limited to the United States and Europe. Last year’s global retail ecommerce sales boom (up 21% from 2018) was led by Mexico (35%), India (32%), The Philippines (31%) and China (27%). Canada came in seventh at 21%.
The Automotive Aftermarket Example
The global automotive aftermarket illustrates the dramatic jump in digital sales both in dollars and as a percentage of total sales. About 75% of aftermarket products are MRO replacement parts, tires, brakes, engine components and body parts. Customers include both professionals and do-it-yourselfers.
In 2020, worldwide aftermarket sales totaled $378 billion (USD), with $42 billion, or 11%, coming from ecommerce. Based on actual annual growth of 4% over the past several years, by 2026 auto aftermarket ecommerce is projected to reach $135 billion, or 27%, against total sales of $494 billion. While COVID-19 is expected to drop 2020 sales by 8.8%, analysts expect a comeback in 2021.
As the link between manufacturers and B2B buyers, distributors face a number of challenges in managing product information and standing out from the competition:
- Managing Product Data. It’s not uncommon for manufacturers to supply incomplete or inconsistent product data. The distributor’s internal team bears the burden of normalizing the data to fill in holes, make it consistent for search and refinement, and enhance it to make its website the most useful to the customer. In this reality, “dirty” data in any form is crippling, as customers will click to a more user-friendly site in a heartbeat.
- Differentiating Product Content. Many distributors subscribe to a content service, giving them the same product information as their rivals and no competitive advantage with SEO. Enriching content in ERP systems or via other inflexible tools is painstaking, inefficient and cumbersome.
- Understanding the True State of the Business via Analytics. Distributors often invest hundreds of hours annually collecting critical performance metrics from across the business. Web analytics, purchasing numbers, sales figures, inventory levels, etc. may exist in silos that make information sharing problematic. Decisionmakers waste more time chasing at the expense of planning and strategizing.
A PIM allows the distributor to take control of the product information journey. Product Information Management:
- Enables distributors to offer more SKUs more efficiently, prioritize products to earn more revenue, and create personalized experiences that showcase the brand
- Optimizes product intake-to-channel workflows
- Drives up product data quality and completeness with automation
- Allows customization for each channel, geography and language
- Saves time for internal teams, allowing them to focus on critical tasks
- Is flexible, scalable and simplifies content maintenance
- Is designed for quick, easy syndication of product information to the desired channels
- Facilitates better decision making on product presentation, assortments, discounts, etc. from a central analytics dashboard
PIM’s ability to interface with ERPs, sales, inventory and other data silos cannot be overstated. PIM brings this data together to give managers the total picture. The difference between operating with or without a PIM is like getting a framed photo of the Grand Canyon versus getting an unassembled puzzle of the same scene.
Agility PIM enables global distributors to curate complete and consistent product information into an engaging shopping experience that increases sales and facilitates up- and cross-selling. Want to learn more? Fill out our online contact form to get the conversation started.
Statistics in this blog were originally published by the 2020 Distributor 300 Research Report, McKinsey, and Forbes.