“The secret of change is to focus all your energy not on fighting the old but on building the new.” — Socrates.
Today, distributors face unprecedented challenges to remain viable in a rapidly changing marketplace. New competitors, shifting customer behaviors and emerging technologies have upended the traditional product-centric selling paradigm. How can a distributor survive — and thrive — in these unpredictable times? Here are four reasons why a Product Information Management (PIM) solution is an essential piece of a distributor’s digital marketing strategy.
The back story
For decades, distributors competed on a relatively contained battlefield. In any given business segment, distributors had their roster of manufacturers and their exclusive rights deals. They knew their rivals. They carved out their niches and market shares. They developed lasting relationships with customers. Much of the distributor value proposition was rooted in one-to-one personal contacts as well as industry expertise, the brand equity of a printed catalog, and supply chain or other knowledge-based services. This “steady state” extended through the first few decades of the Internet.
As we entered the 1990s or thereabouts, the dynamics began to change. Somebody discovered that if customers could order products over “this Internet thing” — they would. Willingly. Eagerly. Repeatedly.
Smart, forward-thinking distributors boarded the ecommerce train early. Websites sprouted overnight like spring dandelions, morphing within a short time from static informational storefronts to sophisticated online shopping experiences. More and more customers adopted this new way of shopping. Still, many change-shy distributors either dabbled in e-commerce as an add-on channel, or dismissed its importance completely.
Unfortunately, a lot of those distributors are no longer in business.
Rise of the Disruptors
As noted earlier, distributors historically competed against “the devil they knew”, that is, with companies that had a shared knowledge of products, industries and customers. But the past 25 years saw the emergence of the Disruptors — the “devils they didn’t know” — chiefly the Amazons and EBays and a plethora of new online-only distributors. These upstarts from outside “traditional” distribution didn’t necessarily know a socket wrench from a pair of socks. They had no brick-and-mortar presence. They didn’t operate from a product-first mindset. But what they did understand were customers. Their businesses thrived on feeding buyers’ evolving desires for more choices, lower prices and greater convenience. They viewed the world from a customer-centric perspective.
Previously unshakeable trusted relationships yielded market share to a new era of commoditization. More and more companies offered the same products, so ease of use and speed of delivery became the difference makers. With so many more purchasing options, customers gravitated to sites that were the easiest to use and catered best to their needs. Many manufacturers saw this e-commerce phenomenon and opted to implement their own direct-to-customer digital strategies — bypassing the traditional distributor altogether — or switched channels to the proven Amazon delivery platform.
The impact of ecommerce in 20 years is staggering. Consider the growth of global ecommerce in the retail sector alone: from $150 billion in 1999 to $2.304 trillion in 2017 — a 15-fold increase. Purchases via mobile devices (mcommerce) accounted for an astounding 59% of 2017 retail ecommerce sales.
The need for digital
So what can a distributor with an inadequate ecommerce presence do to remain viable?
The answer: Make a digital strategy Priority One. Craft a carefully conceived plan with an implementation timetable. Shift focus to a customer-centric mindset. Study the Amazons and learn from them. This requires breaking out of “oldthink”, opening minds to new opportunities and realistically assessing the company’s spot in the marketplace.
Digital transformation (DX) incorporates websites, mobile-friendly apps, email marketing, electronic publishing, analytics and more. A PIM is a core component of DX for several key reasons.
- To keep pace with the leaders — What Amazon offers in the way of information, selection, price, convenience and delivery has redefined the term “customer engagement”. Compare the leading distributors in your industry with Amazon and you’ll find much copycatting. And for good reason: They make the shopping experience engaging and nearly effortless. A good PIM offers the versatility and capability to enable a merchant to create a “best-in-class” customer experience.
- To efficiently manage and curate product information — Product data is the lifeblood of ecommerce. A PIM enables the distributor to create, organize and optimize this data from one central source to ensure brand consistency across all customer channels. The PIM also allows data to be input from external sources such as supplier websites. A PIM is a tremendous time saver and powerful tool.
- For multichannel publishing — A PIM allows the distributor to configure and feed product information from the data repository to an ecommerce storefront as well as publish to print or electronic catalogs. An ERP system cannot. This flexibility enables the distributor to target messages to specific audiences with exceptional efficiency and to archive publications for updates and re-use.
- To understand market trends — A PIM “talks” to outside systems (ERP, mainframes, sales data, price files, asset libraries, Excel, Oracle, SAP, etc.) and integrates data from these sources to provide real-time analytics and reports. This gives the distributor a clear picture of customer behaviors and other factors affecting product performance. Instead of wasting time compiling data, the distributor can evaluate the information from the PIM’s reporting functionality and make better decisions faster.
A robust PIM solution is flexible, scalable, configurable and easily deployed and used. It’s why PIM has become a priority investment for digital commerce. An effective PIM strategy is instrumental for any DX initiative and will empower distributors to compete and thrive in the digital era and beyond.
To learn more about the value PIM can bring to your business, let’s have a conversation.
Join Agility and other thought leaders at the upcoming Modern Distribution Management Digital Distributor Summit (June 18-20, 2019 in Denver) as we look beyond just B2B and focus on the challenges that are specific to distributors as they build digital capabilities.