2D Sales Drawings
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Till now, there has been little guidance for distributors about where to start and how to strategically use digital tools for e-Commerce, social media, mobility, CRM, advanced analytics, and multichannel solutions. The new NAW publication, “Becoming a Digital Distributor: Strategies and Tools That Create Value” by Mark Dancer is welcome. You can read the guide intro here.
Some distributors have already seen the opportunity and strategically adapted to the customer need – for example HUB Industrial, is a $25 million distributor, saw e-commerce revenue grow from 5% of revenue to 15% during 2014. But, as the guide says, for many distributors, “it’s been more by happenstance than design“.
At CDS we think digitalization is a crisis of change for Distribution. As you may know the Chinese character for ‘crisis’ consists of two characters, one means ‘opportunity’, the other ‘danger’. So a crisis is both. Distributors need to pursue the opportunity and avoid the danger/threat. We think the current situation can be summarized in these 3 points:
The guide offers “7 strategic findings” as recommendations. We’ve followed their notation for the first 5 below, and added a few specific thoughts for industrial distributors. Please use the guide and our industrial sector specific suggestions to:
1. Digital tools hold promise and peril for distributors. As the guide points out distributors are intermediaries, that have supplied the knowledge, information, and data that drove the value chain. To maintain that role industrial distributors must now fulfill it digitally or be replaced by others. In CDS’s view these 4 capabilities are now ‘table stakes’ for most industrial distributors:
If industrial distributors fail to deliver these, new online disruptors will provide them to B2B customers.
2. Distributors are refreshing and refining the core value offered to customers. Distributors are used to revisiting their business models as technology drives change. In CDS’s view, industrial distributors should re-examine how they deliver their core value and use digitalization to drive new competitive advantage. For example:
3. Digital tools are not a one-size-fits-all solution for distributors. Your digital tools should present the core value you want to deliver. Different industrial distributors may choose to use the tools differently. For example CDS recommends that 3D CAD Model downloads (but not views) be used to generate sales leads by requiring registration before download and that those leads be automatically transferred to an industrial distributor’s CRM and from there distributed to sales people. Distributors need to keep their business model goals in mind and work with experienced suppliers to create the solution they want. As one distributor explained in the guide, “It’s easy to get lost. Our people don’t really understand digital tools, and vendors are promising the moon. We got started by focusing on the value we want to provide to our most important customers, the ones where we will make our stand.”
4. Value strategies, not value propositions, are an essential ingredient for success. By nature, distributors add value, to customers and suppliers, through a range of inventory, logistics, technical and financial services.In the B2B industrial sector, distributors have a new opportunity to exploit because the person selecting (usually the Designer) and the person buying (usually the Buyer) are often different people.The selection and purchase are often two separate processes executed at different times. With digitalization the two processes, and the two people, can be bridged in a unique industrial way:
5. Change will accelerate, but don’t drink the Kool-Aid. In CDS’s view industrial distributors should focus their digitalization use on:
To do that work choose suppliers with proven ROI for other industrial distributors/suppliers. For example, these case studies may give you some ideas:
That’s our take, please let us know what you think below. As always, if you’d like our opinion on your situation or want see an online demo, call or click either button below: