- 16th April 2018
- Posted by: Manolis
Customers continue to seek out a one-stop shopping experience – paired with a high level of service. Their expectations are increasing for a seamless supply chain and technologically sophisticated suppliers. How will you respond? As we move further into 2017, keep these five recommendations in mind as you plan for growth in this increasingly complex and competitive market.
1. Strategically diversify.
Distributors looked to new product categories during the Great Recession to grow customer spend and increase market share in a tough market. Since then, that rush to diversify has been tempered somewhat, but it remains a viable and important strategy today, especially for customers that want to improve their own efficiencies by consolidating suppliers.
Distributors big and small are refining their approach to diversification to ensure profitability and stickiness with important customers. A broader product offering may also provide an in to new customers.
To accomplish this more cost-effectively, distributors are taking advantage of resources such as master wholesalers, which can enable access to new categories or even the ability to go deeper into a product category at a lower cost. For example, many distributors sell abrasives. But in some cases they may only sell the fastest-moving, more commoditized abrasives and don’t sell more deeply into a supplier’s portfolio unless they specialize in that. A master wholesaler can help them expand that offering without the inventory investment.
2. Optimize your logistics.
Customers’ expectations for supply chain efficiency were built in the age of Amazon. In other words, logistics capabilities are no longer a differentiator. How can you ensure your supply chain is up to par with the competition?
Part of this is streamlining your own operations and identifying how you can reduce your cost to serve individual customers. Work with your channel partners to save on shipping by consolidating orders and invoices, and take advantage of drop-ship opportunities offered by master wholesalers. Embrace technology to automate processes that you may be doing by hand right now.
Don’t try to do everything at once. Identify low-hanging fruit and start improving the customer experience right away.
3. Make data-based decisions.
Data-free decision-making is like shooting blind. You may hit the target, but you’re far more likely to hit air. At AgoNow, we have prioritized the use of leading-edge market analytics to help distributors and manufacturers identify new opportunities for growth.
So before you even start diversifying offerings or optimizing operations, take a look at the numbers.
Analytics can provide you with the current state of your business – a good starting place – and then help you identify opportunities to improve efficiencies or sell more, whether to existing customers or new ones. Data such as that provided by MDM Analytics, which gives visibility into industrial product markets with market-size estimates and targeted prospect lists, provides direction for your sales and marketing teams so that you can build a strategy based on what the market really looks like, versus what you think it looks like.
Analytics gives your team a solid foundation to stand on. It may take work to parse the vast amounts of data now available, but the time and money invested should yield ROI several times over.
4. Embrace technology.
More and more distributors are implementing technology to improve efficiencies and sell more. But the technology adoption rate in industrial distribution is still behind that of many other industries. The challenge: These days, customers expect certain capabilities, and e-commerce is fast becoming one of those.
This doesn’t mean you have to have an Amazon-like platform, which may not fit your business model. Instead you need a platform that will reflect your relationship with your customers. Invest in online capabilities that support your value proposition and meet customers’ expectations – for example, the ability to review product offerings, reorder or check your order status. Make it easy for customers to do business with you. The web has become a primary source of information for B-to-B customers, and if you don’t have what they need, they may move on to your competitor.
This transition isn’t easy, but distributors do have resources available to them. Choose a technology partner that wants to grow with your business. Work closely with your channel partners to ensure you are taking full advantage of the data and marketing services they offer. For example, AgoNow supports e-commerce site hosting and management, content syndication, order management and even digital marketing for our distributor partners.
5. Do what you do best.
It’s long been a strategy credo that you should focus on your core and outsource the rest. In an era where nearly two-thirds of industry buyers are already buying some of their product direct from manufacturers, according to a 2015 UPS study, understanding your core value proposition is more important than ever.
Distributors have many tools available to them to respond to today’s market forces, but they don’t always have the resources to take advantage of them. Don’t go it alone. Seek out partners that can help you meet customers’ needs, operate more efficiently and ultimately grow your business in 2017.
Larry Davis is chairman and CEO of AgoNow, a Tulsa, OK-based pure industrial master wholesaler and channel solutions provider. Learn more about AgoNow at agonow.com. Before co-founding AgoNow, Davis served as the executive vice president and chief commercial officer of Stellar Industrial Supply, an industrial distributor based in Tacoma, WA, and as president of ORS Nasco, Tulsa, OK.