Scott Benfield, principal of Benfield Consulting, sees the rapid growth of e-commerce as an unstoppable trend, but also as an opportunity for distributors to boost the efficiency of their operations, protect market share, and acquire new customers. He recommends careful planning to avoid “digital washout”—that moment when you’ve invested heavily in building a modern-day customer experience, only to find that no one is using the new system and it isn’t generating sales.
In this interview, Benfield traces three trends behind the e-commerce explosion.
1. Better Software
Software has improved dramatically since the early days of web ordering, but Benfield says distributors still need four separate packages to deliver a good customer experience: a transaction module that monitors orders, status, and finances, a product information management (PIM) system to populate a distributor’s content management platform, faceted search software, and a procurement management or punch-out system that allows a customer to search the distributor’s catalogue and place an order on their site.
Most systems are sold à la carte, and that’s a problem for mid-sized companies, Benfield says. The software itself is pricey enough. But the cost of combining the components and integrating them with in-house systems makes for an even more expensive proposition.
“That bundle is a real concern for mid-sized companies right now,” Benfield says, “and it’s also a concern for the enterprise systems.”
But “as you would expect, software is getting better for the mid-market. Products are getting developed that answer the need for companies like TUG members.”
2. Integrated Platforms
Some of the newer enterprise systems are beginning to bundle two or more e-commerce components into integrated platforms that aren’t quite perfect for distributors—but Benfield says they’re getting there. Some vendors are also introducing unique features—like one transaction module, developed in California and embedded in a cloud-based enterprise system, that has top ratings.
Another breakthrough in the making: Most e-commerce platforms require duplicate databases, rather than relying on the existing one in an ERP. But a vendor recently entered the United States with a product that dovetails nicely and cost-effectively with databases in SAP, Microsoft, and a couple of other large ERP platforms.
“You buy the ERP, and the e-commerce platform is fully integrated, so there is no duplication of data,” he says. “Most people I know will buy that.” With new and better options hitting the market every day, Benfield is convinced that costs will continue to come down.
3. Avoiding Digital Washout: Integration with Workplace Practices
It’s a story TUG members know well: Any new software package is only as good as the implementation and support plan behind it. Digital washout is what happens when software is acquired without a plan and fails to deliver results. “It’s a problem when wholesalers don’t transform their organization to use the software,” Benfield warns.
The disconnect could be as basic as not having a plan to migrate existing customer accounts to the new system. “Yeah, I’m serious,” he says. “I’ve seen it happen.”
With a sophisticated new e-commerce system in hand, a company shouldn’t miss the moment of opportunity to rearrange its sales and redeploy its sales force to make best use of the technology. By measuring and categorizing accounts by net profitability, distributors can separate out the more marginal customers and hand them over to the e-commerce system. The sales rep cuts the frequency of his or her follow-ups, leaving more time for the highest-value relationships and customer segments.
E-commerce also opens the door to operational efficiencies, from shipping policies and costs to the location of warehouse hubs.
Across the board, “you have to sit down and plan it out before you go online in a big way,” Benfield says. “People are going to compare you against the leaders out there, the Graingers, the Amazons, and your functionality has to be as good as theirs in what you do.”
For more bright ideas on e-commerce, register today for TUG Connects! 2016, February 14-17 in San Antonio, Texas.