Recently I’ve had the opportunity to chat with a dozen or so manufacturers and distributors about using a sales portal in their business strategy. We usually chat about the challenges they are facing, new changes in their industry and how the web seems to be the root of change. What I’ve found is that manufacturers and distributors are slow to adopting a web-based sales portals in their business strategy. I noticed a few common threads in the conversations.

  1. Few manufacturers and distributors are willing and ready to begin using the web as a tool to increase revenue and build better business relationships
  2. Few manufacturers and distributors are using advanced B2B marketing techniques like content marketing and persona development strategies
  3. Several of the manufacturers and distributors did not feel that “eCommerce” is an important part of their businesses future (yikes!)

To be honest, the last one shocked me. After pondering this for a few months I think I have a better understanding of why they are not thinking in this direction. It comes down to the fact that historically manufacturers and distributors, because of their size and the complexity of their business, are usually the last to adopt new technology. It’s simply difficult for them.

In this article I’m presenting several points about how the web is guiding business growth for the manufacturers and distributors that are adopting the technology (including eCommerce). Hopefully these points will help you understand where your business is heading and how you can make a gradual transition in the inevitable digital revolution.

General Consumers (aka, everyone) are now completely comfortable buying online

Consumers have been buying products online since the late 90’s. Granted, the folks doing the buying in the early days were taking a risk in utilizing new technology, but by 2005-2008 it became a very common part of daily life and many security measures were in place to help buyers feel more comfortable. Today buying daily-use items, diapers, gifts, technology or even ordering groceries is common. General consumers are accustomed to researching products online, reading reviews and educating themselves about their options before they make their buying decision.

This trend has bled into the B2B world. Because people are now accustomed to this process in their personal lives it’s now becoming an expectation in their business lives. If you can research which camcorder is the best option for your family, why not research which [insert big business product here] is the best purchase for your company. Also, data shows that when buyers find a supplier that utilizes web technology to help them make informed buying decisions those buyers develop a loyalty to that supplier.

Big business is now in the Early Majority stage of the web’s technology adoption lifecycle

Technology Adoption Lifecycle Graph

The technology adoption lifecycle bell curve described in Moore’s “Crossing the Chasm”

It seems to me that larger business organizations are shifting into the early majority stage of the technology adoption lifecycle. If your not familiar with this term it refers to the adoption path in which the masses begin using new technology.

Stage 1 – Innovators – the techies that have access to new technology before anyone else

Stage 2 – Then the early adopters – people who are excited to be the first person to use the new technology

Stage 3 – The early majority – people that adopt the technology once it’s proven and bug free

Stage 4 – The late majority – people that use the technology because it’s becoming main stream

Stage 5 – The laggards – people that use the technology because they have too

(I wrote another article about topic here)

It seems to me that the majority of business are now using web technology not only for marketing their business but also for managing operations and customer relationships. They are engaging with customers online, educating users, allowing purchases online and building business relationships.

However, this majority doesn’t include many manufacturers and distributors. They have a reputation for being “late to the game”. While most businesses are now utilizing web-based tools to increase efficiency, improve customer relationships and drive up revenue, this new territory is a bit “scary” and unknown to the manufacturers and distributors. Plus, they don’t seem to have the time to resolve the complexities of their business with web technology and they usually can’t invision the use of the technology in their business. They simply aren’t convinced that the investment of time and money will pay off.

There is some truth to their concerns. Simply put, building a web application to help manage a manufacturer or distributors business online is a lot of work. Very hard work. But the payoff is much more than many realize.

Once the web-based solution is in place, and running like a well-oiled machine, it automates much of the manual work that employees have been doing for years. Just imagine buyers being able to research products, build sales quotes, receive approval from management and place orders online without needing to call a sales representative. Imagine the hours that have just been saved for that sales representative. No more taking orders over the phone or educating customers time and time again about the products.

The commom argument to this point is “Well, our business and products are too complex. Buyers will have too many questions and our website can’t answer them all.” Enter the age of content marketing!

It’s all about content marketing

A recent survey showed that a staggering 83% of buyers use web tools like Google and supplier websites to research products and industry information. The suppliers that are early to the game are reaping the rewards of their effort, but how are they doing this? They are curating content about products and the industry for their buyers and potential buyers. Then using that developed relationship (gained through inbound marketing) to gaining new customers and new orders. They are doing this while developing stronger authority in the marketplace.

This isn’t a coincidence or a “secret sauce” tactic. It’s content marketing 101. For years marketing professionals and advertising agencies have been preaching that the glory days of advertising and media buying are over. Those tactics simply don’t work like they used too. Now, to win at the game, you must put your efforts into providing customers with high-quality information in the form of blog articles, white papers, product details, videos, podcasts, etc.

Again, this is “scary” new territory for most manufacturers and distributors but the companies that are adopting this methodology (Grainger and Supply House for example) are dominating the market.

“We can’t compete with Amazon,” they say…

Amazon Logo

Another complaint and fear that I heard from the manufacturers and distributers was “we can’t compete with Amazon”. Their prices are too low, their system is too good and their service is too fast. These are all valid points but they are missing one opportunity to surpass Amazon… knowledge sharing. Amazon is not in the business of helping customers find the perfect product. They are in the business of helping customers buy the product. Amazon is not interested in educating buyers. They just want people to buy from them. They are not an authority in any one market segment. They don’t have experts on their team that provide decision making wisdom to buyers. They don’t worry about these things and this is where you can beat Amazon.

The reason companies like Grainger and Supply House are doing so well on line is because their websites are designed and constructed to communicate and educate a very specific buyer persona. They are not only using the web to help users buy products, they are also using the web to help buyers become more knowledgable in the buying decision.

This is a hole in the Amazon strategy and one that should be exploited if you need to beat Amazon. Use your site to build relationships with your customers and gain their trust and loyalty. Price is a key factor in the decision making process, but it’s not the only factor.

Make your sales portal a knowledgebase to stay ahead of competition

Due to suppliers building their sales portals or B2B eCommerce sites as knowledge-bases they are providing their buyers the opportunity to use their sites as research tools. This is a great strategy and buyers love it. The problem is that now buyers are expecting this from all suppliers. This is a significant problem but it’s one that manufacturers and distributors have time to get ahead of now. I’d estimate that they have about 18 months (till late 2017) to take action on this opportunity. Losing buyers to more informative suppliers may be painful now, but imagine when the competition is so strong that catching up will feel impossible.

Additionally, if you’re thinking that your particular market is too big to be dominated by small companies just because they have a blog, think again. Read about the dilemma between 3D Systems (a large enterprise in the 3D printing space) and Formlabs (a small startup of young ambitious engineers). You’ll see a modern day example of David vs. Goilath. This story can be told over and over. Small businesses that are using the right web tactics are bringing big businesses to their knees and disrupting “old business” styles on a monthly basis.

  • Uber vs. the Taxi industry
  • Simple vs. the banking industry
  • AirBNB vs. the Hospitality industry, etc
  • Alibaba vs. you

(here is another article on Singularity Hub with more examples)

Conclusion

The future for manufacturers and distributors is bright as long as they begin adopting new technology soon. Building out web-based systems that include B2B eCommerce sales portals, knowledge-bases about products and the industry, and engaging with customers through their web channels are all important keys to succeeding online. There will be many manufacturers and distributors that lag behind the masses, and unfortunately they are the ones that may not make it far into the next decade. Don’t be in that group!


 

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