by tradesmeninsights | May 3, 2016 | Marketing Tips, Marketing Tools, Marketing Trends, Traditional Marketing
By John Sonnhalter, Rainmaker Journeyman, Sonnhalter
We’ve had conversations here before about independent industrial distributors missing sales opportunities by not keeping up with the latest technology available.
I see that Industrial Distribution magazine is doing a webinar on this very subject on May 18th; you may want to sign up for it or suggest some of your independent distributors who are still lagging behind get in the game. Jon Eames from NH Bragg and Jack Templin from Affiliated Distributors will be contributors. Here’s what they will be covering:
Industrial customers are asking suppliers of all sizes to offer a highly functional e-commerce-enabled website. So how do smaller, independent distributorships take the first steps:
- Review ways independents can get in the game of e-commerce without breaking the bank.
- Hold true to their business objectives while developing an e-commerce strategy.
According to Forrester Consulting, a 2014 study shows that 52% of business buyers expect at least 50% of their purchases to be made online in 3 years’ time. This should be an eye opener for distribution, but some are ignoring the facts. The big boys like Grainger (40% of their sales are from the internet) and MSC Industrial (over 50% of their sales come from online) are certainly taking advantage. Shouldn’t that set the tone for the independents? Forrester forecasts that B-to-B e-commerce will exceed $1.1 trillion and comprise 12% of all B-to-B sales by 2020.
I’ve said in the past that for smaller industrial distributors to survive, they need to use the internet. They can’t count on the business model of contractors coming in at 7 in the morning or around lunch time to pick up what they need. Time is money, especially for them.
Industrial Distribution magazine recently released some research on The state of B2B e-commerce in Industrial Distribution. Here are some highlights:
- Independent distributors are slow-moving in implementing e-commerce programs.
- Technical challenges are making sites user-friendly, making it aesthetically appealing and staying ahead of the competition.
- Primary reasons of not engaging online was lack of demand, technical obstacles and lack of marketing/promotional resources.
Customer satisfaction and the customer experience are the key factors in developing an online presence. Ironically, that’s how the independent distributor built their business in the first place. Now they just need to transfer that to a different platform not only to keep existing business, but to grow additional revenue.
Source: Industrial Distribution
My worse fear is that the Amazons and the Alibabas of the world are going to make the independent extinct in a few years. I understand that the AD buying group has just instituted a new program to help members deal with some of these issues. It’s too early to tell if it’s making an impact, but at least they recognize the issue and are trying to help.
If you like this post, you may want to read:
What’s the future of small independent industrial distributors?
Are independent industrial distributors helping Amazon to succeed?
Distributor Strategy: What’s yours?
by tradesmeninsights | Feb 18, 2015 | Uncategorized
I recently read an article in Industrial Distribution Magazine by Justin Roff-Marsh that basically said that the industrial distributor field salesman, as we know it, is DOA.
I don’t know what planet he was born on, but it wasn’t this one! If he was, he would realize that to survive against the big national brands, they must have a unique selling proposition and a strong brand promise.
Granted, if you’re a general line house, your survival rate isn’t good. But most distributors today focus on either a market (Electrical, Plumbing, Construction, etc.) or in specific disciplines like power transmission, cutting tools or industrial hose and fittings. They become experts in that field and customers depend on them for not only product, but advice. This is how they can compete with the Biggies like Grainger and Fastenal.
Speaking of the big boys, who’s going to tell them to stop opening more brick and mortar stores and by all means don’t hire any salesmen!
If this guy did his homework, he’d know that in these models, a lot of their customers come to them. I bet he’d be surprised if he were to walk into a STAFDA, electrical or plumbing wholesaler between 6:30 and 9 any morning, that he’d have a pretty good chance of being run over by customers picking up stuff. And they’re not just picking up an order, they’re talking with counter people on how to solve a particular problem. What’s that worth?
Granted, the role of field salesman has changed over the years, and I don’t expect anyone makes cold calls anymore. But the seasoned field salesman is worth his weight in gold. He’s aware of his surroundings as he walks through a plant or construction site identifying opportunities for new sales. You can’t do that on a phone call or an email.
Years ago, I was making a sales call with a salesman who was called into a customer who was having some production problems with cutting tools. I was amazed as this salesman walked onto the shop floor and walked directly to the CNC machine that they were having trouble with (without even being told ) by just listening to the sound of the machine. He suggested a few adjustments to the feeds and speeds and the problem was solved. The point is, they don’t teach that in college or anywhere else. It comes from experience.
I guess the point I’m trying to make is people still like to buy from other people. If you have value and can help them do their job better, you can bet they’ll make time for you. Look at independent buying groups like Affiliated Distributors or NetPlus Alliance. Each year, they post strong sales growth despite the growing competition. I’ll bet field salesman come into that equation somewhere.
by tradesmeninsights | Jul 2, 2014 | Marketing Tips, Traditional Marketing
In the B-to-B world that I live in, manufacturers have to balance their time and efforts when dealing with distribution, between the big boys like Grainger ($9.4 billion), Fastenal ($3.3 billion) and MSC ($678 million), and the independently owned small local distributors.
Here are a few facts about the independent distributors (ISA) that you might not have known:
They collectively represent about $153 billion in sales.
AD (Affiliated Distributors) members do about $25 billion and NetPlus Alliance more than 5 billion in sales.
Now I realize they need to sell both. The strategy and support for a big player is much different from that of the local independent distributor. Let’s look at the different personas of both.
Big Boys.
- Sell lots of stuff.
- Beat you up on price and delivery.
- Are more order takers than problem solvers.
- Most are high maintenance from a customer service perspective.
- Sales staff turnover high – most use sales as a stepping stone either inside that organization or for a position elsewhere.
- Because of the high turnover, it’s hard to train and build a relationship with them.
Independent Distributors.
- Collectively they sell more than the big boys.
- Usually you can make more margin.
- Are usually problem solvers not order takers (that’s their value proposition).
- Lower maintenance from a customer service perspective.
- More stable sales staff.
- Have actual relationships with local customers
- Able to train and build relationships with sales staff.
Logic and sometimes management says that we need to focus more time on the big boys as that’s where the biggest potential is.
Here’s a challenge for you.
Let’s take Fastenal for example. They have over 2,000 branches in North America. Besides calling on corporate, how many of the branches are stocking your product? What’s the average sale per year per branch?
Now look at the number of independents you sell to and what is the average annual sales for those that stock your product?
I think what you might find is that the independents will be outselling the big boys.
Now the next question is, what percentage of your sales teams times are being spent on both groups.
For those of you who do the exercise, I’d be interested if your results are similar to what I’m suggesting.