Distributors Beware: Online Companies Are Changing the Rules

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According to an article on CNBC.com, the “Amazon juggernaut sets its sights on its next victim: The middleman”.The article describes how companies that are in the business of distributing products are being squeezed by companies like Amazon because “sales in general are going to the internet”.

This makes it critical for “traditional” distribution companies to differentiate through adding significant value during the buying process, through exceptional customer service, and by having a strong online presence.

Based on our experience working and engaging with distribution companies, those that don’t face the realities of changing buying behavior, and the very real threat of online companies like Amazon, will be forced to compete strictly on price.

Their survival depends on dramatically changing the way they do business. “Back-slapping relationships” and product catalogues will no longer cut it.

You Need an Online Strategy – Fast

This competitive reality requires a thorough re-evaluation of the entire business: cost structures, customer service, salespeople skills, marketing, relationships with suppliers, logistics, etc.

From an online perspective, the things you absolutely must do to stave off this competitive threat are:

  • Optimize your online presence. You need to create an even playing field with the online companies with respect to your website, social media, database marketing, e-commerce, and online reviews.
  • Eliminate friction online. Make all the information prospects need to make a decision, including pricing, readily available online. Don’t give them a reason to go elsewhere to gather information.
  • Develop “strategic apps” designed specifically for your target market. These apps must create value for your customers’ businesses – online ordering, ROI calculators, product selectors, access to specifications/technical information, etc.
  • Make an ongoing commitment to provide your target market with educational content/subject matter expertise online that they deem valuable – industry trends, regulatory issues, case studies, etc.
  • Continue to dialogue/engage with customers using online means after the sale to create ongoing value by keeping them informed.
  • Execute a consultative selling/lead nurturing model supported by online tools – CRM and marketing automation.
  • Have “world-class” customer service supported by technology that facilitates this goal.
  • Engage in influencer marketing using online tools such as social networks.

Amazon

The bottom line is that if you are a distributor, you can’t bury your head in the sand and ignore this very real competitive threat. According to Reuters, Amazon now has 300,000 registered corporate buyers, and recently surpassed $1 billion in B2B sales. They are only going to get bigger and more aggressive.

It’s not all doom and gloom. The internet offers distributors an opportunity to extend their market reach, lower their costs, and create significant value during the buyer’s journey. There are no barriers with respect to technology; online tools are no longer cost-prohibitive, and are available to companies of all sizes.

Your advantage is your intimate knowledge of your market, your relationship with existing customers, your reputation/goodwill, and your relationships with suppliers.

But you need to take action. Companies like Amazon aren’t going away.

© 2017 Ben Molfetta is the co-founder of Core Online Marketing. He helps small and mid-sized businesses grow by planning, implementing, and executing winning online marketing strategies. Visit coreonlinemarketing.com or email Ben at ben@coreonlinemarketing.com.

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