When companies start to really give B2B e-commerce the deep consideration it deserves—and this is usually after a couple of years of wading into the e-commerce waters—one significant consideration is sales channel conflict. A question that typically surfaces within companies is, “How do we manage our e-commerce initiatives, given almost all of our sales today occur offline via the phone or in person?” Another is, “Won’t our distributors and resellers feel threatened if we start selling direct to customers online?” While the answers will vary for each company, the goal here is to shed some light on possible solutions.
The start of one’s e-commerce journey is usually filled with mixed emotions. On one hand, it’s really exciting to be embarking on this adventure that will shape your company for the coming years. On the other hand, this can generate confusion and fear because it’s an area where the details are not familiar to a vast majority of employees. It is one thing to say your company is going to start its e-commerce journey, but the process is complex and requires experienced decision-making which often presents a challenge for many companies given their lack of familiarity with e-commerce.
While at times the initial inclination is to jump into the fray, taking a more measured approach should have longer-term benefits. Acknowledging what’s unfamiliar is an obvious place to start, but given human nature, this doesn’t always happen. As a result, a crawl-walk-run approach is advised. That being said, it’s critical to ensure that your company is actively trying to reach the run stage, overcoming the tendency to get too comfortable in the crawl and walk phases, and is aware of what its competitors and the leading e-commerce companies are doing, as Braden Kelley, a founder of the online community Innovation Excellence, writes in “Flaws in the Crawl Walk Run Methodology.” While pace matters, companies don’t want to be rushing down a suboptimal path, so some balance should be struck between planning and pace.
A useful example is a company looking to launch or refresh its e-commerce efforts. The run inclination tends to take hold to stand something up as quickly as possible, but more often than not those types of releases aren’t sustainable and usually the initial e-commerce effort needs to be overhauled in two to three years once the company’s e-commerce maturity level grows. Benchmarking against best practices (e.g., Amazon, eBay, etc.) is a great way to do some initial planning. The example we will focus on is the product catalog.
Oftentimes companies rush to launch a website with several hundred or a thousand or more products, but by focusing on the near term they frequently lose focus on the long term. The product catalog is one of the most critical components of an e-commerce site, and one of Amazon’s many competitive advantages, so time should be spent laying out the details of what a product detail page should look like as well as enabling the database call infrastructure before it’s rushed into production. And different product categories will require different product detail page templates, so taking into consideration the unique characteristics of a product category is also important. While it’s not critical to have everything is 100% perfect out of the gate, this type of planning up front will eliminate a great deal of rework down the road and set companies up to be able to greatly and more quickly expand the number of products they are able to make available into the tens and hundreds of thousands via their e-commerce site.
And as your company begins its e-commerce journey, it should look at its overall sales channel strategy and define objectives for where e-commerce fits in to the overall mix. In the early years, e-commerce rarely makes up 5% of a company’s revenue, but as that likely won’t be the case long term, integrating e-commerce into your existing sales channel mix sooner rather than later is necessary. Customer experience is more critical than ever today and because customers now engage with companies in a variety of ways that can’t be dictated (e.g., in person, via the phone, online, mobile, etc.) it’s crucial to ensure all sales channels support the customer’s buying decision. For instance, it’s highly probable that your customers research products online before purchasing offline, as Forrester Research analyst Lori Wizdo has noted in her report, “Myth Busting 101: Insights into the B2B Buyer Journey.” Making sure this cross-channel integration is in place ensures a smoother customer experience.
If a company depends for a significant portion of its sales on distributors and resellers—,but then makes the decision to go direct—this will likely be interpreted by partners as a direct challenge if they aren’t informed ahead of time. At a minimum, discussing your company’s plans with your channel partners to get their input makes sense, given their historical support of your company. While conflicts in strategy can and will arise, attempting to bypass and not include your distributors and resellers in the process will likely only heighten any tension.
In the vast sea that is the internet, today there are more than 1 billion websites and the number keeps growing, so having just a single website selling goods and services makes it far more challenging to compete in a networked world. No different than in the physical world, it’s easier to have an ecosystem supporting you online, so embracing your distributors and resellers into your e-commerce initiatives is a logical step.
One option for increasing the number of e-commerce sites selling your products is to offer your channel partners an e-commerce platform for selling online that shares your infrastructure. If that’s a consideration, then it’s wise to make sure your e-commerce platform provider can offer this capability—another example of where some up-front planning can pay big dividends.
Another approach that doesn’t directly include channel partners is to launch multiple e-commerce sites. Wolseley PLC comes to mind as a seller using this strategy, with its e-commerce sites ranging from Ferguson.com to Build.com and several others.
Determining the most effective path forward for your firm requires some planning, and if you haven’t started in earnest, get moving. It’s likely your competitors already have. And with Amazon, eBay, etc., moving aggressively into B2B selling, new competitors are emerging all the time.
Companies selling to other businesses need to start accelerating their e-commerce efforts or run the risk of being left behind by competitors. Thinking through how to best integrate your sales channels and including your distributors and resellers in your planning up front will generally lead to better outcomes for your company.
Bill Davis is Innovation & Transformation Group Domain Consultant, E-commerce and Cross Channel Strategy and Execution, at Tata Consultancy Services. Davis has worked in e-commerce for more than 20 years, and was involved in managing what was reported to be the first secure online purchase transaction in 1994 while at NetMarket, an online marketplace. In other roles, he has worked on an in-store location-based mobile messaging service focusing on retail loyalty programs that leveraged passive RFID as well as other technologies. He has also worked on projects involving people, processes and technology for companies including Lowe’s Companies Inc. and Microsoft Corp. He can be reached via [email protected], on Twitter @Omni_is_Retail and on LinkedIn.