Based in the Iron Range of northern Minnesota, with its early-‘80s roots in selling industrial-grade gear to mining companies, SIM Supply Inc. has gone through multiple changes to become the diversified and multichannel distributor it is today.
“We started carrying products that miners use night and day, above the quality level of regular products that consumers use,” says Joe Caldwell, ecommerce strategist at SIM Supply. For example: a Streamlight Stinger flashlight that sells for about $140 and can light up an iron ore miner’s job site like no conventional flashlight. “It’s hard to describe how bright these lights are,” he says.
SIM’s focus on high-quality products has since evolved into more categories—while selling through more online channels—as it has also expanded into serving consumers along with industrial buyers. “That awareness of quality stuck with us, but we now sell a wide range of products from low-end to high-end consumer and industrial products,” Caldwell says.
Shifting between B2B and B2C
The company, located in Hibbing, Minnesota, shifted years ago from a 100% focus on industrial customers to concentrating more on sales to retail consumers, which at one point accounted for about 75% of sales. But with increasing demand from businesses and government agencies—including recent growth in sales to healthcare organizations and municipalities as well as ongoing sales to iron ore mines—SIM in recent years has moved its customer focus again, to a 50-50 split between business and consumer sales.
Much of its sales now come through online marketplaces, reflecting a sales and marketing strategy designed around online B2B and retail commerce venues including Amazon Business, NeweggBusiness, Google Express, Walmart and Jet.com. SIM also sells through its own ecommerce site, SIMSupply.com, telephone orders and electronic data interchange.
SIM provides more than 90,000 products online from more than 9,000 manufacturers and suppliers, covering such categories as maintenance, repair and operations (MRO) products, building materials, industrial safety equipment, janitorial and sanitation supplies, material handling equipment and automotive parts.
Many of SIM’s business customers still call or email in their orders or use EDI, putting its B2B ecommerce orders at about 10% of total B2B sales, Caldwell says. But SIM’s sharpest growth of late has come through online marketplaces and its recent efforts to expand its number and range of products sold through them. SIM doesn’t release revenue figures.
Building B2B online sales
For increasing online B2B sales, SIM has focused on Amazon Business, the B2B portal on Amazon.com, and NeweggBusiness.com, where it features such products as a Nitecore headlamp. NeweggBusiness is the B2B counterpart to retail electronics marketplace Newegg.com.
For the past several years, SIM has worked with ChannelAdvisor Corp., a provider of marketplace services, to help manage and grow its presence on Amazon Business and other marketplaces.
But to increase its online B2B sales, SIM has been relying in the biggest way on Amazon Business, Caldwell says. “Amazon Business is definitely where we spend the majority of our time increasing B2B sales,” he says.
Selling on Amazon Business has its challenges, but so far the advantages have outweighed any difficulties, he adds. SIM operates on Amazon primarily as a third-party seller, rather than selling its inventory to Amazon and making it the seller of record who fulfills the order.
Amazon Business advantages
Compared with selling on the general marketplace on Amazon.com, the main advantage of selling on Amazon Business—which Amazon says provides accesss to hundreds of millions of products and hundreds of thousands of business sellers worldwide—is the ability to offer business customers tiered pricing based on order size, Caldwell says. SIM uses tiered pricing to win over customers with volume discount pricing as well as by offering “white glove” product delivery and installation services at higher prices.
In addition, SIM can view information on the product categories Amazon Business customers order, helping it to better plan its inventory levels. Amazon Business also provides such features as the ability to sell to only certified businesses, integrating with procurement software systems and processing payments with electronic invoices.
The disadvantages of selling through either Amazon Business or Amazon.com include an inability to market directly to the customers who order from it through Amazon, and the likelihood that Amazon itself may win the Buy box on a product-search page with a lower price on the same product that SIM is offering to sell, Caldwell says. (On an Amazon page listing multiple sellers of the same product, the Buy box highlights the seller that Amazon’s ecommerce software determines to have the best overall offer, including such criteria as shipping terms and product price; customers more often than not choose the seller in the Buy box over other sellers.)
But that doesn’t outweigh the advantages of Amazon’s high volume of customer traffic—and the ability to find other ways to win sales, Caldwell says.
Winning back the Buy box
“If Amazon sees a trend for a hot item, they may buy the item at a price where they know they can beat us,” Caldwell says. “But even if they get the Buy box, we don’t drop the listing. Because if we keep at it with good products, prices and service, sooner or later we get the Buy box back.”
One way sellers tend to win the Buy box is by fulfilling orders quickly through Amazon’s Fulfillment by Amazon program, which uses Amazon’s logistics and network of distribution centers. Although SIM declines to use FBA, it uses its own distribution operation and abides by Amazon’s shipping standards to ensure 2-day deliveries. That clears SIM, under Amazon’s Seller-Fulfilled Prime program, to use the Amazon Prime (or Amazon Business Prime) moniker on its expedited shipping service, helping it to win the Buy box, Caldwell says.
“Amazon won’t tell us the magic bullet to get the Buy box, but in my mind, if everyone is selling the same item and you are the only one with Seller-Fulfilled Prime or FBA, even if you don’t have the lowest price, you get the Buy box.”
Moreover, there are plenty of opportunities to stand out as a seller in ways that Amazon can’t, while still benefitting from Amazon’s marketing efforts to drive high volumes of traffic to Amazon Business and the other sections of Amazon.com, Caldwell says.
Multiple ways to gain business
“Even if Amazon is beating you up on price, there are still ways to win sales,” he says. Sellers can figure ways to offer services that Amazon doesn’t, such as repairing or calibrating tools, for example. And small businesses, including those owned by women, veterans and minorities, can win sales from buyers looking to purchase from them rather than directly from a large seller like Amazon.
Exposure on Amazon has also brought SIM unexpected benefits, Caldwell says. “Amazon Business has had a pretty interesting effect on our business,” he says. “We get a lot of manufacturers who look at the products we sell on Amazon Business. They call us to say they offer similar products and ask if we’d sell them, and we have developed good distribution contracts that way.”
Customers on Amazon also weigh in with suggestions. “Customers have told us we need to sell more products on Amazon,” Caldwell says, adding, “They may have a rewards program they use on Amazon, and want to use their points to purchase more of our products.”
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