To get a broad look at how the novel coronavirus is impacting distributors and wholesalers, Digital Commerce 360 B2B talked with Karie Daudt and Justin Racine, senior commerce consultants at digital transformation consulting firm Perficient Digital. Daudt and Racine each have many years of experience working with distribution, wholesale and manufacturing organizations.
Q: How is the virus pandemic impacting distributors and wholesalers as a group?
Daudt: The reality is that distributors and wholesalers with ecommerce in place are managing better than ones without. The high demand is making it challenging for companies that underinvested in the digital channel in the past. Even digitally mature companies are having to make changes to adapt to demand.
We believe that this is going to change the go-to-business model in the future, as everyone has not had to adapt to online buying. We are seeing ecommerce sites with a higher than normal demand slow down or almost stop. We are seeing an influx of companies looking for assistance in addressing this demand. Everyone is doing the best they can and adapting to meet the challenges of the current situation.
Racine: It’s causing major disruption daily for distributors, specifically for those who sell personal protective equipment (PPE) products. The large challenge here is that you have various government agencies, both local and federal, trying to procure these hard-to-find items anywhere they can. Think of it this way, a hospital normally purchases their supplies from a distributor, but that distributor is now competing with government agencies to acquire the product.
The problem with this approach is the inconsistency that is created to the hospital, as they really don’t know when PPE items will arrive. If government agencies are grabbing products before the distributor can, the hospital really doesn’t have clarity on when and where items will come from, which is what we are on the news more and more.
Q: How is the coronavirus impacting their B2B ecommerce operations?
Daudt: It is really an interesting question, as we are seeing that the impact is all over the place. We have distributors that sell safety equipment and that are on reduced hours because the most needed products are not available from their suppliers. We are seeing industrial supply distributors busy as heck, supplying components for machines to make in-demand medical supplies. However, it varies by market, financial position, organizational philosophy and B2B ecommerce maturity, to name a few. We are seeing sites with a higher than normal demand slow down or almost stop. We are seeing an influx of companies looking for assistance in addressing this demand. Everyone is doing the best they can and adapting to meet the challenges of the current situation.
Racine: Products are being hoarded, there is no questioning that. However, there are other subtle areas that are in play here as well. Website performance can be hindered due to the increased amount of traffic. Customers may be struggling to find products due to lackluster on-site search experience. One of the largest challenges ecommerce organizations will have is pivoting to support new delivery styles that typically they haven’t before leveraged. Customers are looking to request curbside delivery with no human contact. These workflows and delivery methods will need to be built and accounted for on B2B ecommerce platforms to support this “new normal.”
Q: What impact is the coronavirus having on supply chain partners? With some manufacturers idling plants, some distributors are seeing MRO sales fall off.
Daudt: As with every aspect of this situation, it varies by market. MRO or non-essential markets are being adversely impacted. Other essential markets including medical and food supplies are stressed but very active. We have seen some manufacturers pull back and delay investment, while others anticipate opportunity shifting online and are actually considering additional investment to meet the new demand.
We believe that this is going to change how everyone thinks about digital commerce in the future. We are seeing companies ask us to help build their business case with digital so they can start the process when this all settles down. We are seeing some interesting markets experience an increase in demand right now that we would not expect.
Q: Are you seeing more distributors close down physical locations and switch to digital sales?
Daudt: We have seen differing responses. In some cases, organizations are “hunkering down.” Others, potentially those with stronger ecommerce businesses and platforms, see this as an opportunity to secure new market share or shift more online. We have heard of some companies going out for loans to help with cash flow right now. We are seeing a lot of distributors add people as they are shipping essential items in essential markets.
So this is not a one-size-fits-all situation. We do see companies making investments on their existing commerce sites to address the concerns around demand and supply. We are seeing companies add messaging that helps people navigate through the site and to gain a clear understanding of limits and availability. We are seeing companies take orders for back-ordered items now that they haven’t in the past. We are seeing more investment around search tuning and SEO to drive traffic to their sites. We are seeing distributors start to expand their efforts into new markets.
Racine: I’m personally not seeing many facilities close. Items still need to be picked, packed and delivered. I am seeing them leverage more digital, as healthcare sales associates are being restricted to access their customers’ facilities.
Q: From an ecommerce perspective, what are the biggest challenges distributors face dealing with the coronavirus and how are they overcoming them?
Daudt: Supply chain disruption is a very real problem. Additionally, uncertainty leads to concerns regarding ongoing investment. The single universal issue is uncertainty, which leaves many wonderings what they should be doing. The availability of products is going to continue to be a big issue, simply because no one knows when this is going to end.
Everyone is making decisions and pivots based on new information and changes in demand. We do see companies making investments on their existing commerce sites to address the concerns around demand and supply. We are seeing companies add messaging that helps people navigate through the site and to gain a clear understanding of limits and availability. We are seeing companies take orders for back-ordered items now that haven’t in the past.
Racine: This crisis has exploited various holes in ecommerce functionality that previously may not have been noticed. Things like delivery-specific instructions and product-ordering limitations will remain at the forefront, but some of these challenges I see as opportunities. For example, healthcare distribution companies likely have new regulations that have to be met by delivery drivers when they are dropping product off at a facility.
Most facilities are likely limiting delivery to only essential vendors, including medical supplies. A healthcare distributor should look to leverage in other product categories if possible. Facilities still need other products like foodservice items, office supplies, etc. If distributors can build out these catalog of products and offer them up to facilities in addition to their core products they may be able to pick up new business and help facilities do what they do best—serve and save patients.
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