The ecommerce tools that exist today have changed how distributors sell. But what’s the next wave look like? And how can distributors separate the hype from reality, especially when it comes to artificial intelligence (AI) in ecommerce?
Ian Heller, Co-Founder of Distribution Strategy Group, asked two industry experts their take on the current and future state of ecommerce:
- Dave Bent, Senior Vice President of Operations – eCommerce Division, ECI Software Solutions
- Jacobi Zakrzewski, Vice President, Luminos Labs
They highlighted four areas distributors should focus on in 2024.
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No. 1: Product Data
While many distributors are still experiencing challenges as they build their presence online, technology is no longer holding them back, according to Zakrzewski. “It’s easy to buy an advanced platform. But ownership is a common trap. History tells us it falls to the IT folks. But then IT ends up responsible for everything when maybe they should be the custodian.”
There are no technology projects, Bent agreed. “There are only business projects enabled by technology. But the business must champion and lead—and that’s happening more and more.”
One of the biggest challenges facing distributors is keeping product data up to date on their websites. A common problem is old product descriptions, images, part numbers and names. Given that ecommerce is only as good as the data behind it, making updates easier to execute is a problem that needs to be solved.
“To have great ecommerce, you must have awesome content,” Bent said. He suggested that distributors build technology partnerships to help update these systems. “I think a great example is a partner we use called Distributor Data Solutions (DDS), which focuses solely on working with manufacturers to assemble content and then passes it to the appropriate distributor. Obviously, the ecommerce partner must play a role in keeping everything linked. It’s been a major challenge, but I think it’s one the industry’s starting to overcome.”
Another question that sometimes arises: Who owns the data? “If you’re talking to 3M, for example, they own the base product data,” Bent said. “That has its challenges because the raw product data not organized into a taxonomy isn’t very valuable. If you create your own product data, that’s effectively within your ownership.”
Zakrzewski agreed, cautioning: “It can be a surprise when you decide to switch vendors and your old vendor says, ‘Hey, we actually own that. You can’t take it with you.’” Distributors must carefully review vendor contracts through the lens of data ownership. The panelists suggested setting an exit strategy even before signing a contract. “It’s all about risk management. It’s a great question that should be done with due diligence on the front as much as possible.”
No. 2: eCommerce Personalization
The level of ecommerce personalization in the B2C space changed the expectations of customers. They expect that to carry over into their B2B experience. But how much of that is possible — and how?
“The first step is all about customer segmentation. Who are customers? That can be difficult to define,” Zakrzewski said. He’s seen organizations segment customers based on how commissions pay out, but that rarely translates well into ecommerce personalization. But bucketing customers into market segments and then figuring out a sales and prospecting approach to these segments provides a certain level of personalization at a broader scale.
“For example, if I log into your website as an industrial customer, do I see certain categories? Do I see certain promotions? Do I get an added business value benefit because I’m a certain customer? Maybe I’m a platinum industrial customer where I’m allowed to do VMI. I’ve unlocked that capability because I spend millions of dollars with you.”
Key to this segmentation is, of course, the core integrity of ERP data. But there are also smaller, individualized personalization touches, such as greeting customers by name or branding their login screen with their corporate logo. But Zakrzewski cautioned: “At the end of the day, their personalization comes down to who they are as a customer and how you serve them with products and services.”
Bent agreed that personalization is one of the most important attributes of ecommerce that builds customer loyalty. “The more personalized it is, the more I feel I’ll go back there. But once you get past the basics of B2B, the number one ROI is getting existing customers to spend more with you.”
No. 3: Upselling and Cross-Selling in eCommerce
So, how do you get that extra transaction or add-on product or service sale, and can technology help you grow wallet share with existing customers? Zakrzewski said the first step is to determine the purpose of your digital footprint. “If you were to look at this holistically in your business, the off-the-cuff answer is to make more money. Generally, that may be true, but really, it’s not that. It’s a choice of three things: net new revenue, convert offline to online sales, or improve the customer experience.”
Zakrzewski believes that increasing website utilization is key to getting to the upsell or the cross-sell. Self-service portals that allow bill payment or credit management trigger a snowball effect where the customer says, “Oh, I also need this for a job tomorrow. I might as well get that while I’m here.”
But this creates problems around revenue attribution, which is much more complicated in B2B. The customer may be on the distributor’s website every day, building their purchase order. That doesn’t mean they actually complete the transaction on the website, however. If you’re measuring ROI of ecommerce by shopping-cart sales, you’ll miss these critical interactions online that build customer loyalty and drive sales offline.
Bent suggested developing a customer loyalty program. He described a medical supplies distributor in Canada who was inspired by The Home Depot. “They set up their own Pro Program in-store and online and were amazed by what it did with hospital groups and smaller dentists and doctors.”
Zakrzewski said ecommerce reflects the rest of your business. “It’s like you have transparent walls showing everything in real time. If you have an ecommerce or digital part of your organization siloed, it will feel siloed to the customer, too. While ecommerce is a channel, it’s more of a business partner operation and function than anything else because it touches just about every part of the organization.”
He suggested approaching an ecommerce site as a whole business entity, requiring clean data, clear expectations of the customer impact and your goals, and the right change management initiatives. Then, approach attribution with a deliberate set of metrics that track utilization beyond the cart.
“You start to see those numbers increasing, and a side effect is increased sales and customer satisfaction,” Zakrzewski said. “I love it when our customers say their core metric of success is utilization. I know that’s the right mindset versus just—we want to make double (the online sales).”
No. 4: AI in eCommerce
There’s no question AI is changing ecommerce—and we’re just beginning this journey. One of the first impacts has been in product data. Some distributors have also already used it to power product recommendations on their websites.
Bent said that leveraging AI to assist with copy should be every distributor’s go-to. “We implemented ChatGPT inside a blog article module on our platform. You can create a blog within the platform. You can write the question or the article title, ask for 500 words, say you want it funny or professional in tone.” But, he cautioned: “There’s a lot of hype around AI. There’s an obligation to work with your technology partners and engage in what they are doing.”
Distributors must weigh the vendor’s claim of AI against what the tool does. Zakrzewski said: “There’s a lot of vendors, there’s a lot of technology created every day. But I’m a stickler about identifying the problem space first and then applying the solution.”
He suggested asking AI software vendors to “show me under the hood a little bit” to determine what the application can do and how it can solve your problem.
Bent agreed. “I think much of it isn’t real. A lot of people are calling things AI that aren’t. I think the right question is to ask the vendor what pain points it could solve.”
Want to see the live webinar? Access the full conversation on-demand.
