Get Ready for the New Abnormal
Despite the many columns and webcasts predicting distribution’s post-pandemic “new normal,” it’s going to be a long time before our industry settles back into a rhythm. For now, expect a “new abnormal,” where powerful forces will continue to transform the industry and redefine how you must compete to win.
A crisis is a catalyst for change that was happening anyway
For those of us who worked in traditional settings, social distancing forced us apart, driving us into basements, spare bedrooms and home offices. That created a great scramble to acquire new tools and skills:
| Tools | Skills |
| Home office configuration Laptop CRM software Dual monitors Bluetooth headset or speaker Web conference software |
Meet virtually Make virtual sales calls Shop & buy more online Manage intertwined work/personal life Manage employees working remotely |
Lots of workers had these tools and skills before the crisis but the number skyrocketed when governments announced “work from home” rules. And, before the crisis, I heard many executives express a preference for bringing employees together in an office building vs. allowing them to work remotely.
When the crisis passes, many people will rejoin the crushing morning and evening commute that was the old normal so they can cluster with their teams in cubes, offices and conference rooms again. But companies will become more open-minded about considering remote workers, and all of us will find our experience with “work from home” has driven lasting changes in how we get things done – and alter the competitive landscape at the same time.
Here’s what will change.
Channel shift to digital has greatly accelerated
Did you have great digital capabilities before the pandemic? You know:
- Wide assortment online
- Robust and complete product data
- Images or multiple images for all products
- Detailed technical information
- Strong search function
- Swift and easy checkout
- Full integration into your ERP, including availability and customer-specific pricing
- Order confirmation, tracking and delivery confirmation
- Easy list-building
- Request for quote functionality
- Workflow to allow order routing for approval, etc.
- Integration into eProcurement systems
- Automated fax-to-order capability
If so, you picked up share. If not, you lost it. Even for customers who have long been skeptical of online purchasing, the coronavirus crisis has given them no option – they’ve had to get digitally competent. Now that they’ve gained new skills, more of their purchasing will come from online suppliers than before. Do you think they’ll give you all their business when times are “normal?”
Their business isn’t coming back because “normal” isn’t coming back – distribution’s going to be abnormal for a long, long time.
Virtual Work is now a permanent reality
Now that the employees of suppliers, distributors and customers are armed with the tools and skills to work remotely, the proportion of worker hours spent in corporate offices is going to drop noticeably. The trend was moving in that direction, but like I said, a crisis accelerates change that was going to happen anyway. It’s time for you to adapt to a world in which:
More training moves online
From manufacturers to customers, all companies are going to spend less on in-person training. Now that so many employees are used to working online and have the tools, why not do more training webinars and videos?
Virtual meetings become more common
You have to run virtual meetings differently, in my experience. You need more structure and process – for one thing, it’s more disruptive for someone to arrive late to an online meeting than to sneak into a conference room and mouth a silent apology to everyone.
Sales and Account Management won’t be as “face to face”
I bet some of your salespeople worked hard to learn how to sell from home. But they didn’t have any choice – even AMs willing to make calls often discovered their customers weren’t working in the office. Now that sales reps and their customers have learned how to work from home, they’ve no doubt discovered some advantages. That means they’ll work from home more often.
Pro tip: The better the digital menu your customers can use, the more effective your salespeople will be in a more virtual work environment.
Marketplaces (many sellers) took share from everyone else
Can you imagine how many businesses started or increased their buying from Amazon and Amazon Business in the past 90 days? While many companies were laying off employees, Amazon was hiring 175,000 workers to respond to surging demand during the pandemic. Of course, Amazon’s phenomenal growth is nothing new – what’s unprecedented is the company’s extraordinary performance while the rest of the economy seems to be tanking.
Here’s a little perspective on the size and growth of marketplaces in the U.S.:
- In 2019, Amazon’s revenues were more than six times larger than the sales of Graybar, Fastenal, Grainger, Beacon Roofing Supply, HD Supply, MSC and Watsco – combined. Additionally, Amazon grew its 2019 revenues by more than $47B. That’s 20x more sales growth than those seven distributors combined.
And that was before the pandemic. They probably picked up even more share during the crisis.
Marketplaces appear to be replacing company-specific websites for online commerce. If you don’t have a marketplace strategy, you are strongly disadvantaged. That doesn’t mean I think you should sell everything you carry on Amazon Business or Walmart.com – there are significant risks to such an approach. But distributors must consider marketplaces in their strategic planning. Are you?
Welcome to the New Abnormal
As these changes sweep through the distribution industry, the competitive landscape is changing in real time. You need new capabilities, processes and skills because the “new abnormal” will be much different than the old normal. Distribution leaders must consider how the world is changing and how they should adapt their companies to stay ahead of competitors.
Let me know if we can help.
As always, we welcome our feedback. Please feel free to post a comment below or you can email me at iheller@distributionstrategy.com.
Ian Heller is the Founder and Chief Strategist for Distribution Strategy Group. He has more than 30 years of experience executing marketing and e-business strategy in the wholesale distribution industry, starting as a truck unloader at a Grainger branch while in college. He’s since held executive roles at GE Capital, Corporate Express, Newark Electronics and HD Supply. Ian has written and spoken extensively on the impact of digital disruption on distributors, and would love to start that conversation with you, your team or group. Reach out today at iheller@distributionstrategy.com.