With the rise of ecommerce and marketplaces in B2B, distributors are struggling to keep branches relevant to buyers who are increasingly heading online as the first step in their shopping journeys. Many wonder if they need to close physical locations and shift resources to selling online. But what if distributors could innovate branches to provide additional value? Would they be worth preserving?
Mark Dancer is a National Association of Wholesaler-Distributors (NAW) Fellow and author of the Mark Dancer on Innovating B2B newsletter. For more than 25 years, he was a channel strategist, helping companies go to market in the most efficient and effective ways. He now focuses on the future of distribution. Dancer has written several books and papers on these topics and is a leading expert on innovation.
We spoke to Dancer about how distributors can reimagine physical stores so that they remain relevant long into the future.
DSG: Physical stores are expensive, so it seems logical to shut them down and sell everything online rather than find ways to differentiate. But as we’ve talked about, that may not be the best idea since there may be ways to innovate. What are your thoughts?
Dancer: “Facing the Forces of Change®,” the NAW series, is one of the first ways I learned about distribution. When I wrote “Innovate to Dominate,” the 12th edition, our mission was not to write a publication or a book on best practices and trends but really dig into and provide some ideas of how distributors can innovate. One of the first things I found when I was researching is that there is a body of knowledge about how to innovate. But almost all of it is either product innovation or technology innovation.
My son was a wrestler, and from him, I learned that if you push the head, the body follows. As distributors, we need to do this. We need to lead our markets. As we do more and more business online in the virtual world, our culture follows, but that’s not our heritage. Distributors were local businesses. They had people who lived in markets where their customers lived and worked. They had local inventory and understood local demand.
A lot of the need for localness has been disrupted. Nobody believes you have to have a warehouse in a local market to understand the demand in that market. Distributors can reinvent, modernize, and update what it means to be a local business. Yes, we need to be online, and we need to be virtual, but we also need to be local. Let’s set our line card aside for a moment. If we imagine job titles or individuals that would never be in our store, could we imagine doing something that would attract the owner of a business, a project manager, a facility manager or a manufacturing engineer to have an experience in our store that would be of value to them?
DSG: What are some reasons a customer might come to a branch? In-person training? Value-added services? Customization? Help finding the right product? Branch open houses for customers to meet suppliers? Product demonstrations?
Dancer: Right. And how about seeing data? If you’re a distributor who has opened portals to your ERP platform online where customers can access data to see delivery specs, performance, and those sorts of things, you can have a place on site where you show them how to access data and how to use it.
Also, if you’re a local in the construction market, how about meeting people from the local government economic development council? It’s kind of like being the local Airbnb of a physical B2B space. Offer it to your community college, your local economic development commission, and developers. Foster conversation in your business space.
I interviewed a distributor of foodservice equipment back before COVID. He converted part of his warehouse space over to a professional kitchen; then he added a garden to do farm-to-table. It brought customers to his location, and he realized he could bring in people who wanted to be chefs to teach them what the foodservice industry was about. He rented it out as a banquet space for weddings, and it was a gathering space for manufacturers. It shifted the way he thought about his customers as a community. If you’re always thinking about customers as buying online and not at your location, you don’t have as robust of a relationship.
DSG: Customers, even expert customers, don’t always know what to buy. Because there are so many products out there, they need someone at the branch to help them figure out exactly what they need. How can distributors improve the customer experience at their branches?
Dancer: I was chatting with a distributor about what he called the “omni experience.” In the distribution world, it combines omnichannel and customer experience. Let’s take digital channels for a moment. If you’re doing social media, or a blog or other ways of pushing things out, you’re telling stories. You can actually take that idea of telling stories and tell them in your store. Interview customers while they’re there. Bring in experts. Ask manufacturers. Add real-world richness to your stories, brand building and communications.
DSG: When it comes to the physical space, you frequently talk about the three Rs: Relevance, Resources and Relationships.
Dancer: Relevance is how relevant the experience you provide to your customers is. You want to make your space relevant to customer needs, not just to the products you sell. Resources include apps, computers and access to data points. Imagine distributors not as intermediaries but at the center of commerce.
Then, the ultimate goal is to create and deepen relationships, right? Relationships are a human thing. I’d be hard-pressed to believe you can develop a deep relationship in just the virtual world. But, if you bring people together and have a service mentality, you are building relationships.
DSG: Do you have any final thoughts?
Dancer: I think distributors should think more about two terms as experience experts. One is customer experience. How do customers experience what we do? The other is user experience. How do we act as a new intermediary for our suppliers in creating a user experience for their products? Establishing terminology and best practices for designing and managing experiences is a way for distributors to lead their markets and offset disruption and disintermediation.
We can do that with our sales force because we have all those arms and legs at the customer location. And we can also do that very creatively and innovatively in our physical stores.
DSG: We started out by saying physical stores are relevant, particularly because of digital disruptors. So if you are a company that has simple transactions, either logistically, or in terms of value-add, and you are closing branches, you are putting yourself squarely in the crosshairs of the large digital disruptors. The big takeaway here is that the physical store is important in a strategy. It’s not digital or physical. It’s both today.
To hear more about attracting customers to your stores and to get ideas from other distributors on what’s working, watch our full conversation with Dancer: