On the surface, B2C and B2B businesses seem wildly different. But, if you dig a little deeper, both share the same goal – helping customers.
Alex Tomey is the Senior Vice President of Merchandising for Global Industrial, a billion-dollar value-added industrial distributor. After serving in leadership roles at major retailers such as Petco, DICK’S Sporting Goods, Kohl’s and Walmart, Tomey transitioned into a B2B role with Global Industrial.
In this Wholesale Change discussion, Alex Tomey spoke with our hosts about making the move from B2C to B2B, how merchandising in distribution compares to retail, and the importance of value-added services.
Distribution Strategy Group: Can you tell us a little about your background and how you got to where you are today?
Alex Tomey: I had various roles at department stores like Kohl’s, Walmart, DICK’S Sporting Goods and Petco before joining Global Industrial last year. I spent some time on the front line and in stores learning the operational components and understanding product and how it could be merchandised to gain the biggest impact before going into buying offices.
When I started, the buyers did the selection, planning and replenishment. They did it all. Then, as things became more complicated and centralized, you started to see the development of matrix organizations where you have people specializing in planning or replenishment. Everyone started working together to drive business.
I had a great opportunity to join the private brand part of the business. Understanding what a buyer needs to drive their business, the dynamics of global sourcing and how it can impact your business were all elements I learned in that career phase. As I grew, having that multifaceted approach to management and teams and understanding those different functions enabled me to take on more prominent and diverse roles.
DSG: You’ve worked in B2C and B2B. Were there any changes in approach or strategy you had to make moving from retail to distribution?
Tomey: Foundationally, no, because the customer needs to be at the center of everything we do in both. Throughout an organization, you have to have the customer in mind and ask if the things you are doing provide value to the end-user.
In retail, there is a focus on different trends and different ways to supply your product. For instance, in the past, a customer would come to the store, and you’d speak to them through a print advertisement. Then, everything became omnichannel. Customers are mission-oriented, so it ultimately comes down to how fast you can get a product to them and how you can personalize how you speak to them.
Everybody is starved for time. How can you speak to customers most effectively so they can go in and interact with the retailer quickly and get what they need? I would say it’s very similar on the distribution side. There are nuances, but distributors have to be hyper-focused on the customer. What problems do they have, and how can you help solve them with your matrix of products, product solutions and educational direction?
I think product management is evolving. Product managers need to be more strategic and leverage the analytics in their area to fill gaps and find solutions for their customers. There are definitely some nuances there, but I think if you keep the notion that the customer is the boss and they’re at the center of everything we do, there are more similarities than differences between the two sectors.
DSG: Generally speaking, I assume that retailers are more sophisticated at merchandising than distributors are. Part of the reason is that there are more changes in SKUs on the retail side. For example, in retail, product changes may be driven by fashion or the season, while in distribution, you might have the same storage product for 20 years. But, I think the opportunity to add value to a customer on the distribution side is enormous. What were your thoughts as you moved over?
Tomey: To your point, the retail side, depending on what industry you’re in, is always going to have changes. Whether it’s seasonality or fashion-related, you’ve got new products coming in every 30 to 60 days. Foundationally, essential items drive the business and help pay the bills for all those fashion products.
We’ve got a lot of core products on the distribution and industrial side of the business, too. So, there’s not as much turning or switching out products; there’s a lot of consistency there. But, I think that technological innovation is providing a doorway to new and improved customer solutions. It can help us craft and problem-solve for the customer, as well.
At the end of the day, I think it’s all about how we can look at the analytics of the business and how products trend differently throughout the year and use that to create solutions for our customers. How can we help customers better their operations and drive efficiencies and safety? That’s what I love about this business. There are so many opportunities to do that; it touches the back end, the middle end, the front end and every other corner of a business. It’s exciting and a challenge.
DSG: Can you tell us a little about Global Industrial’s private label efforts and how it differs from retail?
Tomey: When companies build their own exclusive brands, it creates an opportunity for them to leverage a value proposition and exclusivity within their assortment at a better profit margin. Global Industrial is ahead of the curve because we’ve been making private brand products for 40 years.
As we think about development, the value proposition should be equal to or better than other brands. So, we may have a thicker gauge of steel with more reinforced components or more ball bearings to help the product operate more smoothly. That’s something that’s been a focus for the company, and it’s an important part of our strategy. It’s really all about the value-add.
I think that some brands and suppliers may get concerned about private brand development, but in more cases than not, where you have everything sitting side by side, the boat rises. The waterline rises, and all the boats rise because, in that situation, you’ve got more critical mass and solution orientation where one product may help sell the other.
DSG: Last year, Global Industrial CEO Barry Litwin was on the show. He talked about how Global Industrial is very good at merchandising and shipping bulky products, which is unusual for a distributor that operates out of distribution centers. How do you merchandise bulky items and ship them at an economical rate without getting damaged?
Tomey: We are good at big and bulky. I’d say it’s a core competency of ours, from the partners we work with on the supplier side to how we work with them. The packaging solutions we’ve found also reduce damage rates. Everything goes through a lot of testing and compliance. It’s something that our company has found a real niche in.
Our distribution center associates are fantastic. They know how to build certain frames and have found ways to protect products no matter how big that product may be. Over the years, we’ve found competency and efficiency in how we do that.
We’re not afraid of bulky items; I think that’s why many of our customers enjoy working with us. It’s a solution we can provide to ensure their product gets to the destination the way it should be.
We always do our best to flow through the best type of freight to our customers. Depending on the product’s size, there are different challenges and charges that we have to deal with through the freight companies. But, we have a good network of people, and we do the best job we can to provide the best freight costs for our customers.
DSG: How do you organize the merchandising functions at Global Industrial?
Tomey: We do it in a couple of different ways. I think having deep expertise in specific categories is important. When you have expertise in a category, you know the brands, you know the assortment, and you understand the gaps. With category expertise, you can find opportunities for newness and innovation, whether that’s in your partnership with sales or from customer feedback.
There’s also a vertical approach where you understand the industry. Generally speaking, from an industry standpoint, expertise is driven by category. But, to have leadership and a strategic point of view from a vertical perspective and to be able to penetrate a vertical and speak that language is a little different. So, I think there’s an opportunity to look at it from both sides to improve your approach.
DSG: Can you talk about how personalization differs between B2B and B2C?
Tomey: Personalization is really important. It goes back to the fact that everybody is starved for time. If you send me a bunch of information that isn’t relevant to me or my industry, it’s a waste of my time. It’s noise. If I get enough noise, I’ll unsubscribe and won’t look at catalogs or emails anymore.
So, driving personalization has been a hot quest on the retail side, but it’s similar in B2B, too. We want to cater our messaging to what’s relevant to that person and their industry. We’re beginning to see more capabilities in customizing different interactions and recommendations based on customer histories and industries. However you speak to the customer, it’s always best to drive personalization.
DSG: What are some things that Global Industrial is doing with personalization?
Tomey: Big catalogs from the past are very dated. I think we have to be more dynamic as a B2B industry. In retail, everyone’s interacting digitally. They’re jumping from their desktop to their phone to their tablet. The same thing is happening within B2B. Customers walk around their facility, find what they need and then do everything on their phones. From a personal standpoint, customers expect personalized communication that’s digestible, and they expect a lot of that same technology and capability on the work front. That’s a way we’re interacting with customers to make that interaction more seamless for them.
DSG: The sector you’re in is not an inherently high value-added sector. Do you feel that offering services keeps customers sticky, so they don’t have to go to other distributors for that service? Or is your focus on pure product play?
Tomey: I think it’s really important to offer that value-add. We need the right products, but we also need the right services and support for those products for our customers. At the end of the day, if our customers have questions and need expert advice on how to set things up or fix something, having a robust customer service element is really important.
I think this is an area of opportunity we can continue to build on from an industry standpoint. Providing those solutions is vital to building relationships and trust with customers. Focus on customer service and technical support. If you’ve got a product that may require some kind of technical assistance, add that value. Those are really important elements to focus on and accelerate.
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 firstname.lastname@example.org.