Register now: 2024 State of eCommerce in Distribution
Your ecommerce site might be highly successful, and you don’t even know it. If you measure your ecommerce success with this ROI model, you’re doing it wrong:
Further, if you designed your site primarily to drive shopping-cart revenue, congratulations! You built a great retail site but the wrong site for a distributor.
Different Markets, Different Channels
Of course, there are exceptions. When I worked for HD Supply, the Facilities Maintenance division (now a part of The Home Depot) sold billions through their website. That’s just how that market operates – lots of contracts, eprocurement integration, etc.
But I was running ecommerce for the construction supplies division of HD Supply (now called White Cap), and most of our customers did not want to buy online. They had two primary reasons:
- Purchasing process. Lots of customers have their own way of buying products, and it doesn’t include your shopping cart. Instead, they shop online and then complete a PO, which they email or call in by phone. This probably won’t change for a long time.
- No discounts online. For most customers, the website is the most expensive way to buy from you. Customer-facing employees usually have some discounting authority, and they tend to wield it like a frat brother with a keg of beer: too liberally and in ways that are often unhealthy. This isn’t likely to change, either.
We once asked 1,855 distributor customers how they placed orders once they used the website to figure out what they wanted to buy. Less than 18% placed the order online – and that was across a lot of different kinds of distributors. Your percentage could be a lot smaller depending on the markets you focus on.
Most of the time customers email or call in their orders. If they call it in, you can bet they’re often asking for a discount. If they email it in, they probably called for a better price first.
Mismanaging Expectations
Suppliers put a lot of pressure on distributors to succeed with their digital channels. CEOs and CFOs get upset when the fortunes they’ve spent on building websites, creating content, attributing products, etc., doesn’t offer a good ROI. But there are two expectation mismatches going on here:
- Distributors build the wrong websites. Based on the advice from “experts” who say, “Your B2B site should be just like a B2C site,” distributors naturally try to force website visitors to convert to the shopping cart. Instead, distributors should design their websites to meet customer expectations and needs. If your customers love your website and use it all the time (even if they don’t buy on it), they’ll buy more from you overall. In fact, our data shows that the correlation between customer website usage and sales is 99%.
- Distributors screw up website attribution. Hey, I’m sympathetic – I committed this sin for years. Shopping-cart profits are easy to measure but as we saw above, on average, they’re less than 18% of total website sales. Maybe a lot less for you. You need a new attribution model so you know the real return on your ecommerce investments!
Join us Oct. 2, 2024, for our State of eCommerce in Distribution webinar. We’ll present our latest research results, based on our annual survey of distributors. We’ll also help you understand how you can do proper attribution for your website so you know the real ROI you’re generating from your efforts.
Change Your Thinking and Do This Now
I’m not sure there’s been any single measurement more destructive to distributors in the past 10 years than bringing the retail website ROI model to B2B. Not only has it created confusion, it’s led distributors to build the wrong sites, convinced them their investments have failed and, worse, discouraged future spending on digital capabilities.
This has widened the gap between traditional distributors and pure digital players.
Do this now:
- Conduct research to know how you can add value to your customers with digital tools.
- Based on your research build a site your customers will love and use.
- Design your site to drive sales through all your channels, not just through the shopping cart.
- Stop using a retail method to measure ROI; replace it with a better model.
- Share this graphic to help eradicate this awful model:
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.