For distributors and manufacturers, the need to digitalise business operations has been persistent in recent years. They must modernise to suit the changing expectations of today’s B2B buyer, driven by both improved technology and the increasing volume of millennials entering the work place. By 2020, it’s estimated that up to 35 percent of the global workforce will be a millennial, a generation of buyers that is accustomed to doing everything online and who are not afraid to look elsewhere if they do not receive the customer experience they expect. In fact, with 74 percent of millennials happily switching to a different supplier following a negative experience, delivering a superior customer experience that is digitally-led is more important now than ever before.
As Amazon continues its rapid takeover of the B2B market with the Amazon Business platform, digitalisation becomes even more vital if manufactures and distributors are to remain competitive. Digitalising business operations was a reoccurring theme in a recent NetSuite webinar, Amazon Business: Friend or Foe?
Oracle NetSuite EMEA Business Development Director, Gareth Carroll, was joined by Steven Barr, Managing Director of EDGE Digital Manufacturing, the advisory services firm to The Manufacturer, and Alastair Edwards, Chief Analyst at Canalys, a global technology analyst firm, who has over 20 years’ experience tracking the wholesale distribution industry. They explored Amazon’s B2B takeover and both the challenges and opportunities it brings to distributors and manufacturers. Here are some of the key areas they discussed.
Amazon is one step ahead of you
Being digitally led, Amazon Business is not only meeting customer requirements, but shaping them. Its speed of delivery, ease of use and efficient customer service are all contributing factors to today’s buyer expectations. It is this digital-first approach that poses a key challenge for traditional distributors attempting to compete, as Amazon is already at least one step ahead. Amazon Business is not facing the challenge of modernising its systems. Instead, it’s leading the way for the rest of the market to follow. For those distributors and manufacturers still running on-premise, disparate systems, transforming business operations to a modern, digital platform is step one to remaining competitive.
But, digital transformation does not just happen. It requires commitment and significant change management. As Barr highlights, it requires the leadership team to drive the change needed to become a digitally operated business from the top and show employees the value in digital transformation for both customer engagement and enabling efficiency across the supply chain. Before replacing your systems and processes, you must first ensure internal dedication and investment into a new way of working and engaging with your clients.
Finding your niche
Like its consumer counterpart, Amazon Business is a ‘one stop shop’ for B2B buyers looking to buy business supplies. Whereas many distributors today tend to be specialists, Amazon Business stocks products from across various industries. This is both a challenge and an opportunity. Whilst it puts some manufacturers and distributors at risk of losing customers to Amazon Business, it also presents an opportunity for specialist companies that cannot be easily replicated to differentiate themselves based on a level of expertise that Amazon cannot offer. The secret here is identifying your niche and expanding upon it. Monitor the market, keep a close eye on Amazon and offer your clients a value add feature they cannot get with Amazon Business.
One example of a modern distributor leveraging technology to innovate within a traditional industry, creating a digitally enabled customer experience and developing a unique offering that cannot be easily replicated by Amazon, is building supplies wholesaler BUILT/.
BUILT/ is a newly developed omnichannel B2B business that focuses on providing a greater brand experience, with everything shaped around the customer and their needs. By using an integrated platform to deliver its entire business, BUILT/ has a sustainable, future-proof platform that can grow and scale with the business and can be evolved as customer needs change and expand. With both an online store that is operated through advanced in-store technology and an ecommerce site -- both integrated via one business management system -- BUILT/ is giving its customers the options they desire for delivery, convenience, speed and ease of purchase, offering all of the traditional characteristics of past distributors combined with the desires of today’s digitally savvy purchaser.
It’s not all doom and gloom
The introduction of Amazon Business is encouraging a new level of innovation in the distribution market. As Edwards highlights, Amazon’s move to B2B is going to force distributors to get creative in order to compete. Forward-thinking distributors are evolving their business models to include more value add services in order to be a step above the rest. This will keep the market fresh, alive and striving to deliver the ultimate customer experience. The more superior the customer experience, the more likely they are to revisit a distributor, reducing the likelihood of Amazon dominating the market, edging out traditional players and driving the market toward its next wave of innovation.
It’s not only distributors who can leverage the benefits of Amazon Business; manufacturers are also presented with some positive opportunities. As Barr highlights, Amazon Business allows manufacturers who are looking for new revenue streams and additional ways to connect with B2B buyers to tap into its huge and expanding customer base at a low cost of access and acquisition.
As it does for distributors, Amazon Business presents manufacturers with the chance to observe it, learn from it and adopt and adapt its ways to their own strategies. As Barr highlights, manufacturers today are transforming how they connect with customers through new communication methods such as online portals, where they are creating manufacturing networking communities and adding new elements to the purchasing experience that extend above the core product. This is not the way Amazon Business operates, therefore allowing manufacturers to maintain their client base by developing a more personalised approach to customer relationship management.
Top Tips from the Experts
For wholesale distributors, Edwards recommends investing in digital tools that allow you to leverage your customer data more effectively and build your customer relationships based on actionable customer behaviour, not assumption. The customer is at the core of your success; with the right technology to monitor their behaviours and develop your business strategy to deliver on their demands, you will be on the right path to surviving in the Amazon era.
Whilst identifying a gap in the market is a good place to begin developing your unique offering, it’s well known that if Amazon spots potential in a market, it will eventually find its way there too. Edwards warns this is a short term strategy. Instead, he recommends you consider developing services based value add, such as a consulting practice. Build on your customer relationship by advising them on their needs and positioning yourself as a trusted advisor. Enabling yourself to consistently monitor client behaviour and develop your product and services offering based on their needs will ensure you are continually building trust between yourself and your client, in a personal manner, that it will be difficult for Amazon’s online-only persona to infiltrate.
For manufacturers, Barr advises that you do not try to directly compete with Amazon. Instead, embrace digital transformation to meet the customer expectations Amazon is setting, benchmark your position in the market and identify where there are gaps in the market you can fill. One of the key areas where manufacturers can still focus their attention and where Amazon Business does not have the ability to deliver, is with customised products. Barr shares the example of Nike and the ability for clients to customise their shoes in an online web portal, creating a bespoke and special product. Customisation is a key driver in customer satisfaction and a worthwhile value add for ensuring customer satisfaction.
And Carroll’s top tip is simple. Act now. Amazon Business is already well on the move in the B2B market. Don’t get left behind.
For further insights on how Amazon Business is changing customer behaviours, and more details of the options you should be considering, view the full Amazon Business: Friend or Foe? webinar recording.
If you have any questions for Gareth, Alastair or Steven, please contact us on NetSuiteUK@netsuite.com