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The world of distribution is in flux. Changing customer demographics and the advent of e-commerce technology has altered client expectations, placing many distributors between a rock and a hard place.
One only needs to point to the obliteration of office product suppliers to be fair warned of the consequences for ignoring the digital transition, says Eric Cadell, director of operations at Dutch Hollow Janitorial Supplies in Belleville, Ill. The message is clear: distributors must either embrace technology, or risk getting swallowed up by the competition.
“In the office products industry, it was either change or die,” Cadell says. “What they went through 10 years ago is where janitorial (supply) companies are today. That is the dilemma that jan/san distributors are in. Our industry has no choice but to figure out how to get there.”
The shift to e-commerce has become “a way to transform a slow-growth offline business into a high-growth online and multichannel enterprise,” according to Hoar, but while many distributors have worked hard to please customers by expanding their lines of products and services, the changes have added even more pressure to an already crowded and competitive business environment.
“Historically, there have been some reasonably crisp lines among suppliers, distributors and consumers, and lines between industrial, electrical and jan/san (suppliers),” says Blissett. “Those lines are blurring very quickly.”
Part of that has to do with companies “doing more with less,” during the recession and customers seeking out a “single-source supply,” to cut costs and labor times, says Blissett, but the other part has to do with the way technology has integrated into customers’ lives.
“Over the next two years the B2B buyer is going to be younger,” Blissett says. “These folks have grown up with researching products online, and buying online. They expect an easy interface to make that purchase.”
According to a survey from digital marketing company, Acquity, which polled corporate buyers with annual budgets in excess of $100,000, customers will abandon supplier loyalty for improved convenience. The study also found that 45 percent of respondents have used AmazonSupply to make a purchase in the last year, and 25 percent of respondents who’ve used the service frequently.
That number is even higher among Millennials, the next generation of buyers. An Acquity infographic shows that 82 percent of buyers between the ages of 18 and 35 are familiar with AmazonSupply, 63 percent have purchased from the e-commerce site at least once, and 40 percent have purchased from the site frequently.
“B2B buyers must be aware of the revenue threat from the third-party B2B e-commerce websites,” says Robert Barr, Acquity senior vice president, in a fall press release. “This is particularly important since many buyers do not visit suppliers’ physical stores, but rely on catalogs and websites to research products. Unfortunately, many supplier websites are outdated and lack capabilities to meet customer expectations.”
In his blog, Hoar says those expectations include technology that “delivers an Amazon-like experience.”
That’s a tough reality to swallow for many jan/san distributors, many of whom are still “selling like it’s 1984,” says Dave Conklin, co-founder and CEO of ProspectMX, an Internet marketing company in Lancaster, Pa. By some estimates, less than 60 percent of janitorial distributors have a website, let alone the capabilities to conduct online business. According to the 2012 SM sales survey, 18 percent of distributors’ sales were attributed to online transactions, an increase of 10 percentage points from 2008. Distributors can expect that number to increase exponentially.
A 2012 study from Montreal-based hybris, a provider of commerce software, found that 88 percent of procurers agreed or strongly agreed that if given the option to purchase a product online, e-commerce would be their preferred purchasing channel. The survey also showed that customers expected their online purchasing experience to be “as easy and compelling as that of B2C retailers.”
Aquity found that 37 percent of its survey respondents expected to increase the amount of their budget spent online in the next year, with a majority of those buyers’ feeling comfortable enough to make purchases of $5,000 or more online. At least 57 percent say they have participated in online purchasing in the past.
“Distributors are definitely behind,” Conklin says. “The winners are going to be the ones with technology. The bottom line is: I don’t think it’s a matter of competing with Amazon and Google, distributors just need to join the club.”
Online Retailer Amazon Enters The Janitorial Supply Market
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