Technology Advances Increase E-commerce Value
E-commerce is information. Thought of often as a conglomeration of hardware and software, distributors can forget the value of the information contained in their e-commerce system.
Which customers should I be talking to? What product should I be talking about? What price should I charge? These are all questions that Barrett Thompson, general manager of Pricing Excellence Solutions at Zilliant, Austin, Texas, mentioned that an e-commerce system with predictive guidance could likely answer.
“This would give the sales staff the ability to sell on actual customer knowledge instead of zip codes or their gut,” he said. “The key is they can rely on data and not on assumption.”
In looking at e-commerce as a trove of customer information, some distributors found in the past that the data mined from their early systems had what the software industry calls noise in it. The data could be skewed, difficult to rely on, or lack the intricacies to be effective. Advances in data and data science algorithms, however, have changed the way that data is collected and reported. Instead of showing patterns, the new algorithms that some e-commerce platforms employ can filter out the noise and show early signs of customer defection, use system knowledge about the bill of materials to price out a premium on a product sector in an order, or aggregate a customer’s volume information of business over a period of time as opposed to just one order.
“These functions would give you a chance to reward a customer who is buying broadly because they are bringing all their business to you,” explained Thompson. “Even though the business may be small, the customer is loyal.”
In regards to pricing, Thompson pointed out that customers of all sizes have unique price sensitivities and that without the correct platforms, these can’t always be seen by a distributor.
“This removes your ability to be surgical and precise in your pricing,” he said. “The question you really need to ask is, ‘How many times a day am I making price changes without any prediction pricing?’ ”
Besides the benefits normally considered on first thought of e-commerce systems, Thompson noted there were several other advantages of choosing to implement an e-commerce system in a business.
“The business technology we now have access to allows us to help fill in the knowledge gaps created due to acquisition or addition of new business sectors,” he explained. “Technology can also help distributors preserve their business knowledge that would otherwise be lost when the company’s legacy generation leaves or retires.”
Understanding that there is more to gain from e-commerce than previously thought, the new question becomes, “How do I implement e-commerce in my B2B company?”
Linda Taddonio, chief e-commerce officer for Insite Software, Minneapolis, said, “E-commerce used to be optional, something that was nice to have. Now it is shifting to something that is a vital, must have for your business.”
She explained that B2B e-commerce is complex and internally disrupting but that it is accomplishable. For distributors looking to begin an e-commerce endeavor, Taddonio suggests that they consider the acronym S.T.O.R.M. — strategy, technology, organizational change, re-allocating resources, and marketing. The first step, strategy, is one of the more crucial elements in creating an effective plan, according to Taddonio.
“When working on your strategy, it is important to assess your current state and align your goals with senior leadership,” she explained. “Then craft a 10,000-foot, three-year plan.”
Taddonio said that the three-year plan should be reviewed and updated every three to six months based on the progress and information learned during the process. She also noted that it is imperative to identify multiple phases of the three-year plan in order to help gauge success, and to budget appropriately.
During an October presentation in Chicago, she quoted Neil Ashe, president and CEO of Global E-commerce for Wal-Mart Stores Inc. when he said, “E-commerce isn’t a project, it’s the future of the company.”
Another point that Taddonio stressed for distributors to consider when in the strategy phase is the choice of partners.
“You must partner wisely,” she said. “You cannot do this alone. Acquire a core of partners that are in it for the long haul.”
Both Thompson and Taddonio have different approaches to e-commerce but each agreed that e-commerce is not something the HVAC distributor can ignore any longer.