Understanding B2B eCommerce dynamics in the electrical distribution industry

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If eCommerce is no longer optional for B2B businesses, the electrical distribution industry is no exception.

To stay ahead of the game, both manufacturers and distributors need to acknowledge the B2B buyers’ expectations (which I have further developed in my first blog post) and respond accordingly.

Now how are eCommerce trends reshaping the electrical distribution industry? How are manufacturers’ and distributors’ ways of working impacted?

Managing the digitized customer decision journey: meet customer needs anytime, anywhere in a seamless way

When it comes to customer experience, there is an ever-increasing number of digital touchpoints all customers are influenced by and rely on. As the average B2B customer uses six different interaction channels throughout the decision journey and almost 65 percent will come away from it frustrated by inconsistent experiences, B2B companies need to figure out how to fully leverage and integrate these platforms into a seamless ecosystem. It is about more than just converting interest to sales: two-thirds of the decisions customers make are informed by the quality of their experiences all along their journey.

Then, what will determine the channel the customer will use is the type of purchase made. In fact, to drive growth, both sales force and digital assets and capabilities are needed. For example, B2B buyers will turn to a digital channel rather than a traditional one in the case of a repeat purchase as only a small proportion of B2B buyers need in-person support when making a simple repeat purchase.

Adapting to a rapidly changing Electrical Distribution landscape

As a manufacturer, what goes on in the electrical distribution landscape directly impacts us. Let’s have a closer look at its dynamics and how digital is reshaping this landscape.

B2B eCommerce is without any doubt a reality in this industry. Distributors and wholesalers have all heavily increased their digital investments and if the size of their eCommerce businesses varies, the percentage of their online sales has skyrocketed over the past years.

The traditional value chain is also being transformed with the rise of new digital players which have limited brick & mortar presence. As a result, manufacturers now face two different partnership models: on one hand the traditional proximity model which is hopping on the digital wagon to provide customers with a real omni channel experience and on the other hand the digital model with evolving digital pure players. Needless to say, both models are quickly converging as well.

For the traditional proximity model, sales still mostly come from brick & mortar stores so the mix of sales enablers here is more traditional with rebates for volumes sales and the key strength is high-touch retail environment. Whereas for the digital model, more than 70% of the sales are made online, sales enablers lay in analytics on marketing performance and the main assets are customer centric user experience, convenience and speed.

Connected growth: Seizing the eCommerce opportunity together with our partners

As mentioned above, the partnership model is evolving. What we need is a shift in mindset to pivot together from channel management to ecosystem orchestration by sharing customer insights and driving sales performance together through analytics-based marketing. We need to elevate our partnership model to the next level as this will drive the growth by generating more demand as well as by creating friction free customer experience across all channels.

What is more, building digital capabilities along with rich and impactful content available across our channels is just the beginning. In fact, building a successful B2B eCommerce business goes beyond the technological aspect. An effective digital transformation will only happen through a cultural shift and change in mindset. Business leaders in the electrical industry need to embrace eCommerce as an opportunity, set it as a strategic priority, onboard digital talents, and embed a digital culture in their organization.

In my next post, I will take you through our eCommerce journey at Schneider Electric and explain to you how we, as a company and along with our partners, work to fully seize the potential of B2B eCommerce.