Mark Thornton, Marketing Director at Maginus, looks at what omnichannel should look like in the wholesale / B2B sector, how omnichannel will differ for existing and new customers and provides insight from Wolseley on effective omnichannel in a B2B context.
For the past two years the threat of Amazon entering the market has loomed over the UK wholesale and distribution sector. In 2015 the online retailing giant launched Amazon Business service in the USA, offering 20 million items, with Amazon itself selling nearly two million products directly to businesses and cementing its status as a genuine wholesaler.
The company then quietly launched a BETA service in the UK, firing a further warning shot to the market that it could soon be competing with Amazon. It then fully launched Amazon Business in Germany – its second largest market after the USA – in December 2016, in what is likely to be Amazon’s final step before a full roll out in its third largest market: the UK.
This will clearly have a significant impact on existing UK wholesalers. For many it may seem like mission impossible to compete with the might of Amazon who, based on their previous behaviours, will almost certainly invest heavily in technology and infrastructure to create the economies of scale on which they thrive.
However, there are ways in which wholesalers can level the playing field. First, they should embrace innovative online marketing and selling techniques. By integrating into efficient back office systems and adopting the latest B2B eCommerce products for wholesalers and distributors that incorporate all the functionality offered by Amazon, they can compete directly with Amazon’s offering while retaining their agility flexibility.
Second, they should exploit Amazon’s weaknesses: they don’t offer customer-specific pricing or have a sales team that can build personal relationships either face to face or over the phone via a call centre. Existing wholesalers are specialists in their chosen sectors and have deep knowledge of their products and their markets, as well as detailed understanding of their customer’s needs, that Amazon cannot match – and that they should use this to their advantage.
In essence what we are talking about is offering a top-quality, consistent experience across all channels, both digital and offline, or in other words omnichannel retailing. And while plenty has been said about this topic in the context of B2C retailing, considerably less has been said about how the B2B retail supply chain should approach becoming omnichannel businesses.
This was something that was addressed in a recent IMRG report, supported by Maginus and Wolseley:
‘Wholesale in 2016: the Magic is in the Mix’. The report highlighted that in a B2B context, omnichannel is “about connecting multiple touchpoints with the customer” into a single unified experience and that for wholesalers “touchpoints are about relationships, traditionally relationships between people, and not about execution channels.”
The key takeaway from this is that, for wholesalers, having an eCommerce offering should be seen as a means to building better customer relationships, rather than an end in itself. Or as B&Q’s Trade-Point’s Director of Omnichannel Michael Durbridge puts it, “In B2B a website is an enabler, not the only reason to buy”.
An excellent example of omnichannel being utilised effectively in a B2B context is Wolseley, the UK’s leading plumbing and heating trade supplier. Like many B2B companies, a relatively small number of Wolseley’s total customers contribute to a large proportion of overall sales so retaining and growing existing customers is a key element of the company’s growth strategy.
Wolseley’s primary motivation for investing in omnichannel wasn’t in increasing incremental sales, satisfaction and retention but rather to address the fact that over two thirds of the company’s staff time was being spent on tasks for which an appropriately “trained” customer could self-service via digital. As such, at the outset of its digital project, the group recognised that online platforms and touchpoints needed to enable its customer service team to spend more time focussing on nurturing customer relationships and less time on tasks that a good digital solution could address – and tailored the project accordingly.
Wolseley packaged its digital touchpoints into what it calls eSolutions – customised and personalised electronic trading to allow customers to carry out processes like checking stock levels online. However, it did not attempt to sell eSolutions to every single one of its existing customers, and instead devised a simple two-tier mechanism for establishing which of its customers would benefit most from eSolutions. It then only offered it directly to those that would be able realise the productivity gains as well as efficiency and financial savings that its eCommerce platform had to offer.
Additionally Wolseley developed a complete team dedicated to branch, colleague and customer engagement with digital placing it at the heart of its business strategy – and at the heart of its face-to-face branch interactions with customers. The strategy is a prime example of the ‘make the most difference’ principle, which forward-thinking wholesalers and distributors need to emulate in order to effectively compete with Amazon.
So what can be learned from Wolseley as you plan turning your wholesale business into an omnichannel one?
First and foremost you must establish how online will differentiate itself, not only between existing customer profiles, as with Wolseley who identified which customers would benefit the most from eCommerce, but also between the existing base and brand new ones. When it comes to retaining and developing existing customers, you want to offer them digital simplicity and unity – a quick and easy way of accessing all the information they need. This should include a single view of orders, and a single view of stock, not forgetting that seeing stock depth as well as availability is essential.
As for winning new customers – it can actually be easier, and more profitable, adding new contacts to existing accounts than generating entirely new ones – but this requires effective data mining software. Remember that category expertise is one of the key differentiators that smaller players have over Amazon, so demonstrate this with plenty of high-quality, search-friendly online content, personalised according to customers’ particular segments.
Secondly it is critical to ensure that all staff, particularly those in customer facing roles, are engaged in your digital transformation project. You should be prepared to lead digital transformation out-front and ensure that every part of your omnichannel organisation is involved in the change. This should include explaining, on-boarding and supporting both customers and staff.
Any wholesaler’s omnichannel offering must focus on enabling their businesses to further communicate their highly specialist expertise and enhance their excellent face-to-face customer service. This should be done by moving processes that require no staff input online and offering a content rich website that offers greater visibility and knowledge sharing for their customers. Furthermore it should ensure that your staff are able to focus their time and effort on doing what matters most for customers.
If wholesalers get this right they will not only be able to compete with the technology of pure-play eCommerce offerings such as Amazon’s but also pull further ahead of them in the areas they already excel. Ultimately wholesalers must be able to do business both online and offline and by implementing best practice omnichannel projects they will realise the magic really is in the mix.