A lot to Consider
As an independent regional distributor, you need to take a close look at where to invest your digital dollars. In a recent MDM webcast, Alex Moazed and Nick Johnson talk about distributors entering the digital domain. They discuss the recent proliferation of industrial-specific verticals: Berkshire e-Supply (industrial products), Bluon (HVAC), Parts Town (OEM foodservice equipment), Volition (industrial parts), and ODP Corp.’s Varis platform (office products). Moazed and Johnson emphasize that digital B2B marketplaces aren’t for everyone. Before getting involved, consider your distributor differentiation.
A Small Slice of the Pie
Moazed and Johnson point out, that while the level of investment in digital marketplaces from distributors is undoubtedly accelerated in recent years, it’s still coming from just a very small slice of the pie. In the atmospheric gases industry, a few forward-thinking companies got into marketplace verticals early. Most have found the margins slim. Furthermore, digital sales appear to be an alternative to buying from the company’s mortar and brick stores and are regional in nature.
Focus on Analytics
The historical strength of the independent distributor is in its local resources and relationship to its customer base. Rather than investing in buying platforms, focus on improving your technical skills, facilities, and personnel. Additionally, the best investment you can make is in digitizing and growing your analytics. As Jonathan Byrnes and John Wass suggest in their book, “Choose Your Customer”, take a close look at your high-profit customers through transaction-based profit metrics. Track their erosion and growth. Byrnes and Wass suggest marking these accounts in the database so that your customer contact people know who they are. Build teams within your organization that focus on your relationship with these customers.
Walk in their Shoes
Lastly, find ways to walk in your high-profit customers’ shoes. Join with select clients to identify and develop new value footprint opportunities, ones that may not be obvious initially. Your high-profit customer relationship is your distributor differentiation.