[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.the-future-of-commerce.com\/2017\/09\/18\/b2b-sales-disruption\/#BlogPosting","mainEntityOfPage":"https:\/\/www.the-future-of-commerce.com\/2017\/09\/18\/b2b-sales-disruption\/","headline":"B2B sales disruption: channels are changing \u2013 act now or die","name":"B2B sales disruption: channels are changing \u2013 act now or die","description":"The B2B customer buying journey has been forever transformed by the internet, and this has major implications for manufacturers, brands, and distributors.","datePublished":"2017-09-18","dateModified":"2024-06-13","author":{"@type":"Person","@id":"https:\/\/www.the-future-of-commerce.com\/contributor\/brian-beck\/#Person","name":"Brian Beck","url":"https:\/\/www.the-future-of-commerce.com\/contributor\/brian-beck\/","identifier":182,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/97f46accbfe54d4ef9f1b1097ccd4a541d14f04f611b69e9501cfadc889bb580?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/97f46accbfe54d4ef9f1b1097ccd4a541d14f04f611b69e9501cfadc889bb580?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"The Future of Commerce","logo":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","width":172,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2017\/09\/channels-are-changing_HB.jpg","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2017\/09\/channels-are-changing_HB.jpg","height":375,"width":1200},"url":"https:\/\/www.the-future-of-commerce.com\/2017\/09\/18\/b2b-sales-disruption\/","about":["Auto",{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/commerce\/b2b\/","name":"B2B Commerce","sameAs":["https:\/\/en.wikipedia.org\/wiki\/B2B_e-commerce"]},{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/sales\/","name":"Sales","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Sales","http:\/\/www.wikidata.org\/entity\/Q194189"]},{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/sales\/sales-general\/","name":"Sales","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Sales","http:\/\/www.wikidata.org\/entity\/Q194189"]}],"wordCount":2211,"keywords":["B2B","B2B Sales","Digital Disruption","Distribution","E-commerce","Manufacturing","Manufacturing and Distribution","Marketing Trends","Omnichannel","Sales","SAP Hybris"],"articleBody":"The B2B customer buying journey has been forever transformed by the internet, and this has major implications for manufacturers, brands, and distributors \u2013 are you acting to disrupt the B2B sales disruption?The writing on the wall has become reality. B2B selling channels have forever changed in the age of the internet and mobile devices. Traditional selling models have shifted, and the central communication point for business value propositions has moved from physical to digital in most industries.Forrester Research reports that as much as\u00a070% of the buying process is already completed before the buyer even contacts a potential supplier.\u00a0Product preferences and buying decisions are determined via the web, with\u00a090% of B2B buyers using online search in their product research process.The brutal reality is that if you aren\u2019t well represented on the web, you are dying.Somehow, this trend has caught many manufacturers, brands, and distributors by surprise.\u00a0Most remain ten years or more behind where they need to be in terms of digital transformation.\u00a0A clear call to action is being sounded by B2B buyers (your customers) to meet expectations for digital interaction, research, order support, product service, and Ecommerce.\u00a0B2B firms not acting now are jeopardizing their very existence.Trends from retail carrying over to B2B: Why am I surprised?Well, this story has played out before – in the retail landscape.In the B2C marketplace, consumers have shifted buying, product research, and customer service preferences online.As they did so, dozens of once-prominent but slow moving retailers have closed their doors forever. More than 9,000 and mortar retail stores are expected to close in 2017.Major brands \u2013 including household names like Macy\u2019s, Sears, and J.C. Penney \u2013 are on the ropes and continue to announce store closures. Even the mighty Walmart significantly trails Amazon in terms of e-commerce market share (though, to their credit, they have been making up ground more recently).In similar fashion, sales channels are changing in B2B industries. Executives ignoring the same trends in B2B e-commerce have already put their companies at risk.If you’re not embracing digital transformation, know that your competitors and big players like Amazon are, and this will all quickly pass you by and could very well put you out of business.      Lessons learned: How B2B industries tackled COVID challenges and won                Find out how B2B industries like manufacturing and high tech transformed amid the pandemic. Manufacturers had an important realization: Your buying experience should be simple, even if your products aren\u2019t. This is a valuable takeaway for every industry.      So what has changed?In the past, the B2B sales chain had three steps (in its simplest form):Manufacturers and brands produced goodsResellers and wholesalers bought the goods in bulk from manufacturersBusiness customers (the end users) bought these goods from the stock of resellers and wholesalersAs an example, consider a repair shop in the automotive industry. The shops servicing vehicles are the final business buyer and customer.\u00a0Manufacturers of automotive components would produce aftermarket parts, which would be sold to distributors with a local presence close to the shops (often stocked by the distributor or available on short notice from the manufacturer).The repair shop then would order the parts from the distributor when needed, and they would get delivered quickly (usually within a few hours) to the shop by a local delivery vehicle. Simple, right?Well, traditional sales channels have evolved, driven by changes in buyer behavior. The disintermediation of channels is the result.That auto repair shop is now using multiple ways to research and buy their products, with digital and e-commerce at the center of it all.\u00a0As perhaps the biggest sign of change (and forthcoming disintermediation),\u00a0Amazon recently announced a move into the B2B automotive aftermarkets industry, and the company is expected to become a large player in this sector.      How digital disruptors are changing the automotive industry                Technology has changed how we shop for everything, including car buying. Find out how two companies are transforming the automotive industry.      Today\u2019s\u00a0B2B customers\u00a0expect a broader selection, faster delivery, and more product information\u2014all of which is accessible through multiple devices (e.g., mobile, desktop, mobile apps, marketplaces, and other channels).They also expect to be able to buy the products and services they need through multiple channels, including:Marketplaces.\u00a0Amazon is one of the major forces in here, and, with\u00a0Amazon Business, the company has added significant business buyer features that will certainly impact any industry they target.E-commerce.\u00a0Many businesses have enabled e-commerce functionality on their websites.\u00a0This includes many distributors, which are further ahead in this area than their manufacturer and brand counterparts.Manufacturers going direct.\u00a0More and more manufacturers are selling directly to the end customer via e-commerce, thereby bypassing distributors. Research by our friends at Forrester suggests that customers are willing to\u00a0pay 20% more\u00a0to buy directly from manufacturers. What\u2019s more,\u00a040% of customers prefer buying from manufacturers\u00a0who they consider experts.Digitally-enabled sales teams.\u00a0Companies are increasingly arming their sales teams with real time information that is critical at the point of sale when they are sitting with the customer \u2013 things like instant inventory information, product specs and compatibility details, instant ordering and delivery timeframes, and other data.\u00a0This isn\u2019t about replacing sales teams \u2013\u00a0it is about empowering them to be more effective. We have one client that is generating over $100 MM in annual revenue from a mobile app used by the sales force that provides instant product inventory information. It isn’t fancy, but wow, really effective!Collectively, these trends are a part of a digital transformation taking place across industries.\u00a0The landscape of selling channels has changed \u2013 which creates opportunity, and risks, for you.Is your business accommodating these shifting preferences?      Digital transformation in distribution: An awakening                Digital transformation in distribution is growing as midmarket wholesale distributors realize the benefits of intelligent technologies.      Taking advantage of changeAfter acknowledging these changes are happening, what should your company do next?\u00a0Well, don\u2019t panic.\u00a0It isn\u2019t too late \u2013 yet.If you\u2019re a manufacturer or a brand, confront the reality that your customers are researching and buying differently \u2013 and the definition of your customer may also have changed.Resellers\u2019 roles may be diminishing. Leveraging new distribution channels to sell directly to your customers can drive competitive advantage. My advice:Deploy e-commerce\u00a0to sell directly to end customers\u00a0\u2013 This allows you to enjoy higher gross margins on your online sales (particularly on repeat orders and less complex products).\u00a0Without sales team interaction, we regularly see our clients achieve higher gross margins. I hate to say it, but the fact is that when there is no negotiation – e.g. \u2018Hey Joe, do me a favor on the price\u2019 \u2013 the sale happens at a higher gross margin. The transaction occurs quickly via the web, and convenience and speed outweigh price in the buying decision.Embrace marketplaces\u00a0\u2013 Almost 60% of online product searches start on Amazon.com.\u00a0If you aren\u2019t there, you are losing out.\u00a0Plain and simple.\u00a0See my recent post on this.Get digital support for your sales team \u2013 Get them the real time information they need to be more effective in the field.\u00a0A whole category of products has evolved around this, called Sales Enablement Solutions.\u00a0Technology innovators are solving this for you.By making it easier to buy your products, you will generate more revenue by increasing your share of wallet from existing customers and gaining additional customers.What it takes is breaking down traditional thinking. In many cases, capture these benefits is less about recognizing the digital opportunities for your company, and more about overcoming organizational inertia.\u00a0Leadership is required here (calling all CEOs!).      With the rise of B2B marketplaces, what happens to traditional sales?                B2B marketplaces are springing up across a variety of industries. What are they, and how do they impact traditional B2B sales?      Managing existing channels amid B2B sales disruptionSo you might say, \u201cI have existing channels that I need to pay attention to \u2013 I don\u2019t want to make them angry!\u201dYes. Most manufacturers and brands have existing relationships with resellers. And yes, these relationships are impacted by the channel shift. But that doesn\u2019t mean the relationships themselves have to be adversely affected, as long as you have a plan.Companies can utilize a number of different tactics to manage existing relationships. Distributors will still likely be a part of your sales channel mix for a long time \u2013 but, depending on the industry category, that mix will likely change.I\u2019ve seen numerous distributors and resellers take a hard look at their own value proposition to their customers in this age of digital centricity. Take a good hard look at this yourself as you think through this \u2013 and do it for each of your major resellers.If you’re in an industry with highly complex products, the role of distributor and reseller will continue. The resellers that add value are the ones that are going to survive, at the expense of, I would suggest, their weaker (and possibly smaller) competitors.Channel conflict over pricing, of course, is always a concern. Multiple approaches exist to manage this effectively.\u00a0The most effective method is to require customers to have account access (e.g. a user name and password) to view pricing online, and then only showing contract pricing specific to each account once logged in.\u00a0Publicly available pricing is at an MSRP (read: high) level.I also recommend using digital to support and reinforce your traditional reseller channels. Distributors and resellers need information about your products in order to sell them through their own channels, including e-commerce.Leverage digital product information and real time support to help improve distributors\u2019 value propositions to their customers.Include as much product data (descriptions, attributes, compatibility information, etc.), digital assets (such as great images and videos), and inventory information as you can to support resale channels.Doing so ensures a stronger\u00a0customer experience\u00a0on your brand across all channels.      What is customer experience in 2025: Definition, strategy, examples                Everything you need to know about customer experience, including: CX meaning, tools, strategies, measurements, and real life examples.      What this all means for distributors and resellersDistributors and resellers need to be honest (really honest) about the value they add to their customers. Don\u2019t just assume that you add value because you have been in business for 1,000 years and have great personal relationships with your customers. Ask your customers why they buy from you to figure out precisely how you add value to every transaction.If you can\u2019t realistically and objectively do this yourself, hire a consultant to help you \u2013 B2B sales disruption is coming, no matter who your customers are today.Figure out how to differentiate yourself from your competitors. Maybe it\u2019s the fact that you provide better solutions, superior product application knowledge, faster delivery times, amazing customer support, proprietary products, or better content. Maybe you combine products in a unique way to meet customer needs.Whatever it is, be honest with yourself. The traditional value components of distribution \u2013 price and selection \u2013 are those being impacted by digital trends (led by Amazon).Let\u2019s say you sell industrial HVAC equipment in what is typically a very consultative process.\u00a0Maybe your sales process requires a lot of expertise to make a decision on the right mix of products for the customer\u2019s application. For example, consultation with electricians, architects, and contractors are required, complex measurements are required for installation, and each installation is in a unique environment – and you help customers with each of these steps.\u00a0This is real value. E-commerce is not going to replace every aspect of the selling solution.As a traditional distributor or reseller, you should also be thinking about making digital shifts in your business model. If you are a sizable player and have your own proprietary products (as many distributors have introduced in recent years), think about doubling down in this area.\u00a0You can capitalize on areas where you have deep knowledge and expertise, and your product can stand on its own.\u00a0Acquiring one or more of your suppliers is another avenue that could be pursued to accelerate your positioning here.The point is, find the areas where you can differentiate – and blend this with a digital and e-commerce approach \u2013 and you will be in reasonably good shape to compete.      CX isn\u2019t an area of a business \u2013 it IS business                Business is about buying things, selling things, and engaging with customers. CX is about providing experiences that make people want to engage with you, buy from you, and buy again.      A final word about B2B sales disruptionThe Internet has changed the way B2B buyers research and obtain the products they need. Your buyers have already moved beyond using only traditional channels to research and purchase. If your business doesn\u2019t adapt, your competitors will, and you will be impacted. But this is also an opportunity.Move now. It\u2019s that simple.  Your customers are managing 85% of their relationships online. Omnichannel CX can provide everything they want \u2013 and more.Get started HERE."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"2017","item":"https:\/\/www.the-future-of-commerce.com\/2017\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"09","item":"https:\/\/www.the-future-of-commerce.com\/2017\/\/09\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"18","item":"https:\/\/www.the-future-of-commerce.com\/2017\/\/09\/\/18\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"B2B sales disruption: channels are changing \u2013 act now or die","item":"https:\/\/www.the-future-of-commerce.com\/2017\/09\/18\/b2b-sales-disruption\/#breadcrumbitem"}]}]