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By contributing writer Bruce Nagy

“Many distributors think they can survive in the age of Amazon just by putting up a web store,” says Mark Dancer, a Fellow with theInstitute for Distribution Excellenceof the National Association of Wholesaler-Distributors (NAW). “But they are going to have to think beyond trying to compete with Amazon on ecommerce. They need an integrated omni-channel strategy.”

DIFFERENTIATION

Distributors need to focus on their own strengths and Amazon’s weaknesses, then rebuild their organizations to intensely deliver that differentiation strategy. “Amazon doesn’t really want to help customers at the local level. If we think about the essential capabilities of a distributor in the digital age, we recognize that community, in fact, is local.” Distributors can offer “a physical space where products can be explored, experienced and acquired. They can help with installation, training and troubleshooting.” They can provide or accommodate in-person sharing of advice, suggestions and guidance. If you think your business is to just to be a showroom and an order counter, you’re about to be replaced.

VIP SERVICE

“Lip service is not adequate for effective differentiation,” says Bruce Merrifield, an Amazon specialist and HVAC consultant, “Measurable value must be delivered. What would happen if you said to your key account, “Your crews don’t need to start their day by driving over to the distributor and standing around for an hour while their equipment is picked and loaded? What if it was all ordered the night before and delivered to the site, where techs simply installed it? What if the billable work day was five or six hours for the crew instead of four hours?”

Merrifield says distributors don’t need to be afraid to really ramp up service to a business-partner level with a subset of their customers -- the high volume, high margin ones. “Own them. Identify them and marry them. Offer them special treatment in exchange for all of their business.”

He tells the story of McKesson Corporation (then called McKesson Dairy) which was approached back in the day by a 93-store chain that was operating its own distribution center and wanted to close it and have McKesson do it instead. But there was a catch. McKesson was operating at 14%-15% of sales and the chain’s DC was able to do it at 5%. McKesson realized that, if they could become efficient enough to get the contract, they could grow their company by more than 1,000 percent. The retail chain taught them about bar codes and a handful of other emerging technologies, and the rest is history.

LOCAL ENGAGEMENT

What if that empty distributor seminar room was actually used? What if a highly relevant series on new technologies and best practice seminars was conducted every week featuring speakers from the distributors staff, from customer contractor companies, and from manufacturers? Sessions should focus on local challenges rather than national challenges. A heat pump is national. You can watch a video about it on Amazon. A cold-weather heat pump is a little more local. A cold weather mini-split with a heavy snowfall shield affixed to the outdoor unit, is extremely local.

What if seminars were recorded on video and shared on web sites, Facebook, Instagram, LinkedIn, etc., by the distributor, contractor-speaker, and manufacturing expert?

UNIQUE PRODUCTS & KITS

“Distributors can become product companies,” says Dancer “They can identify and solve local problems or serve particular customer niches by creating their own products or product kits. This will get the attention of both customers and suppliers because it’s a true value-added service.”  He also recommends activities that make the local sensitivity of a distributor a key part of their brand, such as partnering with local colleges on HVAC work/study programs, becoming involved with local chambers of commerce, festivals, sports teams, and so on.

ONLINE PRESENCE: PLAY TO YOUR STRENGTHS

Keeping in mind the foregoing discussion of differentiation and a focus on localized service is important before then tacking your online properties. Success will happen by NOT trying to become Amazon, but still using modern tools.

Writing in Sales & Marketing, Ben Landers recounts:

One day, I came home from work and, like most days, my ten-year-old was simultaneously watching YouTube on our smart TV and playing a video game on his iPad. He paused YouTube only long enough to say, “Alexa, what are the chances it will snow tomorrow?” To my surprise, Alexa responded, “There is a 63 percent chance of snow”   …my son is just now asking Alexa what the temperature is. In a few years he’s going to be asking her why his house is cold.

CUSTOMER REVIEWS

Landers also writes that “Today’s mobile buyers prefer to self-educate before calling a company—81 percent of them do research online before they have much of a commercial intent. Mobile searches for “best” have grown 80 percent…and there have been 1.5 times more mobile searches ending with “to avoid” in the past two years.” Online reviews (genuine ones) correlate very highly with purchases.

“The customer contribution to the exchange of value is often under-examined,” says Dancer. “It can include loyalty, word of mouth, people gathered together in the same space, ideas and suggestions for innovation, and much more. Exploring both sides of the exchange of value is essential for channel innovation.” This is manifested online as forums, comments with every article and blog and customer reviews (good and bad) appearing on companies of all kinds.

AUTHENTIC STORYTELLING

Successful online culture is not to censor a bad review but to address it quickly and hopefully motivate the same unhappy customer to reverse their comments. This kind of activity contains the ring of authenticity that attracts Gen-Xers and Millennials who distrust highly polished brands that reek of controlled, polished messaging. Authentic customer storytelling is better than promotional language.

That’s why your seminar room should be used for that local heat pump or passive house expert to share his stories, even if you’re afraid he’s not a great speaker. When we engage with people, they are more likely to be loyal.

Speaking of loyalty, a distributor is perfectly positioned to create an engaging loyalty program just like Amazon, even more so. You know your local customers and can structure something effective with easy to win, locally meaningful rewards, prizes, and recognition.

By the way, distributor management teams should keep their friends close and their enemies closer. Open an Amazon account and buy some things. Learn what they do and outmaneuver them in your local shop and in your localized social media.

DIGITAL MARKETING

More advice from Landers:

  • Make certain your web site works well with phones and tablets
  • Use software to record web site visitor behaviour and understand which elements of your web site are working
  • Own your web site and update it frequently
  • Update social media continuously with local content
  • Monitor Twitter and Facebook as much as your email, because 2/3 of modern complainers expect you to respond quickly through these platforms
  • Use email marketing because it’s cost-effective
  • Buy pay per click (PPC) ads, use social media, and generate online reviews
  • Avoid TV ads and yellow pages unless your data proves they bring you customers (generally, no).

DATA

On what customers, products and customer niches should salespeople concentrate their calls? What content should email campaigns feature? Seminars? Kit products? Or product/service combinations?

All these answers will be revealed to you if you collect data from customers during showroom visits, seminars, and phone interactions, but you have to systemize with short surveys and recognize that in the modern world it’s like collecting money. It’s a highly valued resource.

Dancer says collaborating with suppliers to better manage combined inventories and logistics will result in untapped gains. Success requires mutual real-time visibility, advanced analytics and new supplier incentives.

Merrifield says distributors are hesitant about the risk of sharing data but, in the new world it’s better to build trust with the best suppliers and do so.

REINVENT & REPOSITION

Distributors in the age of Amazon must collect and analyze data, ramp up service for the best customers, and tighten up profitability, even within a one-stop shop strategy. They need to use the local advantage to differentiate themselves, share expertise, share authentic stories, solve specific product problems with product and service combinations, and modernize digital marketing. According to the experts, these are the ways in which value can still be created for the local distribution model.