Archive for August, 2018

The Amazon effect on B2B – what should your e-commerce strategy be? Top 5 Considerations

August 23, 2018 Pat Clusman No Comments » E-Commerce, Strategy

E-CommerceWe’ve been receiving more and more inquiries lately around e-commerce for B2C and B2B. For consumer-facing companies the online imperative and path are clear: strong searchability (Amazon presence is key), ‘frictionless’ commerce, competitive pricing, benefit-oriented product listings, fast delivery, and positive customer reviews all matter. Though implementing B2C strategy is not easy, there are many good examples to learn from.

B2B e-commerce is far less mature. Amazon is the online shopping behemoth and its B2B offerings are rapidly expanding. According to a recent survey, 8 out of 10 (78.4%) business buyers use Amazon to research and make a corporate purchase online. But for manufacturers selling to businesses, the decision to list on Amazon is not entirely clear cut. Only 40% of those surveyed currently list on Amazon and of those that don’t 50% have no plans to do so. In fact, the benefits at this stage may not outweigh the risks – especially when it comes to your valuable customer data and direct relationships.

Here are the top 5 considerations to think about as you define your B2B e-commerce strategy:

1. Amazon’s wealth of consumer data 

Amazon certainly has consumer data, but B2B e-commerce is more complicated than B2C. It requires complex product configuration, pricing, discounting and bundling features that go beyond basic consumer e-commerce sites. Amazon excels in products that ship “off the shelf” and do not require specialized knowledge. Its logistics infrastructure may or may not be right for your products. Ultimately service will set you apart, along with deep customer insight vs ‘big data.’ Technical advice, the ability to deliver quickly, respond to specific questions, and other ways you serve your customers are most important.

2. Competing on price

There are many ways to avoid becoming a commodity and competing on price. The key is to add value beyond Amazon’s delivery speed. In fact, it may be better not to get caught up in the Amazon pricing game which is geared to commodities. Reward loyalty and volume buyers with attractive pricing, but more importantly offer solutions and services that show you understand their business and their end-users. Collaborate with your biggest customers to define new offerings. Your distributors may understand and cater more to the B2B buying process than Amazon does currently. Their websites might be a better fit than Amazon – an example is Cesco.com which was recently redesigned based on customer feedback. Now customers can search by specific keywords and filter results by criteria including category, finish, manufacturer, style, and product length, width, and height. Site search also now serves up pages with stock availability and product specifications.

3. Marketing approaches

It depends on your industry, but the overall trend is toward a B2C approach for marketing. It is important to understand that B2B embraces B2C as well. Competitive pricing, benefits, and on-demand delivery are important factors across the board. But if your direct customer is in procurement and buying in volume and you meet their specific needs (bundling, etc.), ultimately you will maintain their loyalty. In terms of marketing trends, many B2B trends mirror B2C: millennials are the biggest buyers; they are using mobile devices to make purchases, they watch videos (educational, not just sales) during the path to purchase, they expect personalization, and they expect fast (even immediate) delivery. On Amazon product listings that look like B2C listings (i.e. ratings, descriptions, videos, etc.) will likely surface to the top.

4. Impact on brand

Brands are about trust. You need to be careful to maintain and extend whatever built that trust in the first place. Brands have name recognition advantage at the beginning, but make sure you can deliver, both quality and quantity, as you expand. Monitor your competition, follow up with customers for feedback (and reviews to post!) – it is very easy to be disrupted online by startups.  Brand value should not be taken for granted.

Also bear in mind that brands are not usually what people search for, the generic product is.

71% of B2B researchers start their research with a generic search. Research shows that those involved in the B2B buying process are already 57% of the way down the path to a decision before performing an action on your site. As B2B brands seek new customers, it becomes increasingly important to understand what’s happening during this time.

5. Resource allocation

First, being online is necessary to compete. Surveys indicate that 69% of manufacturers without a B2B e-commerce site expect to launch one within the next year. Building your own site may be the best overall, though presence on Amazon is still a good idea in terms of search functionality, and the fact that Amazon capabilities and market reach are continuously expanding.

“Manufacturers have compelling reasons to build a B2B e-commerce site—or expand their existing site, per the B2BecNews survey. Among the objectives of manufacturers planning to sell online, according to the survey, are:

  • New sales channel: 71% of manufacturers list generating more sales as their top priority for building or expanding e-commerce.
  • New customers: 54% of manufacturers want to sell online directly to consumers.
  • Diversified sales: 45% of manufacturers see B2B e-commerce as a new way to sell over the web to retailers, dealers, wholesalers and distributors.
  • Better branding: One in four manufacturers sees B2B e-commerce as a tool to build broader brand recognition.”

Strategic questions that should be answered:

As you define your e-commerce and Amazon strategy, we suggest you ask yourself the following questions:

  1. How specialized are your products? Do your distributors sell to end-consumers or is it all B2B? The more specialized you are, the less you should focus on Amazon and instead build your own capabilities (alone or with distributors).
  2. Are your distributors large or small? Are they already selling on Amazon? Do they have their own websites? Do they have major competitors on Amazon? How sophisticated is their technology/data capture/marketing? Choosing the right distributors is key.
  3. Do you have repeat business/loyalty factor, customer relationships? If you want to go global then Amazon is fastest route (or Alibaba) but loyalty and local relationships need the human touch – along with convenience and 24/7 access, of course.
  4. What is your geographic coverage? Is Amazon operating in your area? B2B can be regional, is Amazon B2B presence strong in your region?
  5. What are your growth and strategic objectives? Look at the integration of your capabilities with your resources and goals. How much of your company’s competitive advantage is product innovation versus delivery/service innovation?

These are complex decisions that go beyond e-commerce strategy, and Amazon is a factor not to be ignored. We will continue to share our insights and findings, please feel free to contact us with any specific questions you may have.

E-Commerce Growth: Kroger Enters the Fray

August 13, 2018 Cheryl Perkins No Comments » E-Commerce, Food & Restaurant trends

Fresh FoodThe online shopping fray, that is. Kroger just announced its new e-commerce and home delivery push, Kroger Ship, which puts it squarely in the competitive race with Amazon, Walmart, Target,  and just about every other large US retailer.

Its offering is necessary but seems a bit late and may not be enough. Their prices are relatively low and no membership is required. Delivery speed of two days is decent. But Kroger Ship is based on its own brand and non-perishables only.  Can this really compete against the others — and Amazon most of all? They need ‘delighters’ to break people’s Amazon habit, especially Prime members. Plus, Amazon keeps raising the bar.

While Kroger has to be online and offer home delivery (cost effectively, quickly, and easily), the real question is how they will differentiate. Kroger’s other recent moves are far more powerful. Restock Kroger, the company’s strategic plan to redefine the food and grocery customer experience, includes Kroger Ship but goes further. They also:

Now, these are innovations!

The move into meal kits and fresh prepared foods is a smart one – with much higher margins than the center-aisle goods it is selling through Kroger Ship. If Kroger can combine the insight into customer preferences it gains from the lab with the convenience of meal kits and home delivery, they’ll have a winning formula. They still face competition, particularly from Aldi who just announced its launch of a fresh food home delivery service, but they’ll have an edge with the lab.

The Ocado Group and Nuro deals are also smart. Automated delivery, driverless trucks, and seamless online ordering will help make Kroger a one-click auto-decision for consumers.

Couple these innovations with Kroger brand loyalty, local appeal, and personalization, and they could easily pull ahead of the pack.

Innovation and Growth Leadership Summit: What’s uppermost on leaders’ minds

 

The Innovation & Growth Leadership Summit (IGL), held in Phoenix AZ, brought together a dynamic group of innovation leaders. Responsible for defining and executing growth strategies, participants shared many similar goals and challenges.

Key takeaways:

Differentiate by offering products that are personalized, premium, and make life better. Whether it’s multi-sensory, intelligent, or ensures health and longevity, innovations that go beyond what’s expected can break the commoditization mold. Sometimes the innovation is not the product, it might be the service, convenience or experience it offers. Product differentiation is not about features, it is about how products and services make life easier, more enjoyable, and perhaps even healthier.

Sharpen your e-commerce and online sales strategy; an Amazon presence is key. This means re-thinking how products are produced, priced, packaged, and marketed. Whether B2C or B2B, your online success will impact long-term competitiveness. Summit attendees heard about projections that indicate doubling of online procurement over the next decade. The time to move is now!

Have a focused vision and communicate it clearly. Share it with employees, partners, and customers; let them know the “why’s” as well as the “what’s.” Be an effective change agent, emphasizing the need for inclusion, collaboration, diversity, and an outside-in perspective. Make sure actions follow words. Too often leadership creates obstacles; be consistent and make people feel secure, confident, and supported.

Leverage your strengths and core assets. This means going beyond adjacencies, it means stepping back and seeing the big picture. What can your company do that is unique? Can you take your business to the next level by combining strengths as Amazon does regularly? Can working with partners further differentiate the value offered?

Others discussed operational excellence and enabling front-end tools and processes, as well as the changing role of R&D. Innovation requires leaps of faith; success is a mindset. When setbacks occur, try re-framing problems – often much larger opportunities emerge.

Since the Summit, we’ve been further exploring the topics of e-commerce, leadership, long-term vision, and game-changing growth strategies. Sign up to be an IE Insider to receive exclusive updates and special invitations. Be on the lookout for 2019 IGL Summit news – exciting plans are in the works!