Caught in the Web
Maximize your web investment with these strategies for success
By Bridget McCrea, Contributing Editor -- Industrial Distribution, 2/1/2006
Eric Savelle remembers a time when just about 75 percent of Waterbury, Conn.—based Tools-Plus' sales were generated online, mainly through its own Web site. It was the early 2000s, and most industrial distributors were still trying to figure out what the Internet meant for their business Even better, online retailers like Amazon.com had yet to move into the industrial space, and were still sticking with their core product lines.
'As new companies came online to sell products like ours, our piece of the pie had definitely slipped,' says Savelle, president of the 12-employee distributorship of hand tools, power tools, and related accessories. Today, he says only about half of the firm's sales are generated online—small in his eyes, yet respectable by industry standards. To keep up with the Graingers and White Cap Industries' of the world, Savelle says, Tools-Plus keeps its prices competitive, and thrives on volume.
Savelle, who figures that since 1999 he's spent more than $100,000 on his firm's Web strategy, says the payoff was significant three years ago, but has since been reduced because more of his competitors are vying for a piece of the Internet pie.
'It seems like everyone who has a physical store has a Web site,' says Savelle. 'Luckily, we started early enough and are somewhat ahead of that curve.'
Along the way, Savelle says he's gained valuable insight into Web shoppers. For one, they're price conscious, thanks to their ability to compare prices with just a few clicks of a mouse. They're also less loyal, says Savelle, and extremely concerned about delivery times, customer service and even the way an item is packaged.
To meet and exceed those standards, Savelle says distributors like Tools-Plus often find themselves putting more time into service and presentation, and grappling with thinner profit margins than they're accustomed to.
'It's definitely a balancing act,' says Savelle. 'It all comes down to being able to run your business and manage expenses, while at the same time focusing on sales growth, your competitors and always staying ahead of the pack online.'
Beyond bricks and mortar That small to mid-sized industrial distributors are still trying to find a profitable place for themselves on the Web is no secret. While their larger counterparts can throw resources and money at their Web strategies, the typical distributor relies on trial and error to find out what works and what doesn't, then implements from there.
Their efforts are warranted, according to a new industry survey, which found that nine out of 10 industrial buyers start with the Internet to source products and services.
'If your company is not represented online, you are losing business to competitors who have an online presence,' says Susan Orr, director of strategic marketing for New York—based ThomasNet.com.
What are industrial buyers looking for online? According to the study, 90 percent seek out product descriptions and specifications; 84 percent want product pricing; 64 percent are looking for local distributors; and 61 percent want details on tech support.
Orr urges distributors to keep this 'wish list' in mind when establishing new, or upgrading existing, Web sites.
To ensure that their sites attract the maximum number of visitors and convert as many of them into customers as possible, distributors should avoid 'slapping up a Web site' similar to their printed brochures or catalogs in order to gain a presence online, says Chris Consorte, president and CEO of Mineola, N.Y.—based online marketing and lead generation firm Integrated Interactive LLC,.
'Companies need to promote their sites and optimize them for the search engines,' says Consorte. 'If your mentality is 'build it and they will come,' they'll never find you!'
According to Michael Hugos, the Mt. Prospect, Ill.—based author of Essentials of Supply Chain Management and a former CIO for a network services firm, distributors also run into challenges by making their sites too complicated and flashy, without regard to the end-user experience.
'People go to entertainment sites when they want fancy graphics,' says Hugos, who points out that industrial customers visit distributor sites for several reasons: to order products; to check on the status of a previous order; to learn about new products and promotions; and to get reports on their purchases of products over the past year.
To get there, Hugos suggests interviewing five key customers and five newer customers to gain insights into what they like and what they don't like about your site, and what they wish it would provide.
'Define the value that your Web site can deliver to you and your customers, in the area of increased sales, decreased customer service costs, and advertising,' says Hugos.
Maximize those Web dollars For a Web strategy to be successful, Consorte says it must start with a strategy, be followed by a plan and supported by a bud-get. Figure out what you want to accomplish, he adds, be it sales, leads, inquiries or a combination of the three. Web sites are a mix of marketing, sales and technology, says Consorte, and that 'failing to use any of these is a recipe for doom.'
On the site itself, visitors must have clear navigation, easy ways to interact with and/or contact the company, and a shopping cart function that's simple to use.
'Click, buy, checkout and wait for your order to arrive—it's that simple,' says Consorte, who estimates that a distributor will spend $3,000 to $10,000 for a standard site, and $10,000 to $50,000 for an e-commerce site. 'There's no need for creatively overdone Web sites—just the basics will do.'
Other components to include are instant chat functions (where an operator can interact with the customer online via a chat window), blogs (where consumers can communicate with and about the company and its product), and a clearly merchandised homepage that features the firm's key products and services. Sites should be updated as often as necessary.
Savelle says his firm's Web site is updated daily via an automated system that changes product, pricing and availability information. He considers a professional Web site designer important, not so much for the 'look' of the site, but more for its functionality. By far, Savelle says, content tends to be the most important aspect of a site, particularly for distributors trying to stand out in an online space.
That content can be both a blessing and a curse for the small to mid-sized industrial distributor.
'[Some] 800-pound gorillas can basically get away with simply listing an item and its price, while we're the ones introducing these items to the customers,' says Savelle. 'We pioneer the products for the manufacturers, who go off and offer them to our biggest competitors, who in turn get first dibs on those customers who are most concerned with price.'
Despite the fact that his own distributorship's Web site doesn't rack up the same sales volume that it once did, Savelle says having an online presence continues to be important for industrial distributors. Hugos adds that at this point, if a distributor does not have a minimum of a Web-based product catalog, order entry, and order tracking, 'they will not be thought of as serious players in the industry.'
The good news is, a fully featured Web site five years ago may have cost $1 million or more, but today can be had for $15,000 to $50,000, according to Hugos, who advises distributors to tap the services of their existing ERP vendors for help in this realm.
'Let that vendor host your Web package for a small monthly fee,' says Hugos. 'Get started quickly and simply. Then watch to see what happens and what customers ask for before making the next investment.'
And be sure to dedicate both time and money to the cause, says Consorte, which includes figuring out what you really want from your site, and how you're going to turn those goals into reality.
'Hire if you need to, or, for not getting what they want from a current site, fire if you need to,' says Consorte. 'The time is now. Your audience is waiting for you.'
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