Increasingly, distributors are investing in software solutions that help their customers better manage their own operations and those that are reaping the benefits. For example, the few distributors that provide inventory management software as a value-added service to their HVACR contractor customers for their service trucks and warehouses are seeing their gross margins grow by over 35 percent. The benefits to the customers are clear, and most are quick to bite when offered access to real-time inventory tracking and reliable automated replenishment, as well as insights they didn’t have before.
Many distributors have historically been reluctant to invest in the latest technology for their own operations, much less their customers’. Their first instinct may be to want to resell the software as a product to recoup some of their costs.
While you could do that—and some do—the benefits of offering technology to your customers far outweigh the costs. What’s more, distributors that don’t consider solutions like this risk getting crushed by Amazon Business, which continues to tie themselves ever closer to their customers through technology.
Here are three reasons providing technology to customers is worth the investment:
Added Value for Customers – and Distributors
Back to the example above: A distributor offering a technology solution that links their inventory systems with that of their contractor customers drives value for both. The contractor gains better inventory control, fewer stockouts, the ability to complete more jobs in a day (no more last-minute supply runs) and reduced carrying costs. The distributor gains increased wallet share, decreased customer churn and increased demand creation because of the visibility they now have into what the contractor is buying.
When a customer is on a distributor’s platform, the percent of their spend naturally grows, assuming your service is consistent. And because of the benefits they are gaining, the customer’s business grows as well. That growth comes right back to the distributor.
A Stronger Position Against Amazon
Amazon can’t offer customers—especially small- to mid-sized ones—a systems-oriented approach to operate more efficiently overall.
Distributors must move from traditional brick-and-mortar relationships that are labor intensive to digital relationships that retain customers’ preference for a personal partnership. If distributors can deliver under the two-day limit, they have the advantage of expertise in the industry and established relationships. Technology gives distributors the tools to act as sophisticated as Amazon, but with the experience of the partnership they’ve worked on for decades. And as the younger generation takes their place among decision-makers in customer organizations, they’ll come to expect automation and a seamless connection to their suppliers through distributor-provided technology.
A Proactive, Rather Than Reactive, Strategy
With the right technology, distributors gain unprecedented visibility that allows them to be proactive instead of reactive. The distributor offering inventory management software to its customers, for example, now has visibility into actual spend, regardless of supplier. As a result, they can uncover new opportunities to sell more. Distributors are also well positioned to protect their top customers and keep the competition out with real-time data; they can also spot potential problems before customers consider going somewhere else.
Technology is the strategic opportunity that allows distributors to walk in the door with more than just donuts. It opens the discussion up to everything from consumption to strategy. Investing in technology that links distributor operations with those of their customers’ helps distributors compete, grow margin and offer the relationship-based partnership that customers are looking for.
Brian Henderson is the Director of Sales at MarginPoint. MarginPoint Mobile Inventory is an ideal solution for HVACR, electrical, plumbing, facilities management and other organizations. Distributors are invited to partner with MarginPoint. Learn more at www.marginpoint.com or email Brian at [email protected].
