March Editorial: Industrial Distributors' Technology Learning Curve

ID editor Mike Hockett discusses the rate of technology adoption among industrial distributors and the generational gap among its every day usage.

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It’s no secret that many industrial distributors that are at least several decades old aren’t exactly tech-savvy. ID’s 2016 Survey of Distributor Operations — of which 57 percent of respondents were distributors with annual sales of less than $50 million — showed that 40 percent don’t view e-commerce as a priority, 45 percent don’t have a customer relationship management platform, 79 percent don’t use sales force automation and 60 percent don’t have an enterprise resource planning system.

Though each of those figures has long-trended toward increased utilization, they are still surprising numbers given today’s B2B customer climate. Generation Y and Millennial employees — basically anyone born between 1977-1995 — now make at least half of all business’ buying decisions, and the vast majority of them are tech savvy.

The biggest paradox in our survey is that 90 percent of distributors said they buy products online, yet only 60 percent viewed e-commerce as a priority for their business.

The industrial sector has been notoriously slower to adopt tech trends than the consumer world. But while more and more industrial distributors are embracing technology, the rate at which they are doing so is certainly slower than I expected.

Many distributors I visit and talk with say e-commerce is something everyone in the industry has to do, while others say it doesn’t make sense in their case. My opinion is somewhere in the middle. If your customer base has made no considerable demand for an e-commerce offering, it may not be worth the financial and time investment to implement it. This is especially true for small distributors. But I think all distributors — regardless of size — have to at least offer a website that allows customers to check inventory levels and product information. Sure, some customers still prefer picking up the phone and calling a distributor to get info, but more and more will prefer to find it online.

In January I visited a plumbing/industrial distributor outside of Milwaukee. Their industrial sales manager told me about a recent meeting he had with at a long-time contracting customer, where he spoke with a project manager aged in his 60’s, as well as a group of younger managers. While discussing product specs and pricing, he said the younger managers all asked, “Can I find that on your website?” Meanwhile, the older manger wanted it handed to him in paper form. This perfectly exemplifies the industry’s age gap and isn’t surprising, but is a hard truth nonetheless.

That industrial sales manager went on to say that back in the day, a lot of industrial sales used to come from salespeople going fishing or to ballgames with clients, whereas today’s sales climate is losing that personal touch.

It’s fine for distributors to try and maintain the level of personal touch they have with their customer base, but being overly stubborn about it won’t help. The key is in finding that balance between technology utilization — which undoubtedly increases efficiencies throughout operations — and the invaluable element of face-to-face interaction.

My advice to distributors struggling with this challenge is to embrace technology to compliment your personal touch, not replace it.

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