E-Commerce: Unlocking Potential That Goes Beyond Sales

1E-Commerce: Unlocking Potential That Goes Beyond Sales E-Commerce: Unlocking Potential That Goes Beyond Sales A recent hybris audit of e-commerce capabilities in hydraulics distribution reveals gaps that go beyond just transactional capabilities. Contents Executive Summary 1 Industrial Challenges Require Unique Solutions 2 Matching Content with Customers 2 Survey Group Baseline 3 Inside the Numbers 5 Areas Where Hydraulics Distributors Should Focus E-Commerce Efforts 6 Off to a Good Start 6 Executive Summary While it represents one of the most promising opportu- nities for increasing revenues and profits for industrial distributors, e-commerce is also one of the toughest challenges. Recently, hybris commissioned a study that examined industrial distribution as a whole, and took an even closer look at specific segments, to uncover those with the greatest need for e-commerce enhancements. One sector that was readily identifiable related to dis- tributors of hydraulics products. Part of this extensive project was baselining industry- wide website functionality. After the results were ana- lyzed, it was apparent that many hydraulics distributors need to take measures to ensure their websites deliver more than just general information. The next crucial investments will enable them to fully realize the benefits of product data, customer service, sales support, and sales made over the web. This report summarizes findings from 66 websites in the hydraulics distribution sector, and offers: An analysis of the sector, the customer base, and critical issues. Guidance on how distributors can respond to evolving buyer needs. Best practices for evaluating e-commerce technology vendors. A checklist of what to look for in selecting the right platform. 2E-Commerce: Unlocking Potential That Goes Beyond Sales Industrial Challenges Require Unique Solutions Distributors in the hydraulics sector face challenges that, while not exclusive to the distribution commu- nity, require unique solutions to integrate a successful e-commerce platform. For example, many distribu- tors work towards being a “one-stop shop” for their customers. For hydraulics distributors, this means not only carrying a large quantity of product types, but having significant depth within the category to properly service a multitude of diverse industries. More specifically, there are challenges facing distributors of hydraulic products, such as: ApplicAtion specificAtions are rarely universal, meaning there is a high number of specialized products that must be readily available to service customers from medical device development to mining equipment maintenance. MAteriAl chAnges focused on fluid handling and durability continues to be a constant for products in this category. These should be understood by distributors and effectively communicated to customers for both groups to realize the benefits of these advancements. sustAinAbility demands also come into play as customers want prod- ucts comprised of durable materials, and need them to be environmentally friendly, require a smaller physi- cal footprint, and help conserve energy, lubricant, and other fluids. service is always a vital element of a distributor’s business model and one that can provide a competitive distinc- tion, especially when dealing with a category like hy- draulics, where products are being updated frequently. Effectively meeting all these customer demands requires the managing and sharing of an incredible amount of product data. Information gleaned from the website audit clearly shows that this is an area where most hydraulics distributors need significant improvement. The audit showed that only a little more than one-third (35 percent) were set up for product code searches, and 46 percent allowed for search by product name on their websites. About one-third displayed product images. This segment’s lack of online information about the products carried may illuminate the first step in real- izing the benefits of e-commerce. Being behind the times may limit this group’s ability to achieve the business growth and increased customer loyalty that others who have embraced e-commerce capabilities see on a daily basis. These value-added elements can be key competitive differentiators within the hydraulics distribution space, and the broader industrial market. Matching Content with Customers The customer base of the hydraulics distributor is quite diverse. This means any e-commerce platform, in terms of transactional processes and research data, must mesh with the nuances of each industry, and the category of each buyer. purchasing professionals serviced by hydraulics distributors include: industriAl Mro buyer From a purchasing perspective, this group of plant floor operations and maintenance managers is probably the least concerned about price and most concerned about how quickly an order can be fulfilled. This does not mean price is unimportant, but having access to product information (provided by 61 percent of audited websites), comparable products (11 percent), shipping information (13 percent) and quick, secure payment op- tions (14 percent) will be of greatest importance. oeM product developMent For this group, pricing information, access to product and supplier data, comparable specification informa- tion, and timeliness of fulfillment are critical bench- marks when selecting a distributor. The audit showed that hydraulics distributors have much ground to gain in product attribute search (available on only 31 per- cent of audited websites), delivery costs (visible on 10 percent of audited sites), shipping timelines (7 percent) and downloadable product specifications (22 percent). corporAte procureMent This group places equal importance on price and simplicity of the purchasing dynamic. Automating the process, ensuring it is reliable, providing visibility on fulfillment, and easing integration with internal systems all play a key role in selecting a distributor for this type of buyer. Providing turnkey e-commerce solu- tions would be extremely inviting, making criteria such as pricing information (clearly displayed on 29 percent of audited websites), generating invoices from previ- ous orders (5 percent), and adding new cost centers (2 percent) key competitive advantages for hydraulics distributors in winning over this customer base. 3E-Commerce: Unlocking Potential That Goes Beyond Sales The evolving role of all these procurement profes- sionals has created a significant, competitive shift in the industrial marketplace. It is no longer acceptable to assume that customers know and understand the value and breadth of a distributor’s offerings. More purchasers are looking for comparison options and ac- cess to product data and pricing. Additionally, younger professionals are more comfortable with electronic interaction and purchasing transactions. Distribu- tors focused on catering to these needs hold a distinct competitive advantage, while those who do not face limited growth potential. It is important to show that, although the audit did un- cover a number of areas where hydraulics distributors need to improve, it also identified some of the basic e-commerce building blocks that are already in place: Survey Group Baseline The audit of the hydraulics segment found that most distributors in this group have serious limitations when it comes to selling online. Of the audited pool, all had websites, but they varied significantly when it came to product information, and many fell short in providing a comprehensive e-commerce experience. the sites of these 66 distributors essentially fell into three categories: poor dAtA, poor coMMerce. Those in this group have a long way to go in growing or establishing their e-commerce platform. Outside of general information about the company, contact infor- mation, and a line card of suppliers, there was very little progress towards developing e-commerce on the site. In the multi-tier approach required to develop a multi- faceted e-commerce platform, these distributors need to present more product information on their sites. good dAtA, poor coMMerce. The distributors in this group have taken the first step of providing more detailed product information, but opening an account online is usually not an option, there is little visibility of an e-commerce program without first contacting the company, or e-commerce is simply not provided. While the quantity and diversity of the provided information is a plus, these distributors will either need to make investments that expand their content management system to enable e-commerce opportunities, or look to find a CMS with embedded e-commerce functionality. The good news is that these distributors have a wealth of information at their dis- posal – the bad news is that they are failing to capital- ize on its potential. good dAtA, good coMMerce. This group would be considered the cream of the crop in their e-commerce offerings. They provide good, thorough product data and the ability to search for, compare, and purchase products. This group has plucked all the low-hanging fruit and is now charged with higher-level e-commerce functionality improve- ment that could include greater visibility on shipping times, enhancing search functions with features such as finding misspelled search terms, and providing more account management options. provided access to a customer service e-mail address or contact form.72% of the audited sites offered access to techni- cal specifications.61% also allowed for setting up an account online.41% 4E-Commerce: Unlocking Potential That Goes Beyond Sales this hybris-led audit of hydraulics distributor sites also analyzed six major areas of functionality: seArch And nAvigAtion The ability to quickly locate specific products and infor- mation about them is a cornerstone of e-commerce. The lower percentages here reflect the lack of product information common to this group’s sites. featured product code searches.35% of sites allowed users to search for a product name (free text search). 46% allowed for sorting search results by criteria such as price.18% custoMer service This appears to be both an area of strength for hydrau- lics distributors, as well as a work in progress. 21% of the audited sites provided information on how to create an account.41% clearly displayed a phone number for customer service on most sites. provided an e-mail. 77% provided FAQs.15% product inforMAtion This will continue to be an area of focus for hydraulics distributors, although some promising first steps have been taken. clearly displayed pricing.29% of the audited sites of- fered visibility on prod- ucts currently in stock. 22% showed product dimensions and tech- nical specifications.61% 21% provided a downloadable PDF of product data. checkout, delivery, And custoMer Account MAnAgeMent These are all areas where hydraulics distributors need to improve their e-commerce operations: offered named day deliv- ery, and 13 percent pro- moted next day delivery. 7% of the audited sites allow for making a payment on an established account. 21% of the audited sites provided visibility on previous orders. 17% 16% allowed for tracking open orders. 5E-Commerce: Unlocking Potential That Goes Beyond Sales reported that product con- tent management is an overwhelming prospect.24% stated that “management supports this initiative.”28% cited a lack of either IT or financial resources.20% felt it was “too big of an undertaking right now.”12% did not see a clear ROI.14% To the question of what was needed to improve online selling opportunities, the responses show that initial priorities are in place for attacking e-commerce shortcomings: understand that an improved website could enhance sales reps’ cus- tomer service capabilities. 29% cited the need to make web experiences easier and more appealing.42% agree on the need to im- prove product content.29% feel integrating elec- tronic offerings on a mobile-friendly platform is an area in need of greater improvement. 26% Inside the Numbers Looking at responses from a survey of hydraulics distributors performed by Industrial Distribution shows that, while significant progress is needed in establishing e-commerce platforms, this group has a solid grasp of where they need to improve. Of greatest concern may be this group’s lack of current strategy or in-depth appreciation of the competitive advantages e-commerce represents. Not surprisingly, 55 percent of those responding stated that they do not sell online, are developing a strat- egy, or know it will play a large role long-term, but it is not a priority right now. Additionally, 87 percent saw 10 percent or less of their revenue coming from e-commerce. Of these respondents, more than one in three had zero revenue from online purchasing. While this sends up some red flags in terms of e-commerce development, it also spotlights the tremendous growth potential hydraulics distributors could realize with greater focus and dedication of resource to online sales initiatives. When asked about a timeline for investing in e- commerce technology, a lack of urgency was notice- able among these distributors. More than 40 percent stated they would not be looking to allocate funding for such a platform within the next 12 months. Another 29 percent felt it would be at least 18 months before significant financial resources were allocated for e- commerce development or improvement. positive information can be seen in the responses to a question on the challenges hydraulics distributors face in executing on-line purchasing: About hybris, an SAP Company hybris helps businesses around the globe sell more goods, services and digital content through everytouchpoint, channel and device. hybris delivers OmniCommerce™: state-of-the-art master data management for commerce and unified commerce processes that give a business a single view of its customers, products and orders, and its customers a single view of the business. hybris' omni-channel software is built on a single platform, based on open standards, that is agile to support limitless innovation, efficient to drive the best TCO, and scalable and extensible to be the last commerce platform companies will ever need. Both principal industry analyst firms rank hybris as a “leader” and list its commerce platform among the top two or three in the market. The same software is available on-premise, on-demand and managed hosted, giving merchants of all sizes maximum flexibility. Over 500 companies have chosen hybris, including global B2B sites W.W.Grainger, Rexel, General Electric, Thomson Reuters and 3M as well as consumer brands Toys“R”Us, Metro, Bridgestone, Levi's, Nikon, Galeries Lafayette, Migros, Nespresso and Lufthansa. hybris is the future of commerce™. www.hybris.com | [email protected] Version: September 2014 Subject to change without prior notice © hybris hybris is a trademark of the hybris Group. Other brand names are trademarks and registered trademarks of the respective companies. Areas Where hydraulics distributors should focus e-commerce efforts The process of implementing and evaluating e-commerce solutions can be daunting. The following defines a number of key components that distributors of hydraulics products should consider when enhanc- ing existing technology or installing a new commerce platform. off to a good start Hydraulics distribution companies are aware that their market positions are at risk if they do not find ways to streamline their marketing and sales operations by leveraging the automation and efficiencies that e- commerce technology has already actualized in other, faster-moving industries. Strong internal advocacy, and the right guidance from an experienced e-commerce platform developer with a track record of success in industrial distribution, can help resolve product data issues and educate decision makers on the potential for a substantial ROI from the correct infrastructure. The scope of any new e-commerce project should be thoroughly analyzed to ensure that the business takes the right steps towards staying competitive, to adequately serve customers and prospects, and grow revenues and profits as aggressively as possible. eMpoWer the custoMer to MAke An inforMed decision > Product comparison and the ability to hide similarities. > Product reviews. > Videos, photos, and blogs embedded with the product information originating from manufacturer, distributor, or customers. > Product information, schematics, user guides, and standards certification. seArch And discovery > Auto recommend search parameters. > Category and faceted search. > Personalized catalogs for industries and users. > Product and accessory recommendations based upon past buying and current browsing behavior. > Integrating inventory availability into the commerce experience to show units available, and presenting alternative products if a product is unavailable. > Present alternative delivery methods at time of sale, like Saturday delivery or “order by 5pm for next day guaranteed delivery.” > Select shipping options by product and order, including shipping discounts for “orders over $200” or another threshold. trAnspArent And seAMless coMMerce And supply chAin relAtionship For a no-obligation website audit – or to see where your site ranks in comparison to other hydraulics distributors, please feel free to send an email request to: [email protected]