1The Path to the Connected Distributor© 2016 SAP SE or an SAP affiliate company. All rights reserved.
The Path to the
Connected Distributor
A Transformation Imperative
Today’s economy is far more sophisticated and agile than
in previous decades. In the B2B and B2C worlds, the
primary point of focus is the individual customer. The chief
catalyst is data, and the medium that brings it all together
is the Internet.
Wholesale distributors must seriously review and redefine
their business models to capitalize on this change. At
stake are all current revenue streams, and many new
ones, some of which may be entirely novel and external
to any existing five-year plan.
B2B buyers are more sophisticated than ever and expect
the same customer experience in business that they have
come to rely on in their personal lives as consumers
empowered by digital technologies. The Omni-channel
experience includes high-touch and personal experiences
across online, telephone, and in-person interactions.
Of greatest importance in wholesale B2B selling are the
ideas of customer centricity and the use of data and agility
throughout the distribution stream. Embracing new best
practices here allows for more opportunities in all other
areas of business support, including marketing, commerce,
sales, and service.
In short, the wholesale distributor must transform into
a connected distributor.
2The Path to the Connected Distributor© 2016 SAP SE or an SAP affiliate company. All rights reserved.
Contents
Key Trends Affecting Wholesale Distribution 2
Wholesale Distribution Up Until Now 4
What Customers Are Saying 5
The Connected Distributor 6
Driving Customer Centricity through Contextual
Engagement 6
Re-Tooling the Sales Kit 6
Targeting New Revenue Streams 7
Data Is King 7
Proactivity Helps Guide Customer Decisions 8
Digitizing Is Not the Same as Transforming 8
Agility Is the Hallmark of Modern Business 8
Key Business Goals for Wholesale Distribution 9
The Net-Net of Transformation 10
Key Trends Affecting Wholesale Distribution
Traditionally, wholesale distributors have worked outside
of the spotlight – purchasing, coordinating, and moving
products in bulk, allowing the public eye to come to rest
exclusively on the retailers who operate at the end of the
line. However, disruptive forces are pushing all the way up
the channel, and affecting distributors directly.
Evidence of this is apparent in the results of a September
2015 study1 conducted by Forrester Consulting,
commissioned by SAP Hybris and Accenture.
The top three investment drivers for Omni-channel sellers
were customer-specific, as shown in the graphic at right.
THOSE THREE DRIVERS ARE:
> Meeting customer expectations
> Providing a consistent experience across channels
> Recognizing the lifetime value of the Omni-channel
customer
This is especially significant since these considerations
edged out cost savings, competitiveness, and growth
issues as priorities. This accentuates the fact that
commerce is changing across the board, and directly
affecting distributors.
1 Mastering Omni-Channel B2B Customer Engagement, September 2015,
Forrester Consulting, commissioned by SAP Hybris and Accenture.
Base: 450 (2015) and 526 (2014) business decision-makers with more than 1,000 employees (500+ in Europe) in North America and Europe
Source: A commissioned study conducted by Forrester Consulting on behlaf of SAP Hybris and Accenture Cigital, September 2015
What would you say are the primary drivers behind your organization's investment in omni-channel initiatives?
100%
74%
65% 64%
60%
55%
51% 54% 50% 53% 49%
59% 56%
41%
36% 38%33%
66%70%
40%
90%
60%
30%
80%
50%
20%
10%
To meet
customer
expectations
The omni-
channel customer
has a higher
lifetime value
To match our
competitors'
practices
To provide a
consistent
experience
across channels
To drive
additional
efficiencies
and cost
savings
To see an
uplift in our
customer
satisfaction
metrics
To gain a
competitive
edge over
online
pure-plays
To reduce
customer
service /
call center
expenses
For inter-
national
growth /
globalization
2015 2014
3The Path to the Connected Distributor© 2016 SAP SE or an SAP affiliate company. All rights reserved.
BELOW ARE FIVE SIGNIFICANT WAYS THIS IS HAPPENING:
Commerce has become high touch and personal. Consumers are experiencing greater
personalization and power while shopping for themselves, online and in-store. They receive
instant information on price and availability and enjoy tailored service. They carry this
expectation across to their interactions in B2B, and this includes the supply side.
Wholesalers are facing pressure to alter their operations rapidly and radically, and provide
the same type of end-to-end tailored service that has become routine in retail.
Competition is increasingly originating from non-traditional sources, including online
giants like Amazon, and manufacturers who sell direct. Disruptors are moving into the
markets and channels traditionally served by distributors. Wholesalers are being squeezed,
as brands weigh their options of selling direct or choosing other marketplaces, none of
which require the services of wholesale distributors.
Generational issues are also having an impact. The people who do the purchasing are
getting comparatively younger, many being part of Generation Y, and they march to a
different beat. Some people in sales and distribution face challenges with understanding
and catering to the needs and styles of millennial and Gen-Y buyers.
The marketplace is gaining velocity. Viral trends emerge instantly and disappear just as
quickly. Retailers constantly reinvent themselves and their offerings for a demanding public.
This compels every player in the industry to evolve more swiftly, become more efficient, and
provide more memorable customer experiences.
Industries are consolidating, reducing the need for wholesale distribution services, and
increasing market pressure. Agility and high touch are not terms that the wholesale world
has traditionally been familiar with, but the need to transform is pressing and permanent.
Each of these trends has a significant impact on a business that has not had to face the minute-by-minute influences
that their retail partners have experienced – until now. These trends point to customers, not to pricing or logistics,
and this is a whole new ball game for distributors.
4The Path to the Connected Distributor© 2016 SAP SE or an SAP affiliate company. All rights reserved.
Wholesale Distribution Up Until Now
Three fundamental concepts illustrate the traditional and current status of the wholesale distribution industry.
Relationships:
Wholesale distribution has, for a long
time, relied on relationship selling to
capture and secure customer loyalty
and ensure repeat business.
Nurturing a consistent customer
base has remained the primary
method for ensuring slow and steady
revenue growth over time.
Apathy toward online commerce:
In past years, online commerce
has not played an important role
for wholesale distributors, with
respondents to an SAP Hybris State
of E-Commerce in Distribution2
survey reporting that only 5% to 10%
of their total sales are coming from
that space. This is significant in light
of reports on buyers’ changing habits,
which reveal that “70% of B2B buyers
are doing research online before
purchasing.”
Technological inertia:
Wholesalers and distributors have
been conservative in their adoption
of new technology. After making
significant investments in ERP and
other platforms, a move into new
forms of digital commerce is difficult
for some. To many, the Omni-channel,
mobile world may seem like just
another disruptive IT expense. The
traditional approach has been one
of “slow and steady wins the race,”
paired with a belief that industrial
enterprises, craftsmen, restaurants,
canteens, resellers, and consumers
will always need an intermediary to
get the goods to where they need
to be. But, this no longer applies
universally.
2 The 2015 State of E-Commerce in Distribution
survey was sponsored by SAP Hybris in
partnership with Modern Distribution
Management and Real Results Marketing.
5The Path to the Connected Distributor© 2016 SAP SE or an SAP affiliate company. All rights reserved.
Most customers are already there. Consider the following statistics:
Source: Mastering Omni-Channel B2B Customer Engagement, September 2015, Forrester Consulting, commissioned by SAP Hybris and Accenture.
What Customers Are Saying
At all levels, including B2B, customers have evolved
to a level of sophistication in which the industry term
e-commerce is quickly becoming obsolete. To survive
and thrive, every business must be digital to a significant
degree, and as such, the first “e” in e-commerce need
not even exist. Online commerce is not optional.
It enhances customer relationships and retention.
It opens up new markets and segments. It moves
high-cost customers into lower-cost channels.
92%
By 2017, 92% of distributors
will be selling products online.
Source: SAP
38% of customers are using
online channels exclusively
Another 32% use a combination
of online and offline channels
B2B buyers are incorporating
digital channels more and more
into their buyer journey
98% of global business buyers do
at least some online research on
work-related purchases that they
make offline
Buyers are increasingly
turning to consumer sites
to research products
While almost all respondents have
access to a company-mandated internal
portal or a company-dedicated buying
Web site, they are using an array of other
sources to start researching products
and services that they purchase for work
56%
By 2017, 96% of B2B buyers
will complete at least half of
their purchases online.
Source: US B2B eCommerce
Forrester: 2015 To 2020, April
2015, Forrester Research
6The Path to the Connected Distributor© 2016 SAP SE or an SAP affiliate company. All rights reserved.
DRIVING CUSTOMER CENTRICITY THROUGH CONTEXTUAL ENGAGEMENT
The supply chain that distributors support is somewhat
dated. A singular, linear sequence no longer exists. A
more accurate representation is that of an ecosystem –
an organic economy where anyone who adds value can
participate and engage customers. This gives rise to the
need for individualized strategies, agility, and some
surprising symbiotic relationships.
It is imperative for distribution organizations to
embrace these developments and foster a renewed
customer-centric mind-set across every line of
business, a concept called contextual engagement.
Whether a supplier has one hundred, one thousand,
or ten million customers, each should be catered to
singularly and specifically. The tools exist to help
accomplish this, something that would have been
unimaginable and logistically impossible just a few years
ago. Big data, instantaneous online communication, and
mobile technologies make it possible to get personally
involved with each customer, delivering relevant content
and personalized offers to win and retain business.
A number of properties must be developed within an
organization to foster a successful culture of contextual
engagement.
THESE INCLUDE:
> Agility, the capacity to pro-act and react in sync with
quickly changing customer demands
> Reduction of complexity in processes, allowing for
seamless, personalized contact
> Constant measurement and re-measurement of
data and facts about a customer’s needs and history
> Unification of processes and resources to facilitate
direct, contextual service
> Self-service tools that allow the customer to drive
the relationship
> Development of tools that create a dynamic,
content-rich engagement environment
These tools help build a closer, more relevant relationship
with customers as they approach the company online.
This is just as applicable to wholesale distributors’
relationships with manufacturers and their customers
as it is to the general public, since they relate to stores.
RE-TOOLING THE SALES KIT
The role of the sales force is changing, and must be
updated in the wholesale environment. Since buyers
already have access to the information they need to
make purchase decisions, sales reps must adopt a
more proactive role as a trusted advisor, equipped with
collaborative selling capabilities and real-time customer
information, which together enables them to service
customers anytime, anywhere. This requires investing in
technologies that support the customer journey, along
with appropriate interpersonal skills.
The Connected Distributor
89%
of business leaders believe that customer
experience will be their primary basis for
competition by 2016.
Source: Gartner
B2B customers are using their mobile
devices to research and buy online.
68%
of contractors use smatphones, and
37%
of contractors use tablets
Source: Gartner
B2B buyers prefer
3:1
to self-educate rather than speak
to a sales representative.
Source: SAP
7The Path to the Connected Distributor© 2016 SAP SE or an SAP affiliate company. All rights reserved.
TARGETING NEW REVENUE STREAMS
A constantly updating marketplace becomes a prime
opportunity for distributors to uncover new revenue
streams. They are being discovered or invented
everywhere. A water utility is now likely to venture into
leak detection services. Sharing economy companies
like Uber and AirBnB have changed the transit and
hospitality businesses.
Established distributors can do the same, venturing into
new opportunities for delivery, fulfillment, logistics,
channel management, inventory management, and more.
The new economy demands far less infrastructure and
capital investment than in previous decades, and this
enhances the need for agile, creative thinking.
The constant search for new revenue streams is critical to
the future of successful, profitable wholesale distribution
companies.
DATA IS KING
Public-facing retailers have already learned an essential
lesson: a customer’s data is more important than their
dollars. Although the sale of an item may yield a profit for
a retailer, the information a customer provides – such as
interests, browsing history, location, and demographics –
becomes the raw material used to generate high-touch,
targeted sales opportunities. This is the essence of
consistent, Omni-channel commerce – and it is valid
for B2B commerce, too.
> If a customer’s purchase information has been stored
once, it should never have to be re-entered.
> When a customer speaks to a service agent or sits
down with an account rep to commit to a sale, the
relevant information, such as contract, inventory
availability, delivery information, and customer profile,
should be easily accessible on the nearest computer
or smart device without backtracking or delay, even in
an area without Internet connection.
> When a customer reviews a vendor’s value statement,
it should be clear that it includes service and solution
models that help drive down and manage total cost of
ownership.
Innovative wholesale companies must capitalize on data-
driven insights and make intelligent business decisions
to maximize marketing ROI. This is done by leveraging big
data to create a customer “golden record” and analyzing
both transactional and behavior data in real time.
Innovators seek new ways to leverage the data contained
within ERP and CRM systems. They recognize these
platforms as the keys to future commerce that will
deliver more robust and relevant information to the field
more quickly. This information will be packaged in ways
that compete not solely on price, but that also provide key
account reps with rich, accurate, real-time insights into
product capabilities and availability.
Agile use of data helps guard against competitors who
are already playing a new form of the game, invading
traditional markets. While many wholesalers have
positioned ERP as the central nervous system of their
operations, integrated commerce platforms expose ERP
to customers in new and productive ways, acting as a
translator between customer expectations and the order
fulfillment process. Real-time data benefits the end
customer, who can gain real-time insight into inventory,
order status, and other valuable information.
“Good metrics are incredibly difficult to obtain. You can obtain all sorts of information, but how
much of it relates to how much customers stick with you when they have an alternative choice,
or come to you in the first place?” Finance director at a global manufacturing firm
8The Path to the Connected Distributor© 2016 SAP SE or an SAP affiliate company. All rights reserved.
PROACTIVITY HELPS GUIDE CUSTOMER DECISIONS
When data is available, a new opportunity arises in the
area of proactivity. Wholesalers can take the lead in
assisting their customers to make economic choices,
by leveraging the analytics of big data.
This may include early alerts to reorder, opportunities for
discounts, suggestions or nudges to order other products
that are related to current purchases, but not in an
obvious way, or simply opportunities to save money, time,
and resources.
Analytics allows the vendor to take the first step and lead
the customer to an even more suitable place.
Digitizing Is Not the Same as Transforming
Many companies have established mobile-friendly Web
sites and a social media presence, but this type of
digitization does not equal transformation. It is certainly
better than nothing, and it does allow customers to find
solutions online, but does not represent maximized
transformation.
Transformation means the connection between
wholesalers and their customers is all-encompassing
in its customer-centricity. A customer should control the
desired service level, from full service to self-service,
and this should be changeable during any interaction.
No matter the level a customer chooses, or the channel
they select – phone, desktop, smartphone, or tablet – their
choices and needs must instantly and seamlessly connect
with a supplier’s business process automation.
Agility Is the Hallmark of Modern Business
An agile mind-set allows for procedures that were
unheard of just a few years ago. For example, marketing
departments can generate real-time product catalog
updates so that physical documents, in either print or
PDF format, match their online and mobile counterparts.
Marketing content can flow automatically into predefined
design templates, reducing labor hours and costs, while
increasing accuracy. Accurate and consistent product
categorization enables big data analyses of how
customers interact with the organization.
These types of innovations help distribution management
respond faster to changing conditions, better aligning
purchasing, sales, and supply chain management, to
maximize profitability and minimize expenses. They
require less time, staff, and resources to perform data
synchronization, which in turn drives consistency across
offline, online, and mobile operations – as well as
automated customization for localized markets,
regions, and business regulations.
According to a recent report by Forrester Research3,
US B2B ecommerce is on pace to reach $1.13 trillion by
the year 2020. Forrester also predicts that4 “combined
spend on commerce and order management platform
technology in the U.S. will grow at an annual compound
growth rate of 10% over the next four years, from $1.4
billion in 2014 to $2.1 billion by 2019. Leading this advance
will be manufacturing and wholesale trade firms.”
They further estimate that by decade end, “investment
in commerce technology by manufacturing and wholesale
firms in support of B2B selling channels will exceed that
of B2C retailers.”
3 US B2B eCommerce Forecast: 2015 to 2020, Forrester Research, Inc., April 2015.
4 The Forrester Wave™: B2B Commerce Suites Q2 2015, June 2015
9The Path to the Connected Distributor© 2016 SAP SE or an SAP affiliate company. All rights reserved.
Key Business Goals for Wholesale Distribution
> Know your customers: use data to develop a 360-degree perspective.
> Engage through Omni-channel: demonstrate integrity in each relationship with every person across all touch points.
> Innovate your business model: commit to reimagine your services and clearly understand their value proposition
in today’s digital marketplace.
> Consider aftermarket strategies: opportunities have opened up significantly to global competitors and others within
the supply chain.
> Tap into the Internet of Things: when machinery can be remotely monitored and communicate machine-to-machine,
distributor and customer can realize huge benefits.
> Rewire the business model for improved billing: provide up-to-date revenue tools for real-time collection.
> Focus on predictable recurring revenue to move from a one-time transaction to a recurring approach, building
momentum and loyalty along the way.
> Leverage B2B opportunities: bundle single product sales with projects, service offerings, subscriptions, and
usage-based charging – configure pricing terms and volume discounts, including shared/pooled entitlements
across thousands of recipients in real time.
> Personalize and automate the buying process through self-service portals.
> Collect customer data to provide insights into what was purchased, with customer-specific details about when and
how the purchase was made.
> Leverage this data as the base for predictive analytics to drive future engagements, meeting needs, and providing
solutions – before the customer even becomes aware of them.
> Implement customer service convenience by handling queries through any touch point, including email, phone,
Web self-service portal, chat, text, branded communities, and social media.
> Enable field service experts: give them the tools to perform diagnostics, research inventory information, and order
spare parts on the spot.
> Ensure routing and escalation rules that are seamless, instant, and complete, eliminating the need for revalidation
during all customer service interactions.
> Use analytics for continuous improvement.
> Update loyalty marketing techniques: ensure that incentives, rewards, and rebates for B2B customers remain
relevant.
> Control key marketing activities and tracking KPIs from a single dashboard to understand the details behind the
numbers.
> Identify immediate and long-term opportunities, including target marketing and aftermarket strategies.
> Use mobile data to help key account managers access names, customer data, industry news, and customer pain
points, even in offline mode, while no Internet connectivity is available.
About SAP Hybris
SAP Hybris enables businesses to transform how they engage with customers, innovate how they do business, and simplify their technology landscape. With a
comprehensive approach to customer engagement and commerce, our solutions unlock opportunities to optimize your customers’ experience and transform your
business. We help you drive relevant, contextual experiences across all of your customer touch-points in real-time, so that you can create strong differentiation and
build competitive advantage in the Digital Economy.
SAP Hybris has helped some of the world’s leading organizations transform themselves in response to changing market conditions and customer expectations –
delivering exceptional experiences, adding new channels, evolving their business models, and entering new markets. How can we help you?
Explore SAP Hybris solutions today. For more information, visit www.hybris.com.
© 2016 SAP SE or an SAP affiliate company. All rights reserved.
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The Net-Net of Transformation
Moving through a complete customer-centric metamorphosis takes planning and should be done in sequential steps,
recognizing the distribution company’s level of maturity, and being cautious about the risks and requirements involved
in wholesale change.
When change is implemented in the right ways, it can significantly increase both the bottom line and the top line.
Transformation is about a broad mind-set change and the manner in which customers and the items they purchase are
viewed. A strong leader is crucial – a sponsor who can cross boundaries and uses a customer-centric lens to create
a harmonized understanding of the entire process to form a shareable, 360-degree vision, and transform a wholesale
distributor into a connected distributor.
For more information, please reach out to the SAP hybris team at [email protected]
The Path to the Connected Distributor
Today’s economy is far more sophisticated and agile than in previous decades. In the B2B and B2C worlds, the primary point of focus is the individual customer. The chief catalyst is data, and the medium that brings it all together is the Internet.
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