Building A Financial Model For Your Ecommerce Strategy

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There's a lot of buzz in the industry about the need for distributors to create ecommerce strategies for their business. But how does an individual distributor know if ecommerce is a financially viable option for their business? Industrial Distribution recently had the opportunity to speak with Rick Chavie, Vice President of OmniCommerce at hybris, about a recent Whitepaper that the company published. The Whitepaper offers a how-to guide for manufacturers, distributors, and other B2B organizations on building a financial model to assess the value of ecommerce for their company.

ID: The hybris whitepaper titled “Building an ROI model to Evaluate Your B2B Ecommerce Initiative” outlines how certain tasks can be automated with an ecommerce platform, like order entry. On average, how much more efficient do you see companies operating after just this one step?

Chavie: It is bimodal in terms order entry efficiency: the most efficient B2B mode is now providing a self-service capability to you customers where the seller's role may simply include interactive chat or call center support. Clearly this results in elimination of seller side activities around search, order entry, and purchase. An extension of this is automated subscription billing that requires just a one-time set up by the customer. However, even in the mode of assisted service, there is a reduction in order taking activities, given the availability of advanced personalization and localization of product content to the business customer (and even roles within the customer organization).

ID: The whitepaper also mentions how sales people can be more effective – instead of selling only 30% of the time, and using the other 70% for administrative duties. Does hybris find this 30/70 split normal for companies and their salespeople before they go through an ecommerce implementation?

Chavie: This is a good rule of thumb for a company that embraces a full commerce platform and replaces a traditional model. The shift comes from efficiencies in both modes (self-service by customers, enhanced assisted service) where the systems automates tasks and allows sales personnel to focus on value-added selling.

ID: When most people think ecommerce, they think about advantages like 24/7 availability and a broader audience because of removing the barriers of geographic reach. It is important to note that the whitepaper also mentions enhanced customer service as a byproduct of implementing an ecommerce solution. In what ways has hybris helped its customers improve that service side of their businesses through ecommerce?

Chavie: We have already mentioned services such as interactive chat and call center support during the ordering stage. But there is also a broader definition of services that has emerged - including services that come with a charge: bundling services such as installs and warranties in a bundle when the product is sold; or after-care service such as repairs or VMI where the insight into a customer premise equipment or inventory by the B2B seller is greatly enhanced through the available commerce data.

ID: Speed is definitely of the essence when adopting an ecommerce strategy. What advice do you have for a distributor who is considering an ecommerce platform, but just hasn’t pulled the trigger to get the process started?

Talk to customers who have already gone down the path, attend commerce events where you can network, and have vendors demo the potential solution. But before committing, make sure you have prepared a sound business case with the commitment of executive management to the financial benefits.

To read more about “Building an ROI model to Evaluate Your B2B Ecommerce Initiative,” please visit http://www.hybris.com/en/downloads/ebook/roi to download the Whitepaper.

 

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