When leaders of the distribution world gathered earlier this year in Washington, D.C., for the annual National Association of Wholesaler-Distributors (NAW) conference, disruption was the order of the day.
As Tom Gale, CEO of Modern Distribution Management (MDM), pointed out in a blog summing up the conference, the disruption theme took hold from the very beginning, when kick-off speaker Sekou Andrews challenged distributors to innovate, to leap out of their comfort zones, rather than be dragged – and even to embrace the challenges posed by disruption in the market, and, most importantly, to assure a superior customer experience. That’s the only way, Andrews and a parade of speakers who followed him emphasized, that distributors can expect customers to stay with them, and they can stay ahead of competitors.
At ENAVATE, we don’t have to be convinced. Here’s our take on Gale’s takeaways from NAW (in bold) – and what we think distributors can do about it:
You be the disrupter. Start by recognizing Amazon’s strengths, and maybe conceding victory to them in certain areas. Among other things, Amazon excels at:
- Offering a wide variety of products
- An easy buying experience
- Having and using great logistics
- Customer intelligence tools that offer real-time product recommendations
- Quick delivery
It’s unlikely that you can beat Amazon at their own game. But you can tweak the rules a bit.
Amazon famously offers its Prime membership program. So speaker Mark Dancer, author of NAW’s newest edition of “Facing the Forces of Change,” challenged distributors at NAW to create their own membership service, one based on customer buying patterns analyzed using artificial intelligence and analytics.
And while it may be impossible to replicate Amazon’s lightning-fast shipment and delivery, Dancer challenged distributors to look at creating a more nimble delivery system, possibly one that puts products in warehouses that are smaller, and more strategically located.
Whether that is a practical solution or not, most distributors can and should implement technology that allows you to collect and use data about your customers’ buying habits. When you know what they’re buying – and what they aren’t – how often they buy it, and the platform they prefer to buy it on, you’ll have the head start you need to adapt to customers’ changing demands. What’s more, the improved customer insight will allow you to develop deeper relationships with customers and gain greater value through operational excellence.
Be proactive. As Indian River Consulting Group founding partner Mike Marks pointed out, it’s not enough to know what the disrupters are and respond accordingly. Too often, distributors take a reactive wait-and-see approach. But staying ahead of the market means not waiting to see what the competition is doing and then trying to match them. It means being proactive – anticipating what your customers want and offering it before they have a chance to go looking somewhere else.
Again, technology can help. When you harness the power of machine learning and artificial intelligence, you can more accurately forecast demand, predict future purchases, recommend products for cross-sell and upsell, and create dynamic pricing models.
Ditch complicated pricing structures. When customers find your pricing structure convoluted and confusing, it can lead to all sorts of questioning – about the prices themselves and about the value you’re providing.
You can build customer confidence and create positive customer experiences with clear transparent pricing. And of course, there is technology to help you do that. ENAVATE’s new pricing and costing app designed specifically for distributors gives you greater flexibility as well as margin control – and the transparency your customers expect.
Don’t try to replicate Amazon. Remember when Blockbuster was everywhere? Now try explaining Blockbuster to your kids. Amazon may be king of the Internet now, but nothing is forever. As we described above, Amazon has many strengths. But so do distributors – things like deep customer relationships and a high-touch, personalized sales and service model that is difficult to replicate. In addition, many distributors offer complex, technical or customized products customers just can’t get online. So, let Amazon be Amazon, and you do you.
Learn more about how to thrive in a world full of supply chain challenges in our free eBook: Supply Chain Insights