E-commerce is the top sales catalyst today for many distributors. E-commerce is not a new business strategy, but it is playing a big role in today’s distribution operations.
Your customers want to buy through multiple distribution channels. Therefore, it’s imperative for distributors to integrate their e-commerce system with the rest of their software into a single database. E-commerce is the most popular distribution channel because it’s easy for customers to use, and it reduces distributors’ costs for getting information to the customer and securing orders from them
How can distributors maximize productivity in e-commerce? Here are six ways:
1) Increasing people's productivity: Being more productive boils down to keeping labor costs under control. You want to try to conduct business with the same amount or even fewer people. Depending on the type of business, 60 to 65 percent of gross profit dollars can get eaten up in labor compensation. Your employees shouldn’t waste time manually re-entering data or suffer from inefficient processes. Most businesses that operate only with e-commerce as their distribution channel do so with a relatively low employee headcount.
2) Integrating seamlessly: The last thing a distributor needs is to get bogged down with too many databases. Eliminating multiple databases should be a high priority for distributors. Maintaining multiple databases is an expensive, error-prone, time-wasting headache. It’s cost-prohibitive and difficult. Distributors need to integrate their back office system with their e-commerce system so they’re not maintaining a customer database and a product database on their e-commerce system in addition to a customer database and a product database in their back office system
3) Providing access: Key business and customer information needs to be accessible. Your customer business data needs to be shared throughout the company with the people who need that data. Customer relationship management (CRM) software is the ideal portal for capturing, analyzing, and viewing customer data. It provides real-time, visible, and accurate customer data.
4) Keeping flexible: Multi-channel marketing gives your customers options for how they want to place an order. Maybe last week it was easiest for them to visit your website and place an order digitally. But tomorrow they might be on the road and realize they need to order more products, so they call your phone center. It’s very important that distributors stay flexible so customers have options.
5) Controlling cost to serve: Distributors must avoid the pitfall of losing money in the logistics costs of e-commerce. They could be losing money trying to compete by offering free or discounted shipping, for example. Those selling costs may be the biggest cost for some distributors doing business.
Distributors need to control the cost to serve their customers. You must map out the cost to serve each customer, highlighting the services they’re willing to pay for. The challenge is to match up the cost to serve with customers’ needs and what they’re willing to pay. It makes no sense to continue providing services the customer ultimately doesn’t really want or need. Sometimes this means rethinking a pricing program or, in an e-commerce distribution channel, altering shipping and handling costs.
6) Use third-party or fourth-party logistic providers: 3PLs or 4PLs are a big factor in e-commerce, and you should be considering them for e-commerce fulfillment. These public warehouses make shipments for you, but they do it in your name. To the customer, it appears that the product came from the distributor, but it was actually fulfilled and shipped by a 3PL or 4PL. While the 3PL or 4PL may handle all the parts, the distributor still handles the back-office details.
In nearly all situations, there’s an obvious advantage to minimizing distributors’ fixed costs through a 3PL or 4PL. Your needs aren’t really predictable, and rather than committing to long-term capacity, through a 3PL or 4PL a distributor can adjust its capacity based on the needs of the customer.
Distributors: Be sure to fully embrace e-commerce as an effective, low-cost tool. Integrating your e-commerce system with the rest of your databases will make your business thrive.
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