After Amazon’s acquisition of Whole Foods last week, many B2B companies are wondering if they’ll be looking to acquire brick-and-mortars, like W.W. Grainger, from the industrial sector next.
It remains to be seen if Amazon will make another megalithic acquisition. In the meantime, distributors continue to stave off the three main competitive threats that Amazon poses. Per Modern Distribution Management’s Jenel Stelton-Holtmeier, they are: extended credit terms, marketplace selling and price transparency.
The same article states that “many distributors have said they’re hesitant to make their prices visible on their websites because most of their customers have contracted prices that don’t align with those list prices.” However, it is possible to have your eCommerce sales channel serve up prices that are aligned to customer expectations.
Improving Price Transparency
Pricing is one of the most under-utilized methods to boost profitability, yet the massive complexity of distribution companies makes it difficult for pricing leaders to fully capitalize on pricing potential. A typical B2B industrial distributor can have thousands of products and hundreds of customers. At the transactional level, this can equate to millions of transactions being priced and negotiated.
Yet, there’s opportunity within this complexity, and it lies with your existing data sets. By applying artificial intelligence (AI) to available customer, product, CRM, and ERP data, B2B companies can serve up pricing that’s aligned to the unique requirements of individual transactions.
Without this market-aligned price guidance, it’s common that only 30 percent of a distributor’s transactions are priced on target. Typically, up to 50 percent of transactions are underpriced, leaving money on the table, and 20 percent are overpriced, resulting in lost share.
By stark contrast, when AI is applied to data, customers can receive prices that are aligned with the unique drivers that influence their price sensitivity. Factors can include: product hierarchy, competitive dynamics, regional factors, cost factors and much more. Other benefits for pricing leaders from this approach include:
- Setting prices that maximize profitability without risking volume.
- Delivering prices into varied sales channels and price modes.
- Giving sales reps price confidence with contextual visuals.
- Activating segment-specific pricing strategies.
- Providing customers with a consistent pricing experience on all channels.
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