Blurring Industry Lines: Best Practices to Become an Adaptive, Profitable Distributor
By: Sam Nohava, global industry marketing lead, SAP
SAP VP and Global Head of Wholesale Distribution Business Unit Magnus Meier (LinkedIn, Twitter) presented at Zilliant MindShare 2021 on May 20. In his session, Meier walked attendees through the current paradigm shift in the distribution industry.
According to Meier, three major trends have upended the traditional distribution model – eCommerce adoption, personalization, and intelligent technologies.
Trend #1 – eCommerce Adoption
Here’s an eye-opening statistic: last year, eCommerce penetration in the U.S. jumped forward 10 years in just 90 days at the beginning of the pandemic.
That trend line came back to earth a bit over the full 12 months, but still represents a significant sustained advance – a six-year jump in 2020 alone.
“It is fair to assume that this shift will not go away, that we’re going to keep this level and keep rising from there,” said Meier. “Wholesale distributors that were already heavily invested in digitalization are definitely ahead of the curve. The tools they need to be effective in an economy like this, they already have in place.”
Given that electronic commerce (eCommerce, EDI, eProcurement) has become the prevalent channel in B2B, time is running out for late adopters to get on board with a high-quality eCommerce strategy. Marketplaces like Amazon have simplified and scaled B2B sales, growing at meteoric rates. The traditional wholesale distributor must lean on its value-added services differentiators more than ever and up their pricing game. Cost-plus pricing is no longer a sustainable strategy in this dynamic online environment.
Trend #2 – Personalization
It’s clear at this point that B2B buyers seek a hyper-personalized experience. However, as Meier points out, most B2B distributors are not supplying it – fewer than 10% of B2B companies offered personalization according to a 2018 study by 451 Research, versus 55% of B2C companies.
The ubiquity of eCommerce has shifted buyer behavior, even though buyer profiles haven’t changed. Buyers are operating from a position of strength and have much higher expectations. Meier argues that the old customer stratification model must evolve so that traditional B2B distributors can level the playing field.
“The question is: ‘Has it really become such a one-sided game for the buyer or is there also something in it for the distributor that is just not used yet?’” asks Meier. “Yes, distributors can also make use of the capabilities that are there and really gear their strategy to a personalized market.”
To do so, they must leverage new technology to move from a reactive model to a proactive one, and transform from a traditional distributor to a customer-focused solution-centric business.
Trend #3 – Intelligent Technologies
The engine undergirding this digital shift of course is the rapidly advancing technology available to B2B companies. As Artificial Intelligence and Machine Learning capabilities accelerate, these tools become more readily adoptable even for old-school wholesalers.
From chatbots that address simple customer requests and anticipate customer needs to data-driven systems that optimize every aspect of an organization’s commercial strategy, intelligent technology is vital to delivering that hyper-personalized online buying experience.
Customer Stratification 2.0 Roadmap
Meier introduced SAP’s Customer Stratification 2.0 roadmap, emphasizing that no matter where a distributor currently sits, it can realize success incrementally over time with important wins along the way.
“Every distributor should have a long-term vision,” said Meier. “Where is the leading edge, and where do we stand?”
SAP & Zilliant – Propelling Wholesale Distribution Forward
The partnership between SAP and Zilliant works by helping wholesale distributors power intelligent commerce. The symmetry between Zilliant pricing solutions and SAP Sales Cloud, CPQ, and Commerce helps our joint clients deliver dynamic, personalized, and real-time pricing across all sales channels.
“We’ve had the opportunity to work together with the Zilliant team for a long time now. What we understood from our teamwork and customer feedback, is that Zilliant really has superior qualities,” said Meier. “Their investments are spot on as it relates to integration, real-time processing of the data, the quality of the algorithms. I’d really encourage every prospect here to work with Zilliant to see for themselves the value the solution adds and the difference it makes for the top and the bottom line.”