think outside the box - mdm · mdm 2014 e-commerce survey source: mdm research in collaboration...

1

Future Leaders Council Webinar November 14, 2014

Think outside the box E-commerce as a growth strategy

Thomas P. Gale

President

Gale Media

© 2014 by Gale Media, Inc. All rights reserved. Material may not be reproduced in whole or in part in any form whatsoever without permission from the

publisher. To request permission to copy, republish, or quote material, please email info@mdm.com or call 303-443-5060.

2

Speakers:

Thomas P. Gale

President

Gale Media

Eddie Morrison

IT Specialist

C.I. Thornburg Company

Download today’s presentation

www.mdm.com/WASDA

3

• Digital transformation

• Key concepts to build strategy

• Multi-channel: Learn from others

• Build a TCO/ROI analysis

• Q&A

Agenda: E-Commerce as a Growth Strategy

© 2014 Gale Media, Inc. All Rights Reserved.

Strategic planning

Connect the dots

10 years ago…

5

…was a sound

…was a prison

…was a

parking place

…was a typo

…did not exist

…and applications were

what you submitted for a job

Source: Monitor Institute June 2014 report

6

Current

conventional

customers

Connected

digital

customers

How to build a bridge?

Sell

Stock

Credit

Expertise

Service

Product

Two markets…two models

7

E-commerce moving parts

Data

Content

Conversion

Mobile

Content Analytics

Personalization

Social Content marketing

Search

SEO

Paid/Organic SEM Stickiness

8

E-commerce framework

MARKETING

DATA

FUNCTIONALITY

ANALYTICS

Platforms, devices, UX

Quality, taxonomy, content

Segmentation, positioning

Metrics, SEO/SEM, targeting

E-commerce transformation

© 2014 Gale Media, Inc. All Rights Reserved.

Type of Site Common Functions

Corporate website Public corporate information

Online catalog Browse products - Attract new customers

Online store B2C New customers – Purchase products

Online store B2B Existing customers – Purchase products

Customer portal Existing customers – Order, check status

Sales rep portal Quote, order, check status, configure

Customer Svc portal Order management, place order, check status

Marketing portal Manage & distribute product content

Punchout portal Enable customers to export orders to us

Source: Insite Software

10

DRIVE

E-commerce framework

ENGAGE DELIVER

Market

• Convert

• Show up

• Sign up

• Review

• Share

• Buy

Customer

• Content

• Inform

• Motivate

• Dialogue

• Relationship

• Service

Sell

• Product +

• Experience

• Sales

• Service

• Efficiency

–Multi-channel • Branch

• Catalog

• Relationships

• Digital platforms

• Call centers

– Integrated functions: Market, sell, service, order

– Convergence: Industrial > Retail > E-tail

E-commerce framework

© 2014 Gale Media, Inc. All Rights Reserved.

E-commerce evaluation

© 2014 Gale Media, Inc. All Rights Reserved.

Source: Codifyd

7 Investments Distributors Should Make

to Grow Online Revenue

• Product categorization

• Product characteristics

• Product data gathering

• Data normalization

• Product images and copy

• Single source of truth: gold product content

• Keyword search

• Payoff: ROI!

www.mdm.com/webcasts

Amazon Effect

September 2013 January 2014 June 2014

13

Increasing customer expectations

– Convenience, transparency, loyalty

• E-commerce functionality

• Ease of ordering

• Fulfillment infrastructure

• Speed of delivery

Amazon Effect: The facts

14

15

1900 Sears catalog

THIS BOOK

Tells just what your storekeeper at

home pays for everything he buys

and will prevent him from

overcharging you on anything you buy

from him

16

Pricing visibility, alternate channels have been

around for more than 100 years!

1900 Sears catalog

Amazon Effect

• Relationship with key customer segments

• Strong multi-channel tools

• Time: Battle of titans

• Strategic market position • Knowledge, expertise, added value

17

What is your advantage?

MDM 2014 E-commerce survey

Source: MDM Research in collaboration with Real Results Marketing

% of U.S. distribution companies with

e-commerce 10-20% of total revenues

will more than double in 2014

16% market by email daily

35% use Search Engine Marketing daily

18

E-commerce evaluation

© 2014 Gale Media, Inc. All Rights Reserved.

Source: Codifyd

B2B Distributor Continuum

Static Website Line cards

PDF catalog

1st Gen Web Storefront Exposed ERP data

Exact part number searches

Order history

Industry Leading Web Storefront Optimized Product Categorization

Normalized product characteristics Faceted search

Attribute ranking

Search Thesaurus & redirects, tuning

SEO-Optimized landing pages

Rich content (images, charts, specs)

PIM/MDM – central source of truth

Online Revenue

as a percentage of

overall business

Customer Experience

2nd Gen

Web

Storefront Poor Product

Categorization

Un-normalized data

Missing images

Non-Existent Cumbersome Incomplete Fully Satisfied

25-60%

3-5%

1-2%

0%

• E-commerce channel

growth is 2X the rest

of the business

• E-commerce is the

“glue” that holds its

multi-channel

approach together

Learn: Grainger

Source: 2014 Grainger Factbook 20

• Online sales = $3B+ (33% of 2013 sales)

• Spanish language site

• More mobile – traffic more than doubled

• 30% of mobile orders picked up at branch

• Print catalogs reduced 20% in 2014

• 300 IT/E-commerce hires planned

Learn: Grainger

21

Netsuite / IPad / Bakken Oil Boom • 6+ months for

building permits

• Job sites are

remote/dispersed

• Solve problems,

build relationships

Learn: New Models

22

Learn: Wolseley

• B2B/B2C is 15% of total U.S. sales

• 9%+ of U.S. B-to-B business via e-commerce

• 30 people converting customers to online

23

24

Learn: Motion Industries

25

Learn: Motion Industries on YouTube

26

Learn: Motion Industries – MiHow2 (YouTube)

27

Leading distributors: Applied Industrial Technologies

28

Learn: Applied Industrial Technologies

29

• Economic value analysis

• Key metrics

• Marketing lift

• Average order value, frequency

• Productivity

• Cost reduction

• Customer retention

ROI & TCO analysis

Source: Real Results Marketing. www.realresultsmarketing.com

30

ROI & TCO analysis

Source: Real Results Marketing. www.realresultsmarketing.com

Solution Annual ROI (after tax) Payback period (years) Net present value (NPV) Annual TCO Annual Benefit

High 130% 1.90 $1,322,574 $428,000 $1,190,000 Medium 130% 2.10 $1,016,600 $334,000 $935,000 Low 111% 2.33 $746,096 $282,000 $748,000

Assumptions Value

All government taxes 35%

Cost of capital 15%

Depreciation cycle 5

Reduction in cost per order $50

Average order value $400

Gross margin % 30%

Revenue TTM $40,000,000

Number of SKU's 50,000

Number of customers 20,000

• Focus on data and content quality

• Hold onto core strengths

• Communicate your value

• Let your customers embrace you… digitally

• Do something & prioritize!

Transition: Drive, Engage, Deliver

31

Questions?

Get the slides: www.mdm.com/WASDA

or email: info@mdm.com

32

Thomas P. Gale President

Gale Media/Industrial Market Information

Publisher, Modern Distribution Management

303-440-3857

tom@mdm.com

www.mdm.com @mdmnews

www.imidata.com https://www.youtube.com/user/jenatmdm

Thank you

www.mdm.com/webcasts