As retailers move, almost en masse, to implement omnichannel functionality (e.g., ship to home/return to store, online order/in-store pickup, anytime/anywhere access to inventory) in an effort to effectively meet the rising demands of customers, the movement has significant implications for distributors. A recent study by global consultant Oliver Wyman comments on the phenomenon, particularly the impact of eCommerce:
The online channel is becoming increasingly important in B2B transactions: while it represents a $700 billion business in the U.S. today, it is set to top $1.2 trillion by 2020. More important, Amazon and Amazon-like offerings have led B2B customers to expect the same experience from their distributors as when shopping online. B2B customers are expecting more and more to be able to discover, buy, receive, and return products seamlessly across multiple channels: in short, they want to fully benefit from the omnichannel experience.
For distributors, this creates challenges and opportunities. While product manufacturers and online distributors can bypass distributors and go direct to customers, traditional distributors can leverage their unique strength in the supply chain to grow, and to reinvent their businesses and relationships, in order to become platforms or marketplaces for customers.
While challenging to traditional distribution operations, this market shift to a customer-centric model represents an opportunity for distributors. A recent study by Morar Consulting shows that high-growth distributors are focusing on the "external opportunities" that omnichannel is opening up, and that these opportunities are driven through digital properties such as eCommerce and mobile sales tools. Among other important findings in that research:
- Seventy percent of distributors saw the ability to adapt to evolving customer needs as critical for business growth.
- High-growth companies are more than two times likely than low-growth companies to see strategic planning for growth as important.
- Eighty-six percent of high-growth companies believe they are well placed to respond to growth opportunities compared to only 43 percent of low-growth companies. The top consideration distributors cited as important for overcoming business growth challenges: better technology.
The Wyman study recommends two steps that distributors should take to survive and thrive in the omnichannel world: one, use agile approaches to IT and business; two, focus on areas that help drive customer-centric operations. On the second point, they call out four key areas to concentrate on:
- Change how you think about designing your network and fulfilling orders.
- Consider a variety of options for last mile and delivery.
- Aggressively integrate upstream and downstream to lower total cost in the value chain.
- Build and partner for the right technology capabilities.
All these steps point to a cultural element as well: the ability to embrace change, not resist it. The Morar study showed that high-growth companies were 55 percent more likely than low-growth companies to prefer constant innovation to business stability. This is one reason high-growth organizations invest in solutions such as enterprise resource planning (ERP) systems that provide the visibility and agility to quickly respond to changing market demands and constantly rising customer expectations in the omnichannel ecosystem. To become a high-growth company, distributors need to invest in technologies that boost productivity and increase their teams' capacity, allowing them to scale while maintaining cost control.
Aberdeen points distributors towards three requirements of a supply chain optimized for the omnichannel approach to market:
- Clean up inventory data sets to gain actionable insight into customer preferences that affect your supply chain.
- Bolster your packing and shipping capabilities to meet demand for minimal delivery times.
- Adopt measurement tools to track improvements in finished goods turns, carrying costs, and service levels.
These, too, call for investing in a responsive IT infrastructure.
How We Can Help
For distributors adjusting to the omnichannel ecosystem -and looking to leverage their participation in it to competitive advantage -Epicor has a number of tools that can be of real benefit:
Epicor Commerce (EC) provides the tools necessary to deliver a rich customer experience across your organization's omnichannel, from quote to fulfillment and beyond. Benefits include:
- Fully integrated ERP and eCommerce
- A single database to simplify platform management
- Around-the-clock service to all trading partners with real-time access to account and product information
Further, the Kinetic (new name for Epicor ERP) platform supports mobile and cloud developments, while Epicor Social Enterprise (ESE) heralds a new generation of business collaboration, and leverages the benefits of Microsoft Windows 10. By providing a platform that encourages the sharing and sourcing of information, ESE is designed to change corporate cultures and drive efficiency and innovation on a whole new scale.
As noted in a Forbes column, "From the customer's perspective, there is only a single, technology-enabled channel that brings together all touchpoints. While channel conflict is still one of marketers' top concerns, it is little more than an illusion for companies who have achieved levels of success with their omnichannel digital transformation initiatives."
As your organization moves toward that transformation, we can help speed and ease your journey.
