Contractors Are CLICKING:
E-Commerce Becomes Essential for Distributors

As all portions of the distribution value chain continue on their journey of digitization, Channel Marketing Group surveyed contractors on their perspectives on e-commerce.

A forthcoming white paper, which is sponsored by BigCommerce, provides a snapshot of the valued features and functionality of distributor websites, how much is purchased online, reasons why contractors use and do not use distributor websites to purchase construction material and other key insights.

We gathered input from almost 400 buyers. People who make construction purchasing decisions…installers, purchasing managers and contractor owners.

The bottom line is that contractors value the ability to order from wherever and whenever, meaning from home, the office, job site or vehicle. The conclusion is that distributors that offer robust, transaction-oriented websites are able to better satisfy customer desires and build differentiate themselves.

E-COMMERCE HAS ARRIVED! CONTRACTORS ARE ON WEBSITES

Here’s the shocker…nearly two-thirds (yes, almost 67%!) ordered construction materials online!

Furthermore:

• 64% have made mobile orders, either via an app or text
• Only 18% have not purchased any construction material electronically

Of those who purchased building materials online, 59% have done so from a distributor, the second most frequent is from an online supplier, such as Amazon Business, Home Depot.com, Lowes.com, Supplyhouse.com or a similar online only source and the third most popular destination was from MRO distributors, such as Grainger, Zoro, Fastenal, MSC, McMaster Carr or others.

The buyers surveyed tend to make good use of online. In fact:

• 24% make more than half of their purchases online
• 29% make between 26% and 50% of purchases online
• 37% make between 6% and 25% of purchases online
• 10% make less than 5% of purchases online

In terms of online purchases and the frequency of online purchases by type of site, it is a growth opportunity for distributors.

TYPES OF SITES PURCHASED FROM AND PERCENTAGE OF ONLINE PURCHASES MADE FROM THOSE SITES

The data shows:

• Customers are buying something online…so there is a willingness
• They just are not buying regularly online

It is interesting to highlight why:

• They buy online: The most common reasons for buying online are ease, self-sufficiency, speed and a broader selection.
• They are not buying online: The reasons for not making online purchases come down to relationships - preference to talk to a salesperson or visit a branch. It is rarely about technology or security. The reality is that more complex orders and project orders are not going online due to price accuracy, or interest in negotiating price, being a concern.

USAGE AND FEATURES

The data shows that the features most valued vary. The most common uses of a distributor or online site are:

• Checking prices, with 67% stating regularly or very frequently
• Product research, with 51% checking regularly or frequently
• Checking availability/inventory, with 49% checking regularly or frequently

Downloading invoices was not a high-ranking use, with 30% of respondents never or rarely doing this. But then again, this is a feature that would be of value to smaller contractors as well as accounting personnel within a contractor.

Shifting to distributor website functionality, the critical features are accuracy in ordering, delivery, inventory and pricing. Also, customers expect the same experience they would receive if they ordered from your salesperson or at the branch.

Very important features also include the ability to easily search your site and for the site to have complete product descriptions. A good search experience requires quality product content inclusive of robust product description information, product attributes, graphics, MSDS information, spec sheets, supplier installation videos and more.

The feature ranking lowest was product training and videos, and interestingly, new product information ranked next to the bottom. The inference is, “give me what I need.” While value-added content may not be as highly valued, it is important as it provides SEO benefits and can differentiate your site.

The most important online ordering and product information features revolve around ease of search, either by product, manufacturer or attribute. Having a quality search experience is paramount, especially since time is money to contractors.

Having pricing on the site is important, and it must be customer specific, as buyers demand accuracy with pricing used for negotiations. If your pricing is not accurate and your salespeople override the price, then contractor confidence in your website evaporates. There are also models where you can launch a site with a robust e-catalog and “on request” pricing for your customers.

There are other features ranked as “nice to have,” such as additional photos with details of products, the ability to upload schematics, layouts/take-offs and the ability to compare products based upon their attributes.

Online account management and customer service features most valued include order delivery and status tracking, followed by having access to invoices and the ability to access a customer service person with whom to talk or chat. The least valued features for online account management were accessing after-hours call centers or after-hours customer support as well access to product specialists. For these, customers expect to call.

DELIVERY OPTIONS

Critical online delivery features include the ability to order online and to pick it up locally at the branch of their choice, which highlights contractors’ planning abilities as well as using the site for change orders. Free next-day delivery and the ability to receive a delivery first thing in the morning rank highest.

PERFORMANCE MATTERS

From a website system functionality viewpoint, the most important features, intuitively, are website performance and ease of use, followed closely by ease of ordering/reordering and accuracy. Customer service and live support were the lowest valued features for system functionality.

WHAT DIFFERENTIATES DISTRIBUTORS?

The top features that differentiate distributor websites are similar to the most valued features – delivery time, ease of use and ease of product search. Distributor relationship is rated fourth, indicating that contractors who want to use a distributor’s website, either for searching for products or ordering, may discount their existing relationship. For these reasons, having a well-structured, effective website is now an expectation from contractors.

E-COMMERCE IS TAKING HOLD

In 2018 Channel Marketing Group conducted similar research. At that time, consultants were forecasting the demise of the distributor, and that Amazon Supply (now Amazon Business) would take over the industry.

Not only has that not happened, but today’s research shows that distributors are winning.

This speaks to industry complexity and the value of relationships.

However, contractors are now going electronic (or we could say “digital.”) They prefer to buy online from known suppliers but are willing to move their business to a distributor that offers an effective website.

They are searching sites, seeking information and buying online. The industry has gone digital.

A robust e-commerce platform is now “table stakes” for a distributor.

Just because your customers may not be searching, or buying, on your website does not mean that they are not searching, or buying, from your competitors’ website! Your website is either a sales tool/sales generator or it could be your greatest competitor (or Achilles heel)…or maybe a blind spot.

About the Author: David Gordon is president of Channel Marketing Group, channelmkt.com. He consults with distributors, manufacturers and representatives in the construction channels and helps with strategy, marketing strategy and market research to drive profitable growth. He can be reached at dgordon@channelmkt.com or 919-488-8635.

You can request a copy of the research report at ecommerce4distributors.com. If you would like to gather the same insights from your customers, Channel Marketing Group will conduct the survey for IMARK Group distributors for a discounted price of $1,750.