Savvy MRO Distributors Look Within to Weather Online Marketplace Threat

By Zilliant

Nov 21, 2019

Avert your eyes! The trend lines spell doom – Amazon, Alibaba and other marketplaces have taken a huge chunk of B2B sales in 2019 and will continue to do so at an increasing rate. Your buyers and employees are getting younger and more digitally savvy, making pent-up expectations for B2B eCommerce and a real-time digital experience akin to floodgates bursting open.

The latest survey from Digital Commerce 360 confirms what many of our distribution customers already suspect. The numbers are impossible to ignore: “40% of B2B buyers are doing at least 11% of their corporate buying on marketplaces and 20% more than one-quarter of all purchases.” The same survey revealed that two-thirds of buyers plan to increase their spending with Amazon Business over the next year.

Distributors of all sectors are scrambling to deal with this new normal. But Maintenance, Repair & Overhaul/Industrial (MRO) distributors may be the most exposed. There are two big reasons for this. First, products in this sector are typically of small sizes that fit neatly into standard packages, which lines up perfectly with an Amazon or Alibaba business model. The other threat comes from disintermediation, wherein an increasing number of suppliers are choosing to move to a direct sales model or sell through marketplaces, cutting distributors out of the loop.

Given these impediments, how can the traditional MRO distributor possibly compete? The answer is often hiding inside their own customer base.

Data Science for Better, Faster, Smarter Omnichannel Performance

It’s a well-known fact that the easiest customer to sell to is the one you already have. New customer acquisition is time-consuming, costly and always competitive. Selling more to current customers via cross-selling is top-of-mind for any distribution sales manager worth their salt.

Of equal importance to expanding wallet-share is knowing which customers are at risk for defection to competitors of all stripes. Typically, customers defect to competition slowly, one product category at a time, rendering the detection of where churn is beginning from moment to moment an unreachable task for sales reps.

Data science, tailored to the unique needs of B2B MRO distributors, can build a metaphorical firewall around your entire customer base to protect from outside competitive threats while at the same time growing your share with them organically.

This strategy is attainable, particularly within MRO distributors which typically traffic in replenishment sales, meaning many customers are making frequent repeat purchases from massive product catalogs. Given the inherent depth of data sets in replenishment businesses, the opportunity is ripe to identify buying patterns and detect pockets of hidden growth within an account. Leading data science applications built for this exact use case exist and excel at blocking out the noise, false signals and staleness that plague standard business intelligence reporting.

The output is intuitive, targeted guidance that can be infused into all your sales channels. eCommerce serves up the most relevant products to the right customers at the right time. Additionally, your inside and outside sales teams receive insights that drive better, more tailored and relevant conversations that result in measurable revenue lift.

The digital threat isn’t going away. Smart MRO distributors aren’t panicking, they’re preparing.

Schedule a 15-minute meeting with one of our industry experts here to prepare your playbook for 2020.

Are you ready to learn how Zilliant can help you overcome your pricing challenges?

Reach out to us today to learn how we can help!