Channel concern over implementing a direct e-commerce channel continues to be a polarizing topic in most B2B organizations.
Existing channels are tough to change
Why are they so hard to change? […]Simple – your existing channels are bringing in the revenue you have now. That is important. And one of the channels that will inevitably be impacted is a B2B firm’s own internal direct sales channel, the source of significant political power in the organization. Channel partners understandably have much to protect. For these reasons, there is a strong incentive to stay status quo – despite knowing that customers strongly prefer good e-commerce systems to search and transact. As Lawrence J. Peter (of the Peter Principle) said:
Bureaucracy defends the status quo long past the time when the quo has lost its status.
[…] Above is an excerpt from How B2B E-Commerce Shapes Channels
Traditional approaches to channel conflict
To eliminate channel conflict, you could have an e-commerce like site without having the “Add to Cart” button. You can deliver a great customer experience using e-commerce technology for catalog, merchandising, personalization, on-site search, guided navigation. The end game would be to guide the customer to fill out a lead gen campaign or go to a partner to purchase. This method certainly eliminates channel conflict.
I would call that method the “do nothing plan”. For all others, it is just a matter of time before b2b e-commerce drives significant structural changes in their channel(s). It then becomes a question of “when” it happens and “who” will benefit (besides the end customer). For those B2B firms, there are a few traditional approaches to channel conflict.
- Share the wealth – either by doing a cart transfer to fulfill the order with a channel partner, sharing revenue on the e-commerce site, or simply linking the customer to the channel partners website.
- Niche e-commerce – choose new products or enter new markets that don’t currently sell in your channel and sell those through e-commerce.
- Screw the channel – nobody has said it in those words, but this essentially means that we are doing e-commerce without regard to the channel.
All of these options have pros and cons and there are multiple examples in the marketplace especially in high-tech and manufacturing.
A different approach to channel conflict
The data that you collect on all of your sites including e-commerce has value. Data such as customer data, product data, analytics and behavioral data has value to understand your customers researching methods, search terms, buying patterns, online versus offline behaviors, etc. Instead of taking a traditional approaches above, consider collaborating with your channel partners to share and use all of this valuable data (in aggregate of course) to identify new opportunities for both organizations. Collaboration will strengthen your relationship with your partners, open up new lines of communication, and create innovation opportunities. Along the way you probably won’t even make a dent in their channel sales. This doesn’t have to be an either / or approach, but is meant to look at the entire e-commerce ecosystem and extract value for all parties involved.
What about the Sales channel?
External channels are not the only conflict. B2B organizations struggle with balancing their online channels with the Sales channel as well. Sales departments often don’t know how e-commerce is going to affect their bottom line.
Taking a different angle on the data approach, consider how Grainger uses their data to benefit the sales teams. Grainger uses the plethora of data available from online customer interactions to help offline salespeople sell more effectively.
Internet Retailer talks about this data, Grainger shares its shopping cart abandonment data with members of its sales team. If John Doe of Caterpillar Inc. visits Grainger.com, logs in and fills his cart with products, but then does not complete the purchase, whichever salesperson at Grainger oversees the Caterpillar account or the geographic region in which John Doe resides, will get access to this information.
This arms the salesperson with the knowledge of what John Doe is interested in buying—valuable information when trying to close a sale, says vice president of e-commerce Paul Miller.
It’s also one way of avoiding alienating a large sales force by selling directly to business consumers online. “You have to understanding your salespeople’s motivation and give them things that help them to be more successful,” Miller said. “This benefits everyone.”
Your data has value to your channel. Your channel partners have valuable data. Together and collaboratively you can create innovative solutions. I look forward to hearing about yours.