A Recap: Scot Wingo & Charlie Peters on B2B Consumer Trends

June 11, 2013

Two weeks ago, our CEO, Scot Wingo, along with Charlie Peters, a Senior Executive VP and board member for Emerson, hosted a fireside chat at the BMA Blaze conference. The theme of the chat was B2B is the New B2C: What Consumer Trends Sweeping Through the B2B World Mean for You.

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Though the chat was missing an actual fire, there was friendly banter between the two about the relative merits of their favourite college football teams (Roll Tide) and the origin of one of the presentation slides (“a rainbow that barfed”).

Tribby Warfield, President, North American Commercial of the Gates Corporation kicked off the session by stating that this isn’t just change, but disruption. She referenced big box retailers targeting businesses as well as the creation of Amazon Supply and Google Shopping for Suppliers. She wondered what this shift means for industrial suppliers and whether the small, independent distributors will survive. She also asked whether Amazon, Google or Grainger would build brand value for manufacturers.

In response, Scot discussed the waves of change that we see in the B2C world, including the growing influence of Amazon, mobile, social and global trade. He also mentioned the “Internet of things.” Scot asked the audience for feedback on whether they thought these trends would impact their businesses.

While a majority thought the trends might impact their businesses, there were some that thought they wouldn’t and that Amazon will have a minimal impact on them. Scot pointed out that the road of e-commerce is littered with dead companies that ignored Amazon.

Charlie indicated that these trends make it easier for global companies to enter the U.S. market because the barriers to entry are less than they were in the past. He also highlighted how pricing can now be compared globally. Regarding the “Internet of things,” Charlie noted that Emerson is focused on profitable growth and that intelligent products linked in an intelligent way will be a key driver for that growth in the future.

Channel Management

The discussion turned to channels and Charlie indicated he had learned the craft of channel management at an early age. In the ‘old’ days, manufacturers pushed products through channels to end customers. Now, said Scot, end customers have many choices. It’s a zero sum game and end customers need to be able to find and purchase products in all places, including the new alternative channels, or sellers risk losing a sale. Installation services, previously the purview of traditional distribution channels, are now unbundled in many cases and can be selected during an e-commerce transaction. He highlighted this via an example of purchasing hardwood flooring.

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Charlie said that he learns from B2C instincts, including completing transactions immediately. He thinks that these trends show a future path for B2B, though he’s uncertain on the rate of change. Scot highlighted the ability to go to the site of a shoe manufacturer, configure a shoe and have it delivered to you. Charlie noted that with B2B, the ability to transact often doesn’t exist and that B2B companies hide behind the fact that products are too complex.

Charlie then introduced the concept of ‘catalogueueue’ products, which involve simple, repeatable transactions and more complicated products, which require selection or configuration tools and sales assistance to help customers purchase. He noted that the profit is higher on the catalogueueue products because the cost to serve the customer is much lower. While Emerson doesn’t have a lot of catalogueueue products, Charlie worries what might happen to their traditional distribution channels if Amazon, Grainger, or other players take more of the profitable catalogueueue business. And, if these newer non-traditional channels start moving into the realm of more complex products, it could lead to the demise of many traditional distributors unless customers are willing to pay more for the more complicated products. But, Charlie said, while e-commerce has its advantages, traditional channels have advantages as well, including deep vertical capabilities. Scot’s opinion was that Amazon could move into the more complicated sales faster than most B2B companies think if they wished to pursue this strategy.

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Marketplaces

The talk turned to marketplaces and Scot discussed Amazon, which he said is less likely to be concerned about the higher margins in B2B and more interested in capturing volume via lower prices. He also highlighted how Amazon uses data to drive decision-making and strategy. Charlie noted that he and many companies are weary of Amazon because of the data they have on customers and pricing.  Discussion turned to treating Amazon as a “frenemy” and having different Amazon strategies depending on the market position of your products. Scot mentioned that many businesses source product via eBay as well via the large Business & Industrial category. Charlie indicated that as he started reviewing the big players, he assumed that Amazon and Google were out front but he now sees eBay playing a more important role than he initially thought.

Charlie worries about losing control of pricing on online channels (vs. defined discount schedules in traditional distribution) and abdicating price control. Scot discussed that selling on marketplaces can allow manufacturers to get control over price and that this is a hybrid path between traditional distribution and selling direct with the benefits of marketplace model. Charlie agreed that this is a good way to dip a toe into online selling without angering traditional channels, for excess inventory as an example.

Search for B2B

Scot discussed how B2C is a search world and that many B2B companies don’t factor in search terms when creating URLs, hurting their organic performance on Google. Charlie mentioned that Google had pointed out to him that customers were searching for products using different terminology than what Emerson was using. Scot suggested using Google Trends to assist with this problem. The two also discussed customer reviews, which are big in the consumer world.Charlie indicated that he originally operated under the assumption that B2B didn’t do reviews, but he envisions a day in the not-too-distant future where much of the B2B experience replicates B2C. Scot mentioned that manufacturers could actually use reviews on their websites to reinforce the core features and value proposition of their products.

The Scope of China

The final topic of discussion was China. Charlie talked about Emerson’s mid-tier initiative in China to expand the market and take the battle global, even as some of these global companies attempt to penetrate the U.S. market. A poll indicated that 63% of the audience saw some threat from China. Scot discussed the scope of Alibaba in China. Charlie followed up by noting that there are a plethora of e-commerce and social sites in China that make it very complicated and that the U.S. is easy by comparison.  This makes it easier for Chinese companies to enter the U.S. market than it is for U.S. companies to enter the Chinese market and this will only accelerate if B2B becomes more like B2C.

Finally, Scot and Charlie closed with a list of actions for the audience:

  • Master search – Ensure that customers can find your solutions on Google and other search engines, not just in the U.S. but in other countries. Ensure that you have a great search experience on your own site.
  • Engage marketplaces – This is essential in North America and critical in emerging markets. See which companies are selling your products. Charlie suggested getting on and selling, even if it’s at a higher price point.  Good places to get started are narrow vertical markets with characteristics of B2C and where fulfilment can be optimised.
  • Build transaction self service
  • Embrace mobile – This is the primary interface in emerging markets. Content needs to be skinny, requiring thought on how to provide a rich presentation without being verbose.
  • Invest in your brand – Disruption in channels make it incumbent on manufacturers to build and reinforce brands. Amazon and other distribution channels won’t do it for you.

Will B2C trends end up impacting the B2B market? Tell us what you think in the comments below.

Blog post by Mike Shapaker, ChannelAdvisor Director, Business Operations