Today, 53% of all orders from distributors to product companies arrive by paper, fax, email, or phone. I once ran a manufacturing company that relied on distributors, and I know that the potential for mistakes, lost orders, and unhappy customers inherent in that statistic is staggering.
But pain is fertile ground for innovation. A new report predicts that manual order processes, currently almost $3 trillion of all transactions, are expected to decline nearly 17% in 2020*.
Why the big, sudden shift? “The coronavirus is permanently changing the nature of business buyer behavior to demand even more digital commerce options,” the report’s authors conclude. “There is an enormous multi-trillion-dollar sales opportunity for distributors that want digital commerce growth.”
Yes multi-TRILLION. At Inxeption we have spent much of 2020 at the red-hot center of the buyer-driven digital transformation happening in companies large and small across many different industries. We see this shift happening every day. It’s not just about COVID-19. We are the leader in developing the “industrial commerce” software that’s inspiring businesses to make this shift. We are an “I-commerce” platform that integrates all the major functions of business including digital order-entry, marketing, online sales, shipping, and financial services, into a single, secure software commerce platform.
Our company was founded in part to fix the friction inherent in that 53% statistic. But more broadly to let companies be in better control of their order data—and, really all their data—and use it to drive sales and optimize all their key processes.
The time is right for digital transformation. But to move forward we know some companies must overcome a fear factor. When they hear “digital transformation” it can seem like a tall, abstract mountain they’ll have to climb. Some even say: We let our distributors talk to our customers—we don’t know how! And when they consider shifting at least some products to direct online selling, those who have relied on traditional distributor models worry that their golden egg-laying distributor geese might get annoyed and fly off.
Let’s bash both misconceptions. You have to realize that going slow is far from the “safe” path forward today.
1. Remember, all buyers today WANT to shop and buy online—and the customer is always right.
The Amazons of the world taught consumers to love the convenience, the speed, the ease of searching for solutions and desires online, comparison shopping in minutes, and ordering everything from sneakers to bird seed online, even from a mobile device. Buyers of warehouse equipment and auto parts increasingly want the same quick, easy transaction flexibility 24/7.
COVID-19 did not invent the desire of business buyers to kick tires, comparison shop, and check out virtually. However, it has accelerated it in a very dramatic and compelling way.
Unfortunately, today many companies have web sites that just refer shoppers to partner distributors for more information or request contact info with no call to action. Distributor web sites often don’t allow online ordering, and many of them still require a phone call or series of meetings with a potential customer before a sale. Can your customers buy online from you, or can they at least buy online easily from your distributors? If not, that must and will change. How do you start moving more effectively in that direction?
One option is to start by picking a product to sell online. At Inxeption we believe that whatever they make in whatever industry, most companies have at least one product right now . . . today . . . that could be sold direct, online. Existing distributors may not be doing a great job with an older product that still has a buying base for example, because they’re focused on new, higher margin models. That’s a great opportunity to optimize by promoting it in online ads, email, and social media, and sell it directly using an online channel.
There might be fast nickels to be made from a liquidation bargain related to your core business. Or, you might sell parts and disposables online. Or, you might even invent a brand-new consumer version of an industrial product for the home or DIY buyer.
One of our most successful customers, Purafil, has been selling advanced air filtration systems to hospitals, airports, NASA, even the Sistine Chapel, for 50 years. When COVID-19 created a pandemic, Purafil saw an opportunity to design and build a compact, portable device that cleans the air in a medical or dental waiting room, a gym, an exercise studio, or a cafe. Its distributors were not set up to sell to consumers, so we helped Purafil add a direct-to-consumer channel. That product has succeeded dramatically—selling out its first inventory in 10 days, and ramping up sales significantly ever since. Our channel has become their top domestic distributor for this product. And all the while, Purafil has kept its stable of large institutional distributors focused on their high-volume targets. Everybody’s in their own lane, succeeding.
In fact, Purafil is actively innovating and adding new products across its entire portfolio to the direct channel. Ironically, the initial goal of Purafil working with Inxeption was to create a better customer experience for the distributor in placing orders. But, immediately the power of the platform emerged when it saw how the Inxeption platform could allow it to deploy its growing database of products, customers, and marketing data effectively. Purafil is a great example of how digital transformation happens when you marry opportunity, the right technology, and business creativity.
Bottom line: There’s a way to ease into online selling that addresses customer desires, generates impressive revenues, lets you experiment, and does not create unwieldy channel conflict. Our approach can complement your existing relationships. Purafil has proved that. For the enterprise, creating a channel to efficiently capture orders online even from an experimental product launch, is a great step toward digital transformation. It will help you think through the broader downstream functions to complement new capabilities, like email marketing campaigns, product update alerts, etc. We help you learn digital mountaineering on the foothills…. not the Matterhorn.
2. Even if you intend to sell through distributors indefinitely, realize that if they are transmitting orders to you using manual processes today, it’s costing you time AND money. Embracing digital order-entry is a win-win.
Again, let’s focus on that first statistic in exploring another path to digital transformation: 53% of all orders from distributors come in by paper, fax, email, or phone. That’s chaotic. An unreturned phone call can cost you a sale. Misreading a fax can mean an incorrect order. Why do companies keep doing this? We hear:
- We have complex orders that require taking measurements, working out shipping complexity, understanding the unique customer needs, and often working out financing terms. Each one is so different.
- These are [insert industry] distributors. They aren’t techies. It’s a relationship business. They have a way of doing business that works for each rep and they don’t want to change.
- We have multiple distributors; they have different systems and practices. We need to take data in however they want to send it.
We respectfully disagree. If you have flawed or missing data at the order-entry level, the first official step in a transaction, it will corrupt the whole transaction. It’s called “data entropy.” You’ll have order mistakes, payment delays, frustrations, and even angry customers.
“For some companies, it’s the easiest but also a radically effective first step in digital transformation to streamline the order-entry process,” explains Mike Roush, a President within Inxeption’s I-commerce Solutions Group. “Customers worry about channel conflict when they start selling online, but this is the way to bring distributors into a win-win system. It pays off immediately in time and customer satisfaction—and time to payment.”
With Inxeption, distributors can simply log in to an online portal, even from their phone or mobile device, where all the information they would usually spend time filling out on a paper form or in a one-off email or repeating to a live order-taker instead can be entered digitally. Not by lots of typing, but by using easy variance option forms that present relevant size, style, finish, upgrade variables. Think of Inxeption order-entry as a digital cash register, a virtual point of sale input tool.
The distributor inputs the order and hits send. When it arrives the software can query the warehouse to check the stock, and it can check the customer’s order history to flag any unusual shipping or financing issues. The software then processes the order to fulfillment. Another big benefit: It communicates with all stakeholders automatically. It has the ability to send an email acknowledgment to the distributor and customer that the order is received; it pings finance or shipping if there is complexity that requires their attention immediately; it sends another email when the order is shipped, and follow-up emails to remind customers to shop for replacement parts or new products.
As Mike Roush explains, at Purafil, new leadership came in and discovered the challenging side of the company’s old, analog order processes: “The company estimates that 70% of orders received from distributors via email/fax lacked sufficient information to process the order. Missing ship-to, bill-to, product quantities, etc. caused delays in distributor orders getting processed.” That’s bad news for both Purafil and for its distributors. Delayed processing and shipments meant unhappy customers and delays in Purafil getting paid. That in turn, meant delayed commissions for manufacturer representatives. As a matter of fact, before working with Inxeption to rationalize its order process, Purafil achieved only a **54% on-time delivery to end buyers in 2019. **
Before Inxeption began handling order-entry, it could take days or up to a week for the company’s customer service team to get the missing information to complete and process an order. With Inxeption, the chance of order-disrupting issues falls. Purafil’s average book-to-ship period improved 46% after switching to Inxeption.
According to Roush, Purafil is not alone in wanting to shrink these cycles and improve order accuracy. In his conversations with many different manufacturing companies and distributors in the filtration industry, these problems with lost, incorrect, and incomplete orders are all too common when they’re delivered using manual processing.
Bottom line: If you do nothing else, digitize your order-entry process. On the Inxeption platform you create an order and fill out a customer database that self-populates going forward, saving everyone time and money and reducing errors.
Once a function like digital order entry is in place, companies can look at what other elements of their business can benefit from other Inxeption capabilities, from launching an online selling store to a more advanced, predictable method of managing logistics costs, to in-cart financing for customers.
Digital transformation doesn’t have to be radical or daunting. With Inxeption, it’s about a platform of services that simply help you Do Business Better.
*Source: 2020 Digital Commerce 360 2020 Distributor 300 Report.