When planning a digital transformation, the priority is frequently to increase employee productivity or reduce other operating costs. Unfortunately, focusing on internal processes often ignores the most significant available impact—growing sales and profits. In the aftermarket, the largest contributor is parts sales, so you should start with an e-commerce strategy.

Why Start with an E-commerce Strategy?

“We expect hardware to decrease from approximately 31% of the company’s profit today, on average, to 23% by the end of the decade,” predicts a recent Bain report.

According to McKinsey & Company: “The high bar that B2C giants have set for personal, customized customer experience increasingly extends to B2B companies, including industrial OEMs. As a result, to expand services’ potential, OEMs will want to up their customer-experience game.”

Customer expectations are quickly changing. Customers expect their experiences buying parts and consumables from capital equipment partners to be as quick, easy, and intuitive as when purchasing toothpaste from Amazon.

In past years, customers’ attitude was that if the buying experience from a supplier was as easy as buying from Amazon, the supplier was the best. But now, if the buying experience is not as easy as when shopping at Amazon, the supplier will be removed from consideration for future purchases.

Most non-automated parts sales operations depend on spreadsheets, cheat sheets, and knowledgeable people. Unfortunately, the key people are retiring, relocating, or rethinking their careers.

Imagine This Situation

A customer has a non-operating packaging machine, and the input hopper is overflowing with fruits that quickly spoil. Every second the customer is on the telephone with a rookie parts order taker, it feels like an eternity because the business owner or lead person keeps walking by her workstation. The customer’s displeasure is orders of magnitude worse than when the vendor fails to pass the Amazon test, and the person hanging on the phone feels like her job will end before the end of the shift.

Remember, e-commerce solutions are not just for spare parts and consumables. The system should be used for everything you sell, including off-the-shelf and custom products, spare parts, and services.

Why Are Companies Reluctant to Launch an E-Commerce Strategy and Project?

According to my friend Kristina Harrington, president and CEO at GenAlpha Technologies, a provider of e-commerce solutions to industrial OEMs, the three most common reasons that companies articulate for not moving forward on an e-commerce project are:

• They don’t believe their data is ready for digital commerce and, therefore, are planning to change their ERP software or are in the process of doing so.
• Many manufacturers have built their businesses with the support of their dealer partners. For this reason, they think implementing an e-commerce site will disrupt these important relationships (Channel conflicts).
• Internal customer service teams and external salespeople view e-commerce as a threat to their jobs.

According to Kristina, each of these objections can be easily overcome. For example, data should not be a reason to delay starting a customer-facing digital solution. Manufacturers have a multitude of data available in their systems (ERP, CAD, technical publications, PIM, CRM), that if organized well can be repurposed for use in a digital commerce environment. Manufacturers have invested money, time, and resources in creating processes built around these systems.

It’s time to leverage this data to improve industrial buyers’ part identification and ordering process. Implementing an e-commerce strategy is not an event; it is a journey, and improving data will continue as this important sales channel grows.

There are many ways to get started with e-commerce. For manufacturers with dealer partners, improving the parts identification and ordering process for dealers may be the most crucial first step. If that’s the case, Kristina recommends starting with an e-commerce site for channel partners and key accounts, where they log in to see prices and availability and create orders.

If you make doing business with you more effortless, dealers will likely recommend your brand over competing brands because you are delivering a better experience. Over time, as the business environment changes, manufacturers and dealers may collaborate to open the site to end customers to meet the increased needs of online buyers.

No business should use a new system to take money from their partner’s pockets regarding channel partners. That is an internal issue and should never be an excuse to prevent customers from enjoying the benefits of a digital solution.

As for internal teams viewing e-commerce tools as a threat, this can be overcome easily when stakeholders bring teams into the e-commerce evaluation and implementation process. A good e-commerce site will make everyone’s job easier — customer service, sales, and partners. Dealers and customers increasingly want the ability to self-service.  When they have this ability, it will off-load the recurring transactional activities — parts identification, call for price, availability, and order status — and free everyone to work on the more complex challenges and sales opportunities. When done properly, everyone wins.

How Does Implementing an E-Commerce Strategy Help Grow Service Revenue?

I asked Kristina this question, adding, “Don’t most parts purchases arise because either a spare part was used to repair a unit and needs to be replaced, or there is something wrong with the equipment, and the end-user needs to purchase a part to use for the repair?” She said that the ease of using the software frequently creates new selling situations.

Here are some examples:

• On each part’s page, the company can list any special tools or instructions needed for the repair, along with a link to the tool’s page.
• The same goes for frequently purchased parts used with the primary component to be bought. For example, if the company recommends that an O-ring receive a light coat of a special lubricant, this can be explained in a note that includes a link to the lubricant’s page.
• Many OEMs assemble common industrial components into their equipment.  These common components may be assembled into competitor brands as well.  For example, many specialty trucks start life as standard commercial vans made by Dodge, Mercedes-Benz, or Ford. The OEM fits them to the end-user’s requirements and may even install the advertisements on the outside and the ladder racks on the top. If, during maintenance, the end-user needs a set of brake pads, they may shop around and find the OEM has the lowest price and a good inventory. In that case, they may buy all the brake pads from the one OEM with the e-commerce software, no matter which truck manufacturer. OEMs with the best customer experience may grow their parts market share by selling these common industrial components for competitors’ equipment.
• One reason may be counterintuitive: The OEMs have dedicated technical people available to answer customer calls, help them decide what parts they require, and provide all price and availability information. Because of the e-commerce software, the number of calls these telephone support people handle gradually declines as customers shop online. This frees up technicians’ time to provide more in-depth help on challenging calls. The tech may discover other issues with the equipment during the troubleshooting session, and the end-user may buy more parts and do a better repair than if she only used e-commerce.
• Finally, the most apparent reason is that sales can increase.

Gartner states, “Manufacturing buyers want to engage with suppliers through user-friendly online ordering features, even with custom products. Some 64% state that they would switch to another vendor if the company provides real-time, personalized pricing. Some want to receive estimated freight quotes, information on bulk discounts, MOQs, and customization opportunities, preferably at any time of day or night, and via multiple channels.”

If your e-commerce solution impresses your customers, they will likely consider your company for products and services they previously bought from a competitor. They may even convince you to enter new markets you had never considered.

Key Takeaway

There is no reason not to have an e-commerce website. The benefits are significant, and the reasons for not doing it can be resolved quickly. Your customers want and deserve e-commerce.

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About Middlesex Consulting

Sam Klaidman is the founder and principal adviser at Middlesex Consulting. He helps his B2B product manufacturing clients grow their services revenue and profitability by applying the methodologies and techniques associated with Customer Value Creation and Customer Experience professions to assist his clients in designing and commercializing new services and the associated business transformations. Contact Sam here.

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