What Do 70% Of All Tech Data Orders Have In Common?
19 April 2017 | Caleb Huard
They were bought online through Tech Data’s e-commerce website. I cannot imagine a B2B technology distributor that does not offer e-commerce to its customers being able to sustain itself for too much longer.
Tech Data is a great example of a B2B distributor from which to review financial performance: I suspect other companies such Supplies Network, Ingram, Synnex and D&H to have similar numbers. The conclusion from a quick peek at their most recent quarter is that B2B e-commerce (EDI and via the website) from distributor to reseller is now more important than ever.
The above link is certainly worth a read because of how they view the numbers.
Here are some highlights:
1. 24% increase in online sales to small business resellers. That’s astounding.
2. Overall sales at Tech Data decreased slightly, but the share of online orders increased by almost 6%.
3. 48% of sales were from broad line products such as printers, laptops, and printing supplies.
4. Even though sales were lower, gross profit increased by almost 5%.
Conclusions? Small business people like you, overwhelmingly want to buy online. The system is so much easier than talking to a salesperson. We all think that OEM hardware has razor thin margins, so a slight decrease in sales should have the same effect on gross sales profit, right? It’s likely that as sales have moved online, customers (like you) are willing to pay a higher price for convenience and efficiency. Again, wouldn’t your customers do the same?
Is your website dragging down your sales?
An e-commerce website helps your business in two critical areas. Securing new business, and increasing sales to existing customers.
New Business, Salespeople, and Your Website.
When someone tries to sell products or services to you, what is the first thing you do? I’m betting going to their website is your answer. The prospect will decide within 4 seconds (site reference) if your business is legitimate. Many business owners think that sales people, and not a website drives sales. That is no longer the case even the best sales people cannot overcome a bad website.
“No matter how good a salesperson is, they cannot easily overcome a bad website. At the very least you are handicapping salespeople if they need to make an excuse for the state of their website.”
Existing Customers and Your Website
How successful have you been at expanding categories beyond your traditional product offering? If you sell printers and supplies, have you expanded into computers, laptops, and telephony?
“Customers that buy online increase their purchases by an average of 30%." - Richard Lazazzera, Shopify
One only needs to consider Amazon to see this play out. Not only are their overall sales increasing by double digits, they have expanded way beyond their traditional market—it’s hard to believe Amazon’s initial product was books!
We should also remember what happens when new employees show up at your customer site. Usually, it’s younger employees replacing older retiring employees. Their first action is to review the current vendors and decide which ones to keep and which ones to replace. Once again your website becomes one of the first things they look at.
An upgrade to your website is an important investment. It serves to legitimize your business for new prospects. It will increase revenue. It will enable you to broaden product categories. When the cost of a new e-commerce site is less than the cost of a new A3 MFP (about $5,000), it’s getting increasingly harder to rationalize why your business does not need it. You wouldn’t want your customers to start thinking that your business is not investing in their business.
Oh, one more thing, not only do B2B distributors like Tech Data invest in their own e-commerce, they enable yours! MPSToolbox can offer pricing and inventory integration with your and distributors like:
Contact us today to see how it works.
About the Author
Norm McConkey has been involved in the print, imaging, and software/tech business since 1993. Holding executive level positions in a number of emerging technology firms, he founded PrintFleet in 2003, and Tangent MTW in 2009. A founding member of the MPSA, an award winning author and presenter, Norm has spoken at various industry events around the world including the Lyra Imaging Symposium, Photizo confernece, ITEX Tradeshow, Regional BTA conferences, Remax Europe, and World Expo. He has been contracted to consult and build go to market and sales training programs with several OEM manufacturers such as Canon USA, and HP, and distributors such as Parts Now and Supplies Network, as well Resellers including Office Depot. Norm’s current project, MPSToolbox (www.mpstoolbox.com), is a software platform which helps technology dealers develop and maintain e-commerce websites.