eSessions with AHTD (William Miller, Koganei)
1) Introducing William J Miller of Koganei (00:00-01:06)
William J. Miller III is the national marketing manager for Koganei. He is the first American hired by Koganei, which is a privately owned Japanese manufacturer stepping into their 85th-year history. William has been on a mission since day one to build one of the largest networks of channel partners and distributor dealers in the Americas and deliver the highest quality product to the hands of engineers which are making the future of everything that is manufactured.
William has traveled the world from Israel to Tokyo, Japan, and just about everywhere in between. His current role entails being Head of Marketing for North and South America. William is also the host of a national manufacturing podcast produced and managed by Jacket Media Company. So it’s called Where’s Willy podcasts.
Here are his insights:
William Miller (Head of Marketing & Business Development for Americas Koganei)
2) William on eCommerce and distributorship: an insight
I appreciate all your patience. As you guys know, going virtual, there’s always going to be challenges with the internet, so I apologize, but I assure you this will be well worth the wait. Alright. just to give you guys a little bit of context, the reason why I volunteer to share at least my insights based on what I’ve been doing with Koganei and my experience over the last 15 years, traveling globally from Israel, all the way to Tokyo, Japan, I’ve always worked for a supplier, working with distributors, understanding very clearly the distribution, our relationship with suppliers and what we are both trying to achieve.
This all started with a conversation that I had with Tim a year ago at the AHTD. And he had asked, “Hey, do you think e-commerce will ever happen in our industry?” And I said, Absolutely not. We have partnered over, with 50 distributor organizations coast-to-coast here in North and South America.”
And they are geographically protected and local distributors, I think will always be catalog companies. Unfortunately, I think that has changed. So I’m eating my words and I wanted to get on and share what I think over the next couple of slides that you’re going to see, is the reality of where the industry is.
I think that we do a very good job of putting on our sport coats, having a couple of cold milk at our events, and at least for me over the last two years that we’ve been associated with AHTD, I think we have to start being a lot more realistic about the current state of affairs and where we’re at and really start talking openly about a strategy and what we’re doing, for us to grow.
3) Innovation the distribution industry during COVID (01:06- 02:37)
Here we are present-day facing Corona, COVID-19, whatever you call it, aka, we can’t go anywhere. So I think that maybe by circumstance, serendipity, etc., this reality was coming regardless of any type of pandemic. So this first slide, I want to talk about what we all know is the big elephant in the room or in this case, the DCKAP Rhino.
Okay. eCommerce is here. It’s been here and it’s been in my opinion. so everything that I’m going to share with you guys today is my own opinion. It is not represented or supported by Koganei who employs and pays me. So I just want to give you guys that context as well. The industry is changing and it was changing before Corona happened.
I’ll reference many of you that have been in the industry even longer than me, as I said, 15 years, some of you have 30 plus years. Back in the eighties, there was handshakes, cigars, and a pocket full of quarters.
Many of you had hip dysplasia from carrying those Hoover books whether you’re looking up NAICS, SIC code, you were getting to know your APR, your geographic territory in your vehicle, and going to visit customers face-to-face. In the 90s and 2000s fax machines start saying goodbye… and our parents learnt how to start typing on a machine called a computer. The reality is the old way of doing business has changed significantly.
4)Emergence of suppliers and change of functioning ( 02:38- 06:17)
More suppliers than ever before are available to distribution, mostly because of globalization. Companies like for instance, Koganei, many of you never even knew who Koganei was, which makes sense because Koganei came to North America only in 2015. We used to have a master distribution agreement, but I’m not gonna talk about that because it really brought nobody any value. Koganei established itself in Fremont, California in 2015. Since then, I have been trying frantically and relentlessly teach people how to say our name correctly and have them understand that we are not from Pyongyang or somewhere else, but we’re an actually privately owned Japanese manufacturer.
That being said, how contracts changed? So I’ve seen this paradigm shift from when we talk about the eighties, nineties, two-thousands and present day. In the early days, many of the distribution partners did a couple of things, same with suppliers. Number one, they had trust with one another.
They were very strategic on who they wanted to represent as a brand, as a technology, as a solution provider. So most line cards as we reference, a given distributor in a given geographic area would represent maybe 5 to 10 at most a supplier brands or technologies to serve all the customers in their geographic APR driving distance, that would use any of these components.
So we are pneumatic, electric, robotic components. As you guys know, there’s a lot of automation, PLCs, different drives, etc. So different technologies and you are the local supplier for these customers. Now today. I think the industry has turned, unfortunately, because of eCommerce, because of these big catalog companies that don’t provide as much value as a local distributor.
Many of these distributors are carrying more and more suppliers and they’re almost becoming Walmart. I do not have a problem with this, because I just think it’s a reality. All of our contracts that we have with our distributors, we don’t have exclusivity and even though they tried to tell us that we have to be, we respect that, but the reality is how can a distributor serve their customer by limiting the brands or the technologies that they have.
5) Change in perspective for distributors (06:18- 09:10)
Distributors have to take on new suppliers, even if it’s not their intention to have a line card now with over 90 different manufacturers, but the local distributor wants mike and Pete to buy from them. Distributors today, their job is for any OEM or manufacturer within their APR. And again, each distributor has a different size, geographies, different size sales staff, etc.
They want every manufacturer that needs something to go physically or online to that distributor to buy what they need, whether it’s a Koganei valve, whether it’s Norgren, whether it’s Bimbo, whether it’s, whoever the thousands of lines that they represent, they want them to go there. The reality is over the course of the 80s,90s, 2000s to now suppliers would sit back and say, we have a contract with our distributor. It’s their job to build our brand. It’s their job to put us in the car and go visit OEM customers because we are giving them a discount to do that.
So the value of the contracts between supplier and distribution was predicated on two things. Number one, building the brand and allowing a supplier like Koganei to get market penetration, geographically. That was number one, number two, it was. You’re going to stock locally so we can deliver fast because we all know if a customer has to wait two, three weeks lead time, they may go outside of your APR and go to one of your competitive distributors because unfortunately, your supplier didn’t have stock locally.
You didn’t have stock either. So there you lose the local customer. This paradigm, this elephant in the room, this DCKAP Rhino has been going on. Now, at the present date because of COVID-19 pandemic. We have distributor owners that are going, “We have sales representatives that are making some cases 100, 200, 300,000 a year on commissions because they’ve had the same accounts for the last 30 years.”
And those, sales representatives really don’t care about the owners from the stance of. – Scenario”-If the owners threatened to say, Hey, we’re going to have to cut the territory down because you’ve brought in no new customers, because over the course of the year, you’ve done a very good job of taking care of 90% of the opportunity that’s out there.”
So unless you expand to new markets or you expand to, more real estate, bigger geographic areas, distributors are not going to grow. And the problem is if they’re limited in their current geography, and now eCommerce from catalog companies can come in and pluck and take their customers virtually.
6) What’s going to happen to the future of distribution? (09:10-13:22)
So, this is covering, ” What’s going to happen to the future of distribution?” That’s the first part is talking about, industry. Now I want to talk about the territory. Back in the 80s and 90s and 2000s, the distributor, a sales representative, they knew everybody around.
But now they succumb to sitting in a lobby, holding donuts. The truth is because of the pandemic, the salespeople are not on the road. Maybe they are. So some of you guys can humble me, but for the vast majority, okay, they’re reaching out saying, “Hey, we want to keep all of our girlfriends happy. All of our suppliers like Koganei, because within the territory, you’re not getting any new business because you’re covering 90% of the business”.
So all the distributors have to figure out, okay, how are we going to keep loyalty? But the reality is once as we start to consider eCommerce-the biggest protection in these agreements is going to change, which is exclusivity, geographic protection from suppliers, like Koganei not being allowed to sign another distributor down the road from you three miles. I think that’s been what has really limited distributors and suppliers from either A) going direct B) keeping their agreements with their suppliers, for exclusivity, supporting one another and keeping that partnership.
But eCommerce lack of being able to meet with customers, something has to change. When we look at the market. Okay. Many of you used to sell air logic, diaphragm, poppet valves, mechanical, the heart of automation. Nowadays that has all changed. You’re selling robotics, you’re selling advanced automation, IoT, the annual 3% price increase, complete BS in my opinion, but your suppliers continue to do that.
Why? I think the biggest reason is the operational costs are increasing. Suppliers are seeing very little growth because basically you’ve capped out geographically the opportunity. If you’re serving 90% of a geographic location, there isn’t much room to grow. So the best way to impact your balance sheet is to apply a 3% increase and relate it to operational costs, but that goes directly to your bottom line. Suppliers are notorious for doing it, many suppliers do it annually. I will not say that Koganei will never have a price increase, but we haven’t had one in eight years. So I think that suppliers need to wake up stopping ignorant and understand that our dependency on the distributors has to change. We have to start building our brand. We have to start driving offline sales to our distributors’ websites so they can have more transactions. I’ll also say, technology has changed AI, the ability to automate transactional salespeople are going away.
7) Role of Suppliers and Leads (12:38-6:44)
I personally know at least 10 distributor sales representatives. That have had their territory for 20 plus years. They’re making net take home over $250,000 a year. What’s their incentive to retire. Now the challenge as an owner is you want to integrate some kind of trap. I was also talking about, your costs.
So we as a distributor, what do we do? A minimum of an order’s four turns a year, dead inventory returns, wasted dollars, the need to drop ship to have just in time, suppliers need to stock, but then where’s the value of the relationship. It begins to suffer. Suppliers say, “Hey, distributors, get discounts for a reason to build the brand stock locally that used to work.”
When you have any percent of your crops offset with corn, how can I accept reality to think that you are now going to sell coconuts or watermelons in the same field? You can’t do that. what’s the one thing that we hear all the time I just interviewed. If you guys saw Larry White, the owner of interlinks. Distributors. They want leads. Suppliers. They want leads. So we’ll both just sit around and wait until one of us give each other leads. Truth is you don’t get new business suppliers say, bye bye. And if suppliers brand isn’t being asked for distributors, aren’t gonna want to push the brand. It’s not their job.
Sales stood out to me. The sales staff today, they make ridiculous commissions. They’re leaving distributor owners with fewer and fewer pennies because operational costs are increasing, but you’re on sales staff threatens to leave. If you take that away, the way we’ve always done, it is really starting to bite everybody in the biscuits.
what are we going to do regarding e-commerce to be clear, Koganei,we are not in e-commerce. Okay. We are supporting our distributors, but if they choose to go to e-commerce, you’ve got to look at the investment. The challenge is you can make the investment all ou want to have the best technology to have an eCommerce platform with the best configurator, the best online transaction software that’s out there.
But if nobody knows who you are, if nobody knows that you spent 50, 60, $70,000 to implement this new virtual online catalog ordering system, similar to an Amazon locally. It’s not going to work. So this slide deck that I’m going to talk about next has to do with, what’s going to happen.
What do we have to do? Okay. At the age TD events and I love this. When I walk in, everybody’s dressed so nice. We have a lot of bravadoes. We talk about how great we’re all doing. Nobody tells the truth. Everybody says, Oh, we’re having a banner year as best we’ve ever had.
We’re doing so many values at assemblies. It’s ridiculous. But yet when we’re online, virtually, which we are all beginning to embrace to keep up with e-commerce and not lose any more customers because the old way of sales business doesn’t work were mice. Many of you that I know personally where I’ve shaken your hand prior to COVID, I’ve heard great stories.
I hear about great successes yet online. You have no presence. So from my standpoint, as a supplier, If the reality is all distributors are looking at building an online store, going E-commerce, that discussion you have to have. And thankfully I’m in marketing now. So you have to talk to our national sales manager about that agreement.
How are you guys going to face protectionism against a supplier, going to other lines, how are you going to be able to win or convince the supplier that they need to stay exclusive with you? If you’re going to start selling out a territory? Because when you go out, an e-commerce that 1000% happens.
8) Role of social media and going online (17:11-21:44)
The reason why all of us have embraced e-commerce or, push offline sales. Many of you aren’t on social media. Many of you don’t know how to do it. I don’t know how to do it. I’ve had asked my 15-year-old daughter to do it to what she’s embarrassed and says, dad, don’t ever tell anybody that I’m helping you do this.
The reality is, when you go online. You become exposed. Okay. not just exposed to, your knowledge base, the value that you’re bringing customers, you become exposed to number one, your suppliers. For example, I always say we don’t want to make our girlfriends angry. So when I am on LinkedIn, for example, and I see some of the distributors that I love, we’ve had wonderful dinners together.
We’ve had a lot of good activity together, and then I see them promoting nor Graham, the rest of them see barf, but then how do they feel when they see Willie promoting a distributor near them, Willy stinks, but we’re both doing it. We’re both trying to show value to those we serve.
For me as I pontificate from the Koganei USA company page that we’ve been growing. Koganeiglobal manufacturer made Japanese quality. We’re available at 50 locations coast to coast here in the Americas. I want to highlight every one of my distributors. So locally people know the brand and locally they know where they can go.
So if my distributors are staying brick and mortar, or if they’re going to e-commerce. I want to continue to push that, because again, in my mind, if I’m building the brand and now I’m able to start getting people to ask for the Koganei brand, the next step is they need to know where they can get it. And ideally my distributors who ask us Koganei “Hey, we need leads”.
We need leads. That’s what Willie’s doing. I want to continue doing those things, but I can’t do it alone. Are there suppliers, fortunately for me are hesitant to embrace going online and being social and being virtual. But that’s where the attention is. If you’re not meeting people face to face, if you’re not giving them donuts, if you’re not meeting Becky in the lobby and seeing Frank and talking about their kids.
Because now they’re online in virtually. You have to go where your customers are and if you don’t, you will lose 100%. You will lose. I’m seeing it now. And that’s why I think that there are members of HDD that accept that reality and are making changes to go where the customers and the attention is. And that’s virtually, and that’s through eCommerce.
AHTD in the world is watching. So you have to be smart. I think that. one of the biggest challenges for distributors is isolating or protecting your value because your competition is always the first to respond. They’re the first to view your profile for those of you that aren’t on LinkedIn, there, you have the ability to see who looks at your profile.
So for me, if I see, if I do a post, I will immediately see SMC Mack Norgren, Bemba Festo. Everybody’s looking at my posts and I can bet that you, as a distributor, if you talk about, Hey, we just launched a new online store. Your first people that are going to go to your comments or see your posts are going to be your competitive distributors, your competitive suppliers.
I know we’re going to go to their distribution network and say, Hey, Pete, off the road, just to an online store, you need to do that. And when you go online, you become exposed. Everybody can see what you do, your customers, your suppliers, AHTD members. And that’s just the reality. And again, we all have to swallow our pride and realize this is where the attention is.
This is what we have to do. And I think. More distributors than suppliers. I can highlight a new technology that we make. That’s easy. Koganei made this, and I can talk about a feature, a benefit, a solution that this would provide. So this is, Ethan at IP, direct as a distributor. If you’re only stacking 70 or 90 different brands, you’re going to tell everybody, Hey, we’ve got everything you’re looking for from a mop to evalve.
We’ve got it all. That’s great. But what’s the value because Motion’s doing that. So is, Command. So is everybody outside of your APR that selling to your customers that’s visually seen on social media to drive off on sales, stealing your customers and your APR. You really got to start thinking about what the value is you’re bringing.
And if I hear another distributor say we do value at assembly. I’m sorry. That’s now a commodity. Every distributor is doing that. And then what’s going to happen when the catalog companies say, So if you had, if you sell extruded aluminum and you do framing and you have engineers, and that’s what you’re selling and telling everybody online, what happens with motion says, we’re going to hire our own engineers and we’re going to start doing that and we’re going to deliver faster and we’re going to have no minimums.
And we’re going to say, Hey, if you buy $500 worth, we’re going to give you a hundred dollar credit back. So there’s some significant challenges it’s happening because of eCommerce because of globalization. And we just have to accept the fact that you can’t hide. You have to be seen or you’re not going to sustain the next five to 10 years, my opinion.
9) Avoiding confusion( 21:45- 25:10)
So I talk about confused experience. So orders, transaction sales. In my mind, those are dead. those were referencing the sales people that have been going to the same account, because it was an OEM spec that you got the drawing for you spec the parts, and they’ve been buying it for 25 years.
That’s wonderful. What have you done lately? What have you done to generate new business? So AI and automation now can handle that transaction of the same orders. If you’re doing forecasting, the owners can now implement this software. So many of these OEM customers can go online. you have a quick discussion or an email confirming your forecast for 2021, for example, by quantity.
All these transactions now can now be automated. So you really have to start talking about bringing real value, whether that’s experience, whether that’s, your understanding of technology, you have to become the thought leader or the resource that everybody goes to. And I think that, like I said, we’ve had some wonderful guest speakers that talk about it.
I know Brian fans have talked about, pressing the damn button. I live in West Michigan and I have horrible internet service. That’s why I’ve cut out twice. So I apologize. but I’m starting to see that by being present online, I’m getting more and more traffic and people just coming to me because I’m comfortable now to be on camera.
I’m comfortable enough to talk about the 512,000 products that Koganei makes I’m comfortable enough to talk about my experience. I’m not saying I’m the best at it, but I definitely have 15 years of experience with working with distribution. So I think I have a little bit of insight that some people are starting to see value.
I said it before, if nobody sees you, that’s one thing. Now people are starting to see you and they see great. You went all in. You were embracing e-commerce. We have to now focus on that experience for the customer. So when I talk about confused experience, time beats relationship. So your customers,you can’t continue to be selling the me tos in the commodity.
You have to have them. For example, one of the drawbacks about partnering with Koganei is we are not a drop in replacement company. 90% of the sales in industrial automation is round body cylinders. Yeah, linear actuators, dimensionally footprint. We don’t match typically st. Born stroke. We’re going to be dimensionally smaller.
That presents a problem for a distributor that says, Hey, we have Koganei but it’s not form fit and function. It’s not second to fit the same dimension. So they have to make modifications. If it’s on a drunk, you can’t use Koganei really for Koganei, anybody that partners with us, I know USD sales. We’re proud to have them, as one of our newest distributors.
So thank you, Carrie, for your support. We’ve talked openly about when we started our partnership, we have to drive new OEM business for Koganei. They will never be for any of you that ever talked to us and MRO dropping replacement. Other line that’s on your card that everybody’s going to call and ask for. if you’re on a sack with Clippard, can we use Koganei or if you’re on a sack of Koganei, can we use this and see if it doesn’t matter?
The reality is you’ve got to have everything and you’ve gotta be speed to market, not confuse the customer. And that’s led to distributors feedback to us. We have to have better configurators because now everybody virtually is coming to you as a distributor and ordering the exact part number that they are a configured with your suppliers, on the screen.
10)Aligning offline messaging with online messaging- (25:11- 32:23)
So I just think that. If you’re going to embrace, e-commerce your messaging that you do for offline sales has to be consistent with what you have on your platform. So whether you use DC cap to help, create a new website, to have that AI, that’s introduced to have that automation in place for all transaction orders or MRO orders.
And you want to focus on OEM transactions, you as a distributor, similar to what I’m doing at Cogan, a you have to talk about specifically. What you can offer. And in my mind, before you talk about how great the lines are that you represent, because those lines you represent are also probably in 50 plus other locations in North America, there has to be some kind of incentive that you, as of the USB distributor, Provide that all of your customers in your APR, geographic area feel the incentive to still go to you versus motion or anybody else.
Okay. So I’ll just, I’ll say that don’t confuse the experience, make sure that your messaging that you’re doing on the social platform or virtually or webinars, or again, getting the attention of the customers that you serve is consistent with the messaging that you have on your website. Okay. So I have four, please.
All right. Your time is now. And there’s the timing in my mind is probably the biggest opportunity. Here’s why. You get out of LinkedIn, Facebook live, Twitter, Vimeo, YouTube. It costs all of you. $0 to post $0 to do a video, $0 to highlight one of the brands that you represent in a new innovation that they have.
However, unfortunately, getting that for free, which you’ve never been able to do when you ordered line cards, when you order. the extruded aluminum books and, how to make things that all costs you guys money. So we all have the opportunity to go virtually to, if you’re going to go outside of your geographic territory or not to become the voice, the resource that everybody goes to.
Why would you not take advantage right now when it costs you nothing to do that? Okay. Percentage, it’s a numbers game. As I’ve spent 15 years traveling with different distributors. Tell me about, will you know, it’s all about percentages. You got to talk to a hundred people. If you get 10%, that’s 10 new customers, and we have to keep that going virtual.
It’s the same thing. Right now, many of you, if you haven’t embraced e-commerce or you’re not doing it things to leverage yourself to sustain the next five to 10 years, number one, you have to be present. So you have to come to existence virtually. one of the things that I’d recommend, so yay. 85 years, they’ve been in business.
I’m the first American they ever hired. That was a little scary. Now forward thinking, they’re saying, Hey, we’ll, you’ve been, I was a national sales manager with Kogan a I helped build our network to 50 stocking distributors coast to coast. Are you willing to go into the brand side and become the head of marketing for the Americas?
You’re going to do more than just make line cards where you’re going to start doing is telling our story. You’re going to start explaining to the potential customers that we serve. Why would they go to Koganei versus. SMC or Festo or anybody else? I never once ever two things, one, I never bashed our competition.
I respect them. there’s so much business out there that everybody can do well, and I support everybody. Number two, I never, and I go on record for this, for those of you watching still, I do not put on LinkedIn or any other social platform that Koganei is quote the best. I simply say, give Koganei a try what I have looked at.
Koganei has anything that I P so does. Every other supplier, Koganei has valves. So as every other supplier, if I look at the portfolio, it took a conversation that I had with our precedent to simply say, we can’t talk about precision. We can’t talk about quality because everybody says that we can’t talk about being a drop in replacement.
So we’re not going to be in that commodity game. So we’re not low margin dollars. We’re not going to compete with the air tax of the world. Or like I said, some of these off-brands are private labels. a Koganei a day, 100% test every single part before it shifts. Sounds great.
The customer doesn’t care. they expect everything to work.
For example, I bought kayak refracts, for my kayaks. I didn’t care who made them, I expected them to work. So I know that I can’t lead and talk about precision and quality testing, things like that. What can I talk about that? Differentiates Koganei from every other smart in my mind. As I talked to my distributors, they say, form fit and function.
Your dimensional is smarter than everybody else. Coconut currently has the world’s smallest solenoid valve. It’s the smallest. When you look at our cylinders, we have a single acting round body cylinders down to 2.5 millimeter bore. We have a tubing down to 1.8, no meter ODI.
Koganei specializes in miniaturization period.
So what I’ve done to leverage what I’m marketing. To drive offline sales to our distributors when they call us and say, Hey, we saw we’ll do a video. They have that new world smallest. Valcom get more information about that engineers, as we all know, they don’t like BS. So they don’t care about the gel in my hair or how great I think we’re going to is they want free samples.
So I’ve always been very good. Yeah. And thankfully Koganei has always been willing to give the engineers are going to test it anyway. So they’re going to do durability test staying one to three months, six months. If it’s going to FDA and it’s medical. But it cuts out the BS. So talk about focusing on percentage, focus on getting your company’s brand out there, focused on being virtual, because that’s where the attention is now focused on.You gotta have your own conversations with your sales representatives. They’re making 300,000 a year. They haven’t grown new sales in 20 years. you guys have to figure that out. That’s a separate conversation. E-commerce your time is now it’s here. I can’t fight it. Koganei just says, Hey, we’re going to focus on making good innovative products.
If the products are good, if they bring enough value to engineers, they will sell will. You have to build the brand. So people know who Koganei is. you were new here. It’s going to take time as it always does. This message for eCommerce is my call to action. If you are a distributor, if I was a distributor, I can’t physically go see anybody anymore.
The value of carrying the line cards is over the saturation of the suppliers because the globalization is here. I want to be present. So if I have a 2,500 mile radius, in my physical location, where I have local stock that I can deliver in 24 hours or less, I have a service team that can bring value to the outsource provider, to these manufacturers.
I’m going to make sure that virtually to drive offline sales, everybody that uses our products is a part of our technologies. That’s an AHTD member. I don’t know exactly what we do and how we do it. And I have to accept the reality that a) some co competitors will probably copy. They have to. And b) if you choose not to do these things, I think that in the next five to 10 years, if you are not a part of e-commerce, you will no longer be in business.
11) Key takeaways (32:24-33:18)
So I’ll wrap up with, some more, ideas of the things that I’ve been doing. So if you guys haven’t followed me on LinkedIn, look up William Miller, Willie Koganei I go by Willie, but I’m William. When we’re in the car with a customer, a couple of things I’m doing, I started a, Willie and Yoshi show.
Basically, what I do is I act like a big knee football player. Cause I’m really good at that. And I, sit down with Yoshi and Arcata, he’s the head of our customer service and he has a PhD. So he’s brilliant. And I have open conversations about, Hey, why did Koganei make this? What’s the point of us having this product?
What are the applications? Because…the mind share for a distributor to know the 512,000 products of ours. Plus the other 70 companies they represent is so far, like you literally got to say, Oh, this is from Koganei. This is why they made this. I’ve also been doing live streams. So that’s something else that again, costs you nothing, but we’ll help you guys drive find sales.
12) How does e-commerce ordering affect pricing for the customer? (33:41-40:21)
There’s a question from Brian, how does e-commerce ordering affect pricing for the customer? If the distributor has special pricing for customer locally, is that represented on an eCommerce site?
Alright, so that’s a good question. And I can always speak to it again from the context of Koganei.
So for example, Koganei, if you go to Koganeiusa.com, we don’t put publish any list pricing. Okay. I also am not going to tell any of you what our discount structure is. So if you want to talk to us, you can’t. So here’s how it works. Brian, for us, we’re building the brand and putting all the products out there.
When it gets to the customer. So like right now I’m revamping our entire website. We’re working on having a selection guides, not so much configurator, but at least selection guides to help customers within three clicks or less. That’s been my goal. As I looked at the best case practices in our industry of manufacturing e-commerce catalog companies, I’ve gone through all their websites.
The benchmark is….you have to be able to get an engineer or a prospect to a specific product or part number within three clicks or less. I am working on doing that with Koganei. The next step, click number four is contact one of our 50 locations or the one nearest you. Okay. I’m doing this to try and generate lead activity for our distributors, because if I can do that, then they’re going to, their mind share is going to increase with Koganei.
To answer your question for the suppliers. And there are suppliers and I’m not badmouthing them that do publish their list pricing. They also have the ability for customers to buy direct from them. They are going to pay a lot more. So I guess the question is. Going back to what I said with the offline sales is your messaging.
Hey, go to Koganei USA today, or is it what I’ve been consistent in saying, go, Koganei USA, learn more about this specific product and then contact us to find the distributor nearest you to get pricing and availability or lead time. So your to answer your questions two ways. If you’re a supplier that publishes less price.
Then the conversation in the messaging has to be, Hey everybody, for example, this is a Ethan card for directional control valves, go to Koganei right now, our list price on this is 99, 99 for better pricing, contact one of our 50 distributor locations nationwide by clicking here. So I think that if your supplier that’s going to put less pricing out, there could at least give people better.
Because a lot of times people just want to know a ballpark price, We all know that distributors, and God bless all of you. You’re always going to ask for special pricing. And one of the things that I am notorious for doing is responding back with, how many are you asking for? And I’ve had amazing brilliant sales people come to me and say, they’re looking at two a year.
Guess what? You’re not getting special pricing. You’re getting your normal discount. But again, there’s incentives that you, that the distributors, if they start investing into the online eCommerce platform to compete, they have to recognize and see every day. again, if I’m a brick and mortar distributor here in West Michigan, I’m going to have somebody on our team or myself.
Everyday going online to see if these catalog companies or these huge eCommerce platforms are offering incentives that we comfortably can match based on our discount structure or our, the gross profit margin that we’re making. So for example, if, this is the, this is what I was bragging about earlier.
This is the world’s smallest to position through a solenoid bow. If Koganei a was not exclusive to just local distribution, like we are today. And we were working with motion industries. For example, if motion put out, Hey, if you buy, a 500 zero zero five series Val from Koganei, we’re going to give you a $200 discount me as the distributor.
I have to go back and say, all right, Motion maybe has more buying power, but I’m trying to connect and tighten my relationship with my supplier. So either a) the current discount structure, I can’t offer that $200 off. If they buy a minimum 500 piece order, I have to get creative in and match or provide more value.
That’s not going to hurt, two things not going to hurt my operational costs. And it’s not going to hurt my brand because I think whatever distributors trying to do. And for me, I would not want to be a distributor right now is to put a value on the value, add that you’re doing because outside of representing a line and having these on the shelf, if your discount structure, isn’t an advantage, you have so little room for gross profit margin that, you’ve got to come up with a strategy or work with your suppliers to have an incentive.
one of the things that we did at Koganei and I’ll share this. in the world of pneumatics directional control valves. Okay. Right here. So this is a directional control valve stack. We see them on every conveyor. Okay. This is our 10 millimeter series. one of our big competitors just came out with a new attendant, 15 millimeter because they realized that.
Yeah, there’s cost of air consumption and, living the life of an oversized valve and just using, a sandwich regulators or full controllers doesn’t work. no one, the incentive that I said was, I came up with this program called the game changer program. Koganei. Nobody knew the brand, but these are ready to do a hundred million cycles.
So compared to the industry, compared to our competitors, again, I totally respect their direction. Control valves are rated to 30 million cycles. So if we’re at the same price, three or four times the life. That’s going to bring a lot of value to an OEM, not so much. You’re the distributor because your math is well, I could sell him three 30 million, second life owls instead of Koganeis
So I’m going to have less purchase orders, but that’s neither here nor there. I had to come up with a way to say, okay, how are we going to get market penetration? How are we going to generate sales in this product category? The commodity is everybody has these. There really isn’t a, advantage of ours versus somebody else other than downtime, installation, life cycle, and power consumption.
Okay. everybody that we competed with, it’s going to flow pretty much to the same. So the value opportunity was fast delivery. Typically when you buy a direction control valve stack, for example, and I don’t care if you buy it, motion or whatever. It’s typically a two to three week lead time. So what we did was we took, this was the idea, take some of our partner distributors, fly them to Tokyo, Japan, get them certified to where we’re actually selling them the entire bill of material.
So they’re stacking all the individual parts to make any manifolds they want, whether it’s on a din rail, aluminum block, two station five station, whatever ethernet IP. That distributor now has the ability to, if they choose to stock the parts to now, no, and their APR going against motion and everybody else.
13) Marketing Innovation with Koganei ( 40:27-41:52)
Hey, we partnered with Koganei on this game changer program. If you need a directional control valve stack or a direction control valve manifold for IP ether, cat, flying leads, whatever we can take your order, build it, test it and ship it. Same day. That’s huge. That’s been a great program and we’ve had some success.
We’ve had a lot of success where I think we’re still struggling with it in my, review of how we’ve done since this product launches. It’s still the challenge of people don’t recognize the Koganei brand. And if we’re not publishing our pricing, we’re just not getting those conversations.
So for me, when I talk about e-commerce going back to your question, Because Koganei doesn’t put pricing out there. Yeah. I’m getting a lot of I’s and we’re getting a ton of traffic on these, but that transaction, as we all talk about, it takes average five to six touches to get a customer, to get a quote.
We are sacrificing the opportunities of more transactions because we don’t publish what our list price is to start. I just think that as a supplier, you’ve got to be consistent in your messaging and you have to recognize what you’re limiting yourself to. If you don’t publish this pricing and you also have to recognize what you’d be hurting relationally with your distribution channel to market by publishing less price.
Thank you so much.
What You Should Know Before Moving To eCommerce
1) Introducing Kenneth Ott and Metacake (00:00-02:00)
Kenneth Ott (Chief Growth Rebel & Co-Founder, Metacake) :
My name is Ken Ott, and I’m the co-founder of Metacake and I’m super happy to be here. I think this can be a fun discussion. I am here in my home in Nashville and everyone in Nashville does play guitar, it’s a requirement, where I live. I’ve spent my life helping businesses grow creatively using technology and specifically e-commerce.
And so you can feel free to connect with me at email@example.com. If you have any additional questions from me after this, or I’ll also be at the booth and in chat and things like that. That’s firstname.lastname@example.org. Real quick on Metacake. It’s an eCommerce growth team and it’s, the joke I use is, I never met a cake I didn’t love so that. That’s kind of how you say it. So M E T A C A K E . We do coaching, we have educational products like books and courses and things. We also do one-on-one work with businesses. We’ve worked with really large brands like P&G, which I think is a good example for this distribution model.
Then we also work with a lot of smaller brands as well, implementing e-commerce helping them grow in healthy ways. And so if anyone has any questions about that, feel free to go to metacake.com. You can learn more there. You can also reach out to anyone here directly, and I’m going to let him know everybody introduce themselves and kind of give their contact info too. So that, any questions that anyone has, they can kind of direct them, where appropriate, given that there’s a lot of, sort of getting the people who are getting started in eCommerce, we put together a small cheat sheet of getting started resources. So if anyone is interested in that, you can go to metacake.com/get-started.
2) Diving into the discussion: (02:09-03:53)
So, let’s jump into the topic. So we’ve got like an awesome panel of people here, all, with deep e-commerce specializations and also relationships and knowledge about the distribution and manufacturing world. So the goal here is to put some practical tips together so people can really start to implement things.
But I also want to talk a bit about the strategy of how e-commerce fits into the role of a distributor or a manufacturer. We want to dive into that a little bit as well. so, we’ve got about 45 minutes and only about a few more minutes with Billy. So we’re going to try and break this up into like about 15 minutes talking about the strategy of how you implement e-commerce and maybe some of the challenges that are there. And then about 15 minutes talking about actions, like how do you start? Where do you start? What it costs, what should you invest?
How should you market it? And then we’ll leave a few minutes at the end for questions from the group. And again, if anyone has any questions that aren’t covered, you can just connect with
each of us individually or at the booth which are kind of cool. It’s a little virtual booth.
Um, Okay, so that sounds good. Let’s go, uh, real quick. I’d love to go around and just, I have all you guys introduce yourself. What your role is a little bit about the company that you’re with and, and we can just maybe start with Billy, how’s that sound?
3) Introducing Billy McClennan, Gorgias (03:53-07:28)
and, uh, yeah, I’m happy to be here. So, um, Just to give you guys context on the company. And then my background first, because I’m thinking it’s a little bit different, than most people here. So I work for a company called Gorgias and where we work exclusively with eCommerce brands. Um, we do have e-commerce brands that have, have an offline model, but yeah. Most of these are brands. So they’re there, they’re their suppliers while they’re manufacturing their own product. And basically a Gorgias has a help desk. So all of the different channels that your buyers are communicating with you from. Um, and when you think online, you’re thinking like, like said social Facebook, Instagram, Facebook messenger, live chat on your website.
Comments on posts, email, phone, of course, the more traditional places we bring, all of those things into one place. So most of my day to day now is with eCommerce brands. And then what I’m doing here is I manage all of our partnerships, um, in North America. So not with distributors, but with agencies, basically people like DC cap that are, are scaling these, these e-commerce brands.
Before I started with Gorgias , actually my first job out of college, after my, after grad school was with the distributor. So it was the standard distribution model where like I had, I had a territory, we had our manufacturing factories, we had a big catalog. I did that for about a year and a half.
And I did my grad school in chemistry, so I was a chemist, but I wanted to get into sales and business. So it was like a really good experience for the first year and a half. But to be honest, I didn’t love the distribution model, because at least the distributor that I was with was always about margins.
It was never really about value add. And we were also selling a lot to the government. Ran labs, academic labs. So it was always tender based funding based, it wasn’t privatized, so it was always about the highest margins and what discount we can give these people to get the product out versus value.
Cool experience for a year but I didn’t love that model. So then, basically a year and a half after that, these two guys at MIT started a company and they were building a muscle oxygen sensor. So, I jumped in with them very early before launching them,during the R and D phase.
And when we decided to launch the product we launched exclusively e-commerce. So we started with Shopify eCommerce platform. And I had not, I know what eCommerce experience, so like, you know, Setting up an eCommerce company all the way from fulfillment to marketing, to all of these different touchpoints that were talking about podcasts like blogs, email, marketing, SEO, things like that.
That was all new, but it was exciting. So, I just felt like we had a lot more control over the success of our business. And so, we started e-commerce, we actually did get into distribution as well, internationally, for logistical reasons. So we, we kind of had both models, and we scaled that pretty well for about a year and a half and came to a small exit.
And then I transitioned here. So I know that was a bit of a long introduction, so e-commerce has been most of my experience, a little bit of distribution experience at the beginning, and that was good. And, where we work, any commerce pretty much exclusively as well. Although we help people strategize between the different channels, which also include distribution wholesale, but we use just a top and it’s a really great customer service tool and customer service is so key in any experience, especially in the eCommerce experience, which is kind of what we’ll get into, which is also why you’re here.
4) Introducing Brian Nunes, APS Payments (07:31-08:44)
I’m Brian Nunes with APS payments. And our goal is to help manufacturers and distributors keep as much of the money they can, do that through processing, payments through a very distributor and manufacturer focused way in terms of getting them the types of discounts they can get on their transactions.
I know in today’s world, You guys are probably still dealing with a lot of invoices and getting checks and things like that. But, we help you keep more of your money. We help you get it faster. And, we also understand how B2B business works. So we understand the workflows and challenges you have.
So that’s, that’s basically what we do as a company is we help you keep your money and get it faster. I love that.
And those are great things, especially right now.
5) William Miller III from Koganei on lead strategy (09:01-12:03)
Will Miller from Koganei, head of marketing I wanted to key off of what you just said. And so real quick, let’s talk about lead strategy, B commerce as it pertains to distributors manufacturers.
First, we’ve seen like e-commerce comments of the status that it grew 10 years’ time in three months over the last three months. Um, I’ve seen, I’ve seen something that said a few stats that say it. so typically it’s about 12% of global retail and it got up to about 30%. Now it’s kind of teetered back down, but it’s still kind of level at a much higher level.
And clearly, it’s been forcefully adopted by a new set of people and that will probably continue. And it’s just important to consider for any business, how you do eCommerce, or maybe even more broadly, how you create a really healthy online channel. I think it’s important to point out in the world of eCommerce that, you know, we coach a lot of consumer brands, a lot of manufacturers, CPG is those kind of brands and well e-commerce is incredibly important.
It’s only one channel in the entire sales channel strategy. I always say for a healthy business, you need to have a good balance of all the different channels, including wholesale distribution and marketplaces and other types of channels.
So each channel kind of has a pro and a con or pros and cons. But, I like to talk about this question. And we’ll kind of hit it earlier traditionally. Distributors and wholesale channels has seen e-commerce as a threat in some ways for many rightly so. So, while I don’t believe it’s a threat, I actually think it can be an advantage.
I do think because eCommerce is available to everybody. I do think it’s a threat to traditions, right? Like any type of disruptor threats. The old w threatens the old way of doing something. Um, but I don’t believe it’s a threat to the role and I, and the reason I know that from my perspective is we, we see continued.
Uh, in fact, we see a lot of eCommerce brands increasing the, um, uh, the, the investment in. In that distributor wholesale channel. And, um, and I think it’s a really good thing when it’s imbalanced. And so I don’t think it’s a threat to the role, but I do think it threatens some traditions.
6) Understanding Disruption and Encountering Traditions (12:03-12:46 )
I think when disruption happens, it’s I always like to ask this question, why is this happening for me? You know, the pressure that is created by the disruption forces you to innovate. And while that is hard, it results in a, a huge benefit often for the company and the person. It also levels the playing fields in a lot of ways and it creates opportunities.
With that in mind, I’m going to kick it first. I want to ask you this question: basically with eCommerce with the role with eCommerce coming into play, how has the role of a distributor changed? And for the sake of this discussion, let me ask you this question. Are distributors even necessary anymore in the ecosystem?
7) Importance of Distributors in the ecosystem (12:57-16:32)
Yes, they are necessary. So, I don’t get my butt kicked. I want to preface again, I am a manufacturer, a supplier, so in respecting Bill his experience and here’s where he can’t argue. We have to take a step back and think about like, make things simple. We talk about eCommerce. It’s about the fancy word is it’s the transaction ,it’s digital.
So instead of me physically handing somebody an invoice and saying pain, you like when I get eggs and bacon, they’re not going to do it online period. So we’ll buy it. Every distributor, that’s a part of the AHTD association or the, I forget the term that Leah said solution provider. We all supply an industry called manufacturing to make it real simple for me.
They are a company that makes things. You ever see a team show how it’s made. It could be a cran, a razor. I don’t care. They make it into a physical product. So if we think in that context, if they make a thing, why would somebody want to buy from me two or three things? One cost of good soul. The acronym tags, cost reduction.
If this microphone I can buy or partner with a distributor that helps me make this $10 cheaper, that’s more net income and profit. For me, manufacturer’s happy with the product that they make, finding some ability, because this is now cheaper from buying from Billy. Delivery allows the person that makes the thing at a lower cost because ability to also make more, because the thing that Billy sold us allows us to make more things and a lower cost of goods sold and more net income.
And lastly, my distributor, Billy, I love so many. The thing that allowed me to, to reduce the cost of good school allowed me to make more increased throughput or output or production or whatever you call it. And also it lasts longer than it did when I bought the other thing from Nat Billy. So when you think about those three things, the distributor is virtually remote, I don’t give a crap.
These products are not the kayak that I bought at Amazon test. You’re talking about parallelism and end stroke of five thousands of millimeters. So our products. And I’ll argue with any of you. E-commerce gurus are very technical. For example, whether the back from catalog companies, guess what the number one customer service measurement matrix, whatever for eCommerce platforms is what customer service technical support the value of the distributor. In my mind, isn’t supplying the brands as I gave the example before, and that’s not a slam to them. They re they’re filling the shelves with everybody. We have every line that you want. The real value comes in to me, the maker of this thing at 1:00 AM on a Friday where I’ve got to deliver 12 pallets of these, the machine broke.
And my distributor in Kalamazoo, Michigan, where I’m at gets up, sends their emergency response team because I bought this from them. Versus motion or somebody else. They have 12 people there. Yeah. Fixing the machine, reducing my downtime. So I go back to making the thing, that’s the value of the distributor in my mind, the challenges as an owner, when you look at that, the financials of everything and the transactions, and Billy will attest to this many distributors will go like this.
8) Owning up to liability and role of a distributor elaborated (16:32-18:09)
You didn’t buy it from me to be liable because you didn’t buy it from us. It’s paradigm of contributors is reactionary. I think that a distributor, the reason why I would go to a distributor versus online is that shit goes down. They’ve got my back. And that is the big advantage that a distributor has over these big catalog companies right now, like big catalog companies go into their P and L pull out a big pile of cash, knowing that the ROI is going to be very, very low. It’s probably going to be an added operational cost and yet profitable. But if they decided to stay half people remotely, 50 miles separation coast to coast. That’s going to be a problem, but the value of the distributor is supplying the parts that are needed. Knowing technically I do install them because again, it’s not something that nut and bolt you put together.
Some of these things are so precise that, like I said, from an actuator standpoint, timing, I mean, you’re talking about, you know, something fighting on a conveyor, every two milliseconds. I mean, it can cost thousands of dollars if done wrong. So distributors, there’s a tremendous value because these products have the pendants, the knowledge and correct installation and function and operations.
Should that ever change, then we’re going to have a mission, but that to me is going to be the lifeblood manufacturing as being unique.
9) Understanding unique value of a business (18:10-20:10)
I completely agree. I would say,just trying to tee you up with a question and clearly was that going to take it the wrong way? For the sake of discussion, but, I do think I’d imagine that , that is in the mind of some people.
And so I want to address it and I think at the end of the day in any business, I think it’s important to look at what do I do. What is my unique value? You know, that is, and oftentimes businesses and people end up doing a lot of things and that’s okay. Some of those things are things that can easily be commoditized or taken away by something else.
But what is my unique value and how do you focus on that? And I think they will correct me if I’m wrong, but for the distributor. One of their top unique values is that they can have, they have incredible
knowledge and they have relationships, right? And so that is, that is important. Maybe you can tell me if I’m wrong, more important for certain types of products than others.
Certain segments maybe than others but it’s something that personal relationship is something you can’t replace with technology. In fact, I just think it needs to compliment. I do think we’ve swung as a pendulum too far into that and we’re going to feel that right now. Right. We’re all isolated from each other and it’s like, wow, you kind of need personal connection technology just doesn’t fill every gap apparently.
Which most people would have thought before this, but now we feel it. So anyway, I just wanted to kind of dig into that for a second and say like, in my opinion, there’s unique value. That’s very different than eCommerce. And even from our side, like we come from the eCommerce side and we’re often pulling in that element as a piece of strategy, because I do think to be healthy as a brand, you can just have any commerce channel.
10) Making things virtual and digital with eCommerce (20:19-21:16)
You guys can advise me. The only thing in commerce is doing is just changing the transaction to virtual or digital. That’s it like everybody in eCommerce is changing everything else. No. Everything else stays the same servicing value at assembly testing, certifying prototyping that doesn’t change in the eCommerce platform.
eCommerce is just the ability to automate the transactions with those customers, but all the other work remains the same. But then, but then, like I said, you have to leverage having it because that’s what, now everybody expects. But then also if nobody knows about it, Yeah. I mean, eCommerce is automating manual tasks and a lot of ways which has happened for hundreds of years.
It’s just another type of doing that. But it doesn’t mean, like I said, I think it threatens traditions or like any other, like any other disruptor does, but, I don’t think it threatens the role.
11) Developing relationships and partnerships (21:28-24:01)
You can jump off at any time, but I’d love to ask you, you run partnerships at Gorgias. All right. So this is not really an eCommerce question. This is more incorrect from wrong. Like you’re, you’re in charge of basically all the partner relationships at Gorgias. Is that right?
Billy McClennan speaking
I think there’s a connection here, which is why I wanted to ask you this question. Like, how do you see developing reciprocal value in partnerships? Because I think that partnerships are a lot, like they’re those B2B go between relationships that have to have reciprocal value, and not unlike manufacturers and distributors and those person to person connections, you have to have reciprocal value created and there has to be an intention around it. So how do you do that at Gorgias? How do you create value in being a Gorgias partner? How do you keep that connection strong and how do you sell your product through your partners?
Yeah, I mean, that’s a great question. So, I mean, yeah. Our partnerships are a little bit different than your traditional distribution, supplier, and buyer partnership.So we partner with agencies, basically marketing agencies, website builders that build websites and grow an eCommerce business brand.
Yeah, we want them to send us business. We want them to take their clients and give us business, but like, they need a reason to do that. So, we spend a lot of time and allocate a lot, a lot of resources on making the agency understand where the value is for their client. But then we also have incentives for, for the agency to grow their agency. Because if we were to say, So we have a revenue share for example, but that’s a very small piece. It’s like, even if we said, Hey, if you send us your client, we’ll give you a rev share that rev shares are so small that it’s not moving the needle for their agency.
So our middleman is the agency. And so for them, for them, their biggest motivator is to provide value to their client. If they think we have the service, that’s going to provide the most value. That’s what they get. So there’s a big education factor but the other piece for them is that yeah, they also want to grow their business.
They want to say, okay, like if we’re referring to our business, like how can we get business from you? So we are basically showing them like, Hey, these are how you can get access to our clients. Hey, we’re going to spend this much money, um, on, on growing our partnership, whether that be in the form of a virtual event or an in person event when they were, so it’s super important to obviously show reciprocal value.
12) Technical Support for Distributors (24:02-26:02)
When it comes to distribution,, I mean, we’ll set it and then just back up with Will, I, 100% don’t think distribution is dead.
That was my experience with one distributor, like the in-person and the technical support, the, that, that experience isn’t going anywhere. I think the distributor I worked with, like a large percentage of their revenue was from technical support.
What’s from installations and maintenance. It was a huge percentage of it. I don’t remember now the exact, it was like, 40 or 50%, like it was almost half. So that’s not going anywhere. I think, as you said, Ken what’s changing is how some distributors are going to be operating. So like when we did distribution, the value for us was, so when I worked at that startup, the value for us was a startup. No one knew what our name was. Like we were selling our own branding, but that takes years, you know, you need multiple touches, with people that need to see your brand for the purchasing seven, eight, nine times.
So we had distributors in this sports tech space. That’s where I was in, that had the reputation that they had the sales channels that we did. So for us, like there was a huge value add because they did that. And we had one distributor in Spain. Who, who was it? Who was in e-commerce? They were selling stuff online as well.
And I think like, as a, as a distributor, there’s a lot of value when you’re doing marketing, you know, you’re creating awareness for your company, which makes it easier for the distributor. We were doing the same thing, but I think,you know, there’s a lot of value in the distributor that has an online presence.
If a distributor is saying, Hey, like we’re spending money. Yeah. Allocating resources to like building your brand. It’s not only that they have the sales channels, they’re also getting your name out there. I think there’s like a huge opportunity for distributors to kind of set themselves, you know, to add that value other than just their sales channel.
13) Learning from manufacturer distributor relationships structure (26:00-28:11)
It’s a pretty core philosophy in selling the thing that the higher that you need a relationship in order to sell something. So you either, so you have to either develop that yourself, which takes a lot of time, money and effort. Working with someone who has the relationship just increases that. And I think it’s interesting that technology forms like yourself have invested into partnership programs, which effectively, it’s similar to the manufacturer distributor relationships. You’ve created these partner programs and your technology,you are online first, and you’ve created these partner programs because these partners have access to potential clients of yours, and they have the relationships with those clients and they have the knowledge about your platform. So they’re able to more effectively, or maybe, yeah, probably more efficiently selling into those. I just, I just think that’s interesting because you see. Current technology, first companies creating these distributors alike, you know, it’s virtual.
Yeah. It’s an online like distributor model there. It’s huge for us. I mean like, like the partnership channel for us, like working with, with partners and resellers is like, you know, last quarter. It was about 50% of our, well, Q2 just ended, but it was about 50% of the company’s revenue. Um, so it was, it’s like the partnership side is huge for us. I think for the partner too, like it’s, you know, we, as a Silicon Valley, SAAS company have like thousands and thousands of clients and like a lot of money, um, you know, that we raised to kind of like throw out that gives them good awareness and then, you know, our product is very technical at times, too. So like there’s, there’s some stuff that we don’t do. Like sometimes, you know, they need to custom integrate or build customizations integrations with other apps to our platform that we were not, we don’t do for them.
So it gives them the opportunity to say, Hey to their clients, to like, you know, this is the, this is the product you should use because we think it’s the best one. And also, Hey, we’re certified here and we can, we can build this into your eCommerce stack. Um, so then they’re charging their clients and they’re making money from it as well.
I’ll stand for 15 more minutes. I was honestly excited about the conversation. And then, I’d like to get your input on, on some things in, in a few minutes here. Let’s get practical.
14) Ways to implement eCommerce into a B2B space (29:02-32:58)
So Brian, I want to kick it to you. Like I like to talk about, ways that distributors manufacturers many even more subscribers and where you can chime in here too. Like, how can they actually start to take eCommerce and implementing it into their business and utilize it for themselves.
There’s almost two ways, some ways they have to kind of consider it right. One is, how do they, uh, compliment the brands e-commerce and the other is how can they execute on their own e-commerce or online platform? Okay. Well, I’m going to play off a little bit of what. Well said earlier. I think he purposely kind of oversimplified things when it was like, it’s just a transaction and now it’s just in a different place.
Right. And I think there’s a little, a lot with B2B ecommerce. That’s different from your normal B to C type e-commerce. In the B2C space they’ve really. Advanced technology and functionality to a point where seem to be, even though their businesses different, they’re able to utilize some of that technology, but just in a different way.
So here’s an example. A lot of the things I think when you’re a distributor, you need to look at how your website can become an actual customer service portal. Okay. And take a lot of those
tasks that were done by a person and have it automated because I think in our normal lives, when we have our B2C transactions, we don’t, we expect not to have to call someone about something as simple as. “Did it ship yet, right?” We don’t want to pick up a phone or send an email about that. That all should be automated and you can automate a lot of that menial task and let your employees repurpose themselves in different ways that benefit the company more.
Here’s an example of some things that are important in the B2B space when it comes to, uh, having an eCommerce presence, one.
A lot of your customers, depending on your pricing model, have specific pricing customer specific pricing.It could be standard tiers that you’re offering. It could be one company which buys a million of these things from you, and that’s the only thing they buy. Right? Well, they’re going to get a special price on that.
So you want to have the ability for your customers to log in. See their customer specific pricing because they don’t want to have to call and figure out what that was. They also want to see availability. They may want to see an available inventory. I’ve even dealt with companies where they said they wanted to be able to see inventory by the warehouse.
So, that’s important. Managing things like backorders returns, even being able to see their open invoices and pay their invoices online, all of these things are a little bit different than your regular B2C, because eCommerce experience and really what those are customer service, things that you are actually providing New York customers that if they don’t get it from you.
Your competitor has that and it makes their life easier. They may go take a look at them. So these are things that I think B2B companies or distributors need to look at when it comes to understanding what e-commerce is. It does not just send products, buying products, it’s the whole customer service piece of it.
15) Starting out in eCommerce: Practical tips (32:58-37:27)
I think that’s really good. And I think it’s actually a good transition to this next piece, which I love to kind of get into,which is how do we, how can we give some tips and some steps, some practical things to someone who hasn’t implemented e-commerce yet. Whether you’re a manufacturer or distributor you can start doing. And so Haripriya I want to, I want to kick it to you for a, for a bit here.I want to ask you for companies looking to start to add ecommerce right. What are some of the first steps like the baby steps they should be looking into? Where do they actually start?
Haripriya Muralikrishnan, DCKAP:
I work as a technical writer at DCKAP and I develop a product documentation for one of the products in DCKAP um, I have a little five years of experience in, um, tech pubs and I’ve worked in various fields semiconductors automobiles. And, uh, I’ve started working in eCommerce. I’m pretty new to e-commerce, but, um, I’ve been doing a lot of research, you know, especially with content research is key. So I’ve learned a lot of things over the past eight, nine months and yeah, I’m happy to be part of this panel right now.
Going back to your question. I think the most recent amazing part of eCommerce is the ability to impact sales and marketing efforts almost immediately. Right? So when an emergency tries to get into e-commerce, he can see sales and profitable profitability almost instantly. Another good thing is that web based sales have no geographical boundaries. So, I think the first step is for a merchant to explore, and do the groundwork that he needs to do. So, um, understand what his products are, who his target audience is going to be, what would be their geographical presence and, you know, basically do some groundwork. And once that’s there and he needs to analyze why he’s adding his eCommerce platform into his business, what value does it add to his business?
Is it to build a customer base? Is it to provide better customer service or, you know, for better brand awareness. So that kind of analysis is necessary. I think. Um, and the next step is, um, To actually set up the website or the eCommerce store. So, that is typically outsourced to an agency will if, depending on the size of the business.
So, what these agencies or, uh, website development companies do is they analyze the merchants requirements. They come up with a plan, right? There’s a site creation plan or website creation plan. That would typically include a software or a platform to build the site upon the design and the content and other, uh, navigation details and, you know, the payment gateway and shipping options, all that.
So that is typically done by the website designing company. So, uh, after designing, we jumped into development, we go into publishing the website and then there is maintaining the website. So, uh, many of these companies, they have an annual payment plan to maintain, ECommerce stores or any website for that matter.
So, I think these are the basic steps that a merchant would have to consider before jumping into the eCommerce space. So overall I think the first step is the most important, right? So once you have that optimistic feel you jump into it, you and that’s what matters the most. And once you’re out there in the eCommerce space, It really opens up a world of possibilities.
I liked it, I liked that point because that’s so important. It’s often skipped over, right? So, uh, starting with, with the goals of what you’re trying to do is important. And some might say, Oh, that’s really easy. Like we want to sell more stuff. That’s not really a goal. that I would say that’s
an indicator to a goal.
16) Investing into eCommerce (37:28-42:04)
Figuring out what you’re trying to do with this endeavor. Right. And I love how you broke it down. It could be selling, it could be increasing leads and awareness education. There could be a whole bunch of different goals, primary goals, but starting there. And then I think what’s important is once you have that, like, here’s what we want this endeavor to do.
I would say you need to put a value on it, like a number, because.what can, what could it mean to your business? Because that will help you when you’re budgeting for how much you’re going to invest into this, and you may not know what this is going to cost. And I would say that’s okay at the start, because what I would actually suggest that, that most brands figure out what the value is and then say, I could, for that value, if it’s going to make me another a hundred thousand dollars or a million dollars this year, I could, well, if it did that, and be conservative with it, then I could invest this into it and be good with that.
You kind of have then your sort of reasonable investment.you, you can start figuring out how do you use that, that money and what are the actual prices? and my suggestion, how would you say, um, And then when you guys work with people, do they share their budgets with you? Or do you have to, how does that interaction work?
I think it’s both ways. Uh, one, they share a budget with us and also we give them numbers. So when we talk about cost, right, there is no set cost. It really depends on how much sales and what the traffic is going to be and what features they need in their website. So there is actually no set number to how much a website design could cost, uh, again, it depends on the size of the business. It depends on what functionalities they need. Lke you said, a million dollar company. Might spend about $50,000 a year just for the website maintenance. Right. But a small size business would, would be ready to spend only, yeah. About say 10 grand. So it really depends on the traffic, the traffic that they will have once the store is up. And also, again, what features. They need it for their website.
So, then it’s really good. So would you mind just answering, one more here and then we’ve got a couple of minutes, I’d like to give people a little bit an idea of what costs look like. And so you mentioned a million dollar company often invests about 50 grand.
A year what are some ballparks? Like some good investments? What are some costs for, say starting a new website? Yeah. So I would say, for a small business, I think about 1,520 grand annually, that includes the website that designed development, hosting maintenance, SEO, and, uh, maybe we could include a few integrations as well.
Haripriya Muralikrishnan : That would be for a small business. for the midsize business, something around, we’re looking at 60 to 80 grand annually. And if you are looking at an enterprise-level business again, um, anywhere over $200,000, I think that is the ballpark number.
Yeah. Yeah. That’s good. I would say I would, I would agree with that.
I generally tell people, if you’re starting, if you’re building a new eCommerce store, you probably want to spend ideally somewhere between 30 and 75 is sort of like the middle, middle ground, 75 K. You could obviously spend hundreds of thousands and millions on that kind of stuff.
But you can probably get away with it for less. You just have to, you may be simpler. I normally tell people though, like you’ve got legitimately only. You know, under $10,000 or something like that, you’re probably best spending a lot of that on educating yourself or just a small portion of that on educating yourself, maybe doing some things yourself, and then proving the model because maybe the money’s not there, or maybe the model’s not there.
You might as well use that to prove the model. And once the model is there, then you can work with someone. Because it’s going to cost a bit more to actually use a scale that jumps in.
16) Pre-requisites and key takeaways (42:07-45:52)
So you could spend 30 to $75,000 and get nothing for it. So that’s a very big thing to think about. Right? So one of your key factors in working with a company that has done it before. You don’t want to be a company’s guinea pig. Okay. Especially when it comes to a B2B website, you want to make sure that the company understands how B2B business works. And how your company works because we’re probably all a little bit different, you know, you’re a B2B company. There are some things that are the same with yours as other companies and some things that are not so understanding having that company understand your workflow. You have to have that company not have you as their Guinea pig as their first B2B business is important because it’s going to save you a lot of time and money because a lot of times they’ll have functionality already built out that they can use that they’re not starting from scratch.
And so if you, if you’re working with someone that’s starting from scratch and they’re doing everything from scratch. It’ll probably cost you more than if you’re working with someone who has that experience already.
I think that’s a good point. I mean, the experience is key. Um, and, uh, whether it’s a, B to B or B to C site like that, even that’s key, um, uh, speed Tim jumping on.
I think we’re coming up on time. We just mentioned the fact that if you build something. It’s not going to do anything for you unless you have the ability to get it out there and start marketing. Those can be small things. Those can be free, grassroots things and activities. And, they’re also obviously a lot of paid marketing and that’s. That’s a lot of what we do and a lot, a lot of what the industry does, but, and typically people might be like, Oh, I’m not, how do we actually do that? I just want to kind of give some people some pointers on that. So, for when it comes to digitally market, getting often suggested.
You know, meet, identify your customers and where they are going to be, and then be there. So don’t just be on social channels. Don’t be on Tik-Tok because someone told you to be on Tik-Tok because of your customers there ever, whatever it is and only be there and then invest appropriately therewith, with really good content.
And that’s kinda what, distributors are highly knowledgeable. Manufacturers are highly, highly knowledgeable about their products, about their clients, about the products they sell, use that and create really great, valuable content with that. That’s that that would be, I think, a really smart thing.
Typically we like to say, you want to spend up to 30% of revenue on marketing activities. Now that’s not marketing with no return that would be marketing with. An ROI with a return on ad spend, but that’s kind of a ballpark.and if you want to see some movement, just trying to give people all the, all the nuts,bricks that we can.
And, um, if you want to see some movement, yeah. Suggestion is don’t start with just a couple of hundred dollars, try and get to where you can start with a few thousand dollars a month and, and really want to be scaling that as you see the return. But, I do think it’s important to say, like, don’t, don’t expect, wouldn’t spend all your money on a weapon site and then not be able to market it because you’re not gonna get anyone there.
And so make sure your budget is split across those.
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