Volume used to be the defining characteristic of more B2B (business to business) sales in the ICT market. Yet, while a lot of traction is behind the idea of customer-centric B2C (business to consumer) trends, those concepts are increasingly more relevant to B2B buyers.
Research from service giant Salesforce reveals that B2B buyers anticipate and demand customer-centric features, such as personalisation, omnichannel and other retail features. Specifically, more B2B buyers expect an Amazon-like experience than B2C customers do.
These findings give a hint as to how the B2B market is changing. But to understand what is going on, we’ll need to dig a little deeper.
Blame it on e-commerce
As the Amazon comment reveals, a lot of the above sentiment is being driven through e-commerce. This speaks to the current space volume sales find themselves in. Volume transactions are not going away, but they now operate in a more competitive market. Buyers are more sophisticated in their expectations. Volume is now part of a larger conversation, and the large enterprises that typically support volume transactions are exercising their choice in other areas as well.
“What we are seeing is that some of those big corporates aren’t focusing as hard on the volume play,” says Rory Twort, Managing Executive of Sales at Axiz. “They are focusing more into the enterprise and value-added play, which could include the hardware on the data stack, and in the context around managing this. And then the more sophisticated ones are having cloud storage discussions.”
Specifically, the rising prominence of services has broadened the minds of B2B buyers. A personal touch, as are long-term value conversations, is now expected. Every distribution customer that supplies the end-market should at some level be a value-added reseller.
This might seem like an obvious conclusion, but don’t forget that the B2B market was once overwhelmingly based on volume and long-term projects. Yet as it adopted the norms of faster delivery and short-term proof of value, consumer-centricity has become very appealing. It’s a significant challenge for the reseller market.
Keeping up with B2B
“The blend of value add and relationship is essential, especially in our role as a distributor,” Twort explains. “In the FMCG (fast-moving consumer goods) market, it’s certainly about price and product. But in the value-add space, you need that level of trust around the technical skills. So you need to be a little bit more involved with a personal touch.”
Here many resellers have a problem. The market is incredibly competitive. Resellers struggle to access the right skills and capabilities to help them hold those value discussions or configure solutions. For this reason, many rely on distributors to help. But this doesn’t apply to all distributors; only to those who have expanded beyond volume to become something more.
“What is a distributor? Well, it’s a logistical bank with technical capacity. It can work with vendors of specific products. Not every customer is in the same place, but everyone now has to provide value and relationships as key parts of their sales offerings. A distributor must be able to provide that.”
Why distributors? Twort raises two key reasons. First, their volume businesses provide very stable foundations for expanding into other technology ventures. Though volume margins are thin, they are nonetheless consistent and profitable. Volume also provides the institutional discipline to manage different demands in an agile fashion.
Distribution’s proximity to vendors is the second reason. Vendors access their markets through distributors: they may have other partners, but the goods are usually channelled by distributors. This applies to volume, yet also increasingly to other aspects such as post-sale support and technical skills. Distributors will also typically have a broader range of brands and products that the rest of the ICT value chain benefit from and utilise those agnostic relationships.
In other words, the right distributor is an invaluable link between business buyers and sellers. They promote the vendor’s message while also helping resellers add value where it is needed. If they need 50 laptops to sell in a volume deal, it can be done. If they need to help a customer design a new digital strategy, distributors can help. If they need to accomplish both… well, you get the picture.
B2B transactions are changing fast and demand more depth than before. Resellers need to adjust to these demands in a market that is very competitive and straining under financial pressure. Distributors are the bridges that link those worlds together, provided they have changed as well. But if a distributor can’t talk about volume and value in the same sentence, then maybe they aren’t ready for the new B2B market yet.