How do dealers survive in the era of e-commerce? The answer might surprise you.
Mike Shumard and Rob Moe join the show to discuss how building a dealer network benefits everyone involved and why your online shopping cart isn’t the magic bullet to save your business.
More About This Show
The Smarter Building Materials Marketing podcast helps industry professionals find better ways to grow leads, sales and outperform the competition. It’s designed to give insight on how to create a results-driven digital marketing strategy for companies of any size.
In this episode, Zach and Beth talk to Mike Shumard and Rob Moe from Sphere 1 about how dealers can differentiate themselves and thrive in the era of the e-commerce giants.
Competing With the Online Giants
Mike and Rob, along with the 150+ dealer-members of Sphere 1, know how much the industry has changed in the last twenty years. More than ever before, brick and mortar businesses are under pressure to compete with the online e-commerce giants where price is king. There’s nothing more frustrating than having a customer comparison shop on their phone while they’re in your store.
Sphere 1’s mission, like a lot of industry cooperatives and associations, is twofold: They connect suppliers and dealers to create better supply chain opportunities, whether it’s through incentives, pricing or discounts. But more importantly, they want to help move the playing field toward the distributors and away from the e-giants.
How do you do this? For dealers, the solution is service and education. While many dealers may not be able to compete with the likes of Amazon when it comes to price, they need to look at the bigger picture. A dealer representative who can talk to a contractor about a product, how it will be used and what might work better will always be more valuable than a list of “Products bought by other customers like you.”
And the real benefit of this approach? It’s proactive instead of reactive. While all of Sphere 1’s members have felt pressure to compete with online retailers, only 20% of them have tried to compete by implementing online shopping to their website. The rest are working hard to be successful through high-value relationship building and understanding how their customers make purchasing decisions.
BIM Is King
So if the future isn’t online shopping carts, what is it? Forward-thinking distributors looking to stay at the forefront of their customer’s minds need to be looking at a tool that is far more powerful and more valuable to contractors and designers. That tool is BIM Modeling.
BIM Modeling is changing the way contractors and their designers make purchasing decisions. Dealers work hard to stay top of mind on the job site, but with BIM becoming more common among contractors, purchasing decisions are now made in the design phase, and often before ground is ever broken.
The advantage of using BIM Modeling is that contractors are able to streamline the entire construction process. They have less waste on the job site and are often able to bring in pre-fabricated or pre-assembled products, and need smaller teams to install them on site. Dealers who can participate in this supply chain will have an advantage over impersonal online retailers.
Making sure your products can be specified as part of BIM Modeling is critical to keeping your business in the purchasing cycle, but it also affects how your sales team approaches selling. Because those purchasing decisions are made away from the job site, your team needs to adapt to selling to a more corporate, and often white-collar, decision-maker than before.
Looking at the Long Game
With shrinking margins and increasing competitive pressure, it’s tempting to chase the short-term payoff of tactics like e-commerce. But dealers should invest in suppliers who believe in education and BIM Modeling so they can present a clear and personal value proposition to their clients.
Sphere 1 is fortunate to have a number of young executive members—often people who have taken over a business from their parents or young entrepreneurs who have purchased the company from a retiring owner.
While their predecessors may have been happy to maintain the status quo of a 5-year plan before they step away from the business, these younger owners are ready to play the long game when it comes to growing their business. They’re looking for solutions that will hold them in good stead for 20-25 years, and that’s where innovations like offering BIM objects and specifications can make them stand out.
How Can Manufacturers Support Dealers?
The other side of organizations like Sphere 1 is their network of suppliers. The manufacturers enjoy an enhanced connection with their dealer customers, but the suppliers who succeed the best are those who are most communicative with their own teams about what groups like Sphere 1 are and how both suppliers and dealers benefit by participating.
A lot of the time, relationship building between manufacturers and distributors is centered around the product. What is it, what does it do and why do contractors want it? But suppliers really succeed when they take their communication and relationship with their dealer customers beyond the product and into better business education.
Manufacturers who do best at Sphere 1 are often more willing to share their expertise in other areas, like recruiting, building corporate culture or how their sales team innovates with technology. Rather than seeing this as giving away competitive secrets, sessions and conversations like this help deepen the relationship and build trust between dealers and suppliers.
Got a Question?
Want to connect with Mike and Rob about Sphere 1 and how they help their members thrive? Distributors can reach out to Mike at 949-932-3600, and suppliers can contact Rob at the same number.
If you have questions about how dealers can compete in e-commerce era, let us know! Shoot us an email at [email protected] with all of your questions.