When you think about big technology mergers and acquisitions, it’s unlikely you’ll think about distributors getting in the mix. Yet earlier this summer, that’s exactly what happened when B&D Industrial acquired GTI Predictive Technology, an internet-of-things company that conducts vibration analysis.
The promise of the IoT is that by connecting tools and appliances to the internet, the manufacturers and sellers of those items can gather more data in order to better understand their use. One of the most common examples is the smart thermostat, which can gather information on home heating and make automatic adjustments based on user preferences.
So what does a regional distributor want with an IoT company? The data, of course. Your e-commerce data may be more important than the products you sell.
This acquisition was the latest proof point that data is transforming the distribution business, helping distributors better understand what they are selling, as well as how well it works. But beyond that, data opens up a brand new revenue opportunity for distributors of all sizes, regardless of whether or not they can outright acquire a company.
The new data paradigm
There is value in almost all kinds of data, and distributors – especially larger regional ones – are sitting on troves of data helpful to both their manufacturer partners and their B2B customers. For many, the doorway toward unlocking that data is through e-commerce.
Distributors accelerated their adoption of e-commerce during the pandemic, and with it came troves of information on buyer behavior. While easy to aggregate purchase data certainly has its value, the greater opportunities may lie in the data that is produced before customers make purchases. For example, e-commerce allows distributors to understand what buyers are searching for on their sites.
Also see: “The ABCs of Average Order Value Growth.”
There are myriad uses for this data. If the distributor sees many searches for a product that it doesn’t offer, it can begin stocking that product. Remember, any time a customer can’t find a product and leaves your site, that’s lost revenue. Meanwhile, if customers are searching for one particular brand, or a single product from a brand, the distributor now has valuable information to offer the manufacturer partner. If customer’s are frequently looking for a product that a brand doesn’t offer, that information is valuable as well. The manufacturer may be missing a revenue opportunity as well, and they’d likely want to be notified.
Indeed, e-commerce data may be more important than products
This represents just a sliver of the opportunities available for distributors if they want to package their on-site behavior data and share it with their manufacturer partners. It’s hardly a new concept either: Amazon is constantly analyzing its customer data, and this information likely influences the products that Amazon white-labels and sells under its own brand name.
While sales and customer relationships will keep the lights on for distributors, sustained growth will come down to identifying new revenue opportunities. Many are just now realizing that the data about their customers may be more valuable that what the customers actually buy. Distributors can use e-commerce to not only own the data about their customers’ buying habits, but to help package that data as well.
Ben Stump is chief growth officer at Unilog.
The post Is E-Commerce Data More Important than Products? appeared first on Modern Distribution Management.
