TRANSCRIPT
Peter:
Welcome to unpacking the digital shelf where we explore brand manufacturing in the digital age.
Peter:
Hey everyone, Peter Crosby coming to you from the digital shelf Institute's Cape Cod office. Justin King, the DSI B2B whisper joins us from Maryland. Hey Justin, welcome back to the pod. Thank you. It's great to be back under these circumstances talking about the new normal and B2B.
Justin:
Yeah, I mean, it's perfect time to have you on just to hear what's been going on in on the ground and B2B land during these times. You know, the, I'm sure like with everyone else, there's challenges and opportunities. Love to hear about it. What's, what's top of mind for you?
Justin:
Yeah, that's right. I think, I think that's exactly what it is, Peter. It's about challenges and opportunities there. A recent digital commerce three 60 article that really kind of traced four different distributors, Granger, MSC, Watsco and Systemax. So it's interesting. It's a Granger MSC and system acts are very similar. Companies, they, they, they sell very similar products. They really sell for MRO, maintenance, repair operations and industrial supplies. For those that don't know Systemax they run a site called global industrial dock. So for the real top distributors, Mmm, we can all see that industrial and commercial kind of got cooked killed by coven. I mean, well these are all essential businesses. A lot of the products, I'm still a lot of the productions still stopped and industrial and commercial. Obviously we know what's happened with commercial and commercial real estate. It's just not being, not being utilized. Right? So, so Granger's e-com first quarter grew 7.2%, $2 billion, which, which I think is very impressive. Billion dollars
Justin:
Because the supply chains, as you said, have been affected. Like the product they can get in has been affected. So the fact that they're growing in the face of engine precedent.
Peter:
Well, and, and, and I think it speaks to, in this case, I think it speaks to Granger's depth and breadth of products because they're not serving a specific industry. So just because commercial and industrial might've been down, they had other products to kind of fill in the gap. Right. MSC on the other hand, did 478 million, but they were down almost 4%. So Granger up MSC down Systemax similar company, their web sales declined about 2%. So in general in the MRO industrial supply, it's down. I mean, it's not down 20% is down a couple of points, right? Which is, which is which is good to hear. Watsco on the other hand, Watsco serves the HVAC industry, the HPAC industry, heating, heating, ventilation, air conditioning is HVAC and Watts goes their digital group, 12% in the last quarter to 363 million with their total sales growing 8%.
Peter:
So total sales grew 8% digital group, 12%, and now digital is now 36% of their business. And what, what I think, you know, their, their business being not the most companies were classified as central. Well, when you think of HVAC, it really is essential. Like heating problems. Cooling problems didn't stop during this time. In fact, a lot of people were probably at home and doing some repairs to things there to make sure that their home life was you know, it was kind of was comfortable. I in general, I think too there, there's some indicators that that there's some positivity at least in the residential side. So us new home sales actually increased by almost 1% in April. So in March they were down 13%. It's a new home sales. This is building, building new houses, building new houses, grew in April, they were down 13% in March, but new home sales accounted for all the growth in home sales in April. This is a, this is a leading indicator and what's going to happen down the road three or four months down the road. Obviously you have commercial, it's commercial decreasing industrial, probably increasing and residential, increasing those industries that serve those residential new home type purchases, you know, are likely to see a increase. Over the next few months.
Justin:
I also wonder if specifically in HPAC whether buildings office buildings will be, you know, refreshing their, their filtration systems. And
Peter:
That's a good point. Yeah. No, absolutely. And refreshing. And then I think along with that you know, we're going to start seeing as, as the States open up, we're about to see janitorial and sanitation called Jan sand and the industry, well we're going to see a, probably a pretty big uptick in those areas is a grain gem to see, provide gen Sam materials. But then they're GN sand distributors, Jan sand manufacturers and most of them are preparing for a pretty big surge over the next couple months as, as offices need to clean, hospitals need to clean, schools need to clean government buildings, I need to clean. Those are the specific areas where we're going to see the biggest rise. But a lot of these distributors are still saying, listen, we're not, it's not business as usual. It used to be come to the branch, get a donut, get some coffee, get your product right.
Peter:
That's not the way it is anymore. And now it's, Hey, we've got to you gotta buy and can't buy from the branch directly cause you can't go into the branch. It's pick up at the curb so it's online pick up at branch or pick up on curb at the branch. And a lot of distributors, Peter, I mean we're still in the same spot, right? A lot of distributors are still in that same spot of, of, of not having prepared a digital awareness to be able to serve customers in this way. So a lot of companies are not scrambling. Yeah. I wanted to ask you, you know, on the B to C side, we've, you know, Rob and I have been talking about last few episodes and you know, that sort of estimate that digital has taken a five-year leap in a matter of months.
Peter:
You know, what, what's your view on what's happening among distributors and their industrial suppliers? What's, is there a similar thing happening and, and do you think it will last? Yeah, I think, I think five day years of acceleration in five to eight months is probably a little bit of an exaggeration, but, but, but, but go to 12 months. I mean, I think, I think it's become the number one priority, digital transformation, right? And digital transformation. It's not just about e-commerce, it's about like how do we enable our companies digitally? We're here, here's a, here's a side thing that's happened, especially in distributors and manufacturers work from home, crush them, right? Because no manufacturer, no distributor was set up to be able to work to be worked from home and all of their systems, like their ERP, their most important system was behind a firewall inside of their company.
Peter:
Like literally the only way you could access it before was to be inside of the building that you're in or have some kind of VPN tunnel. Now you have a whole company go work from home and you have to set up all of these kind of private networks for employees to be able to access all this information internally. I mean companies help desk it departments were just crushed by this. So when I talk about digital transformation, I'm not just talking about e-commerce, I'm talking about digital transformation, transforming the entire company to be enabled by digital so that things like work from home are, are easier to transition to. I think you'll, I think we're going to see work from home become a, like a Y two K like preparedness event over the next 18 months where companies realize like, we cannot go through that again.
Peter:
We've gotta be prepared. We, our systems need to be prepared so that our employees can access this wherever they're at. And I think we're going to see that type of preparedness and that's where digital transformation sits in the work for home preparedness and the ability to give customers self service access to their information to limit this, the, you know, the person to person contact. That happens so much. I mean, you think about even just phone systems, Peter, like we do most of our work through our cell phones. I don't have an extension at Salsify or anything like that, but most manufacturers most distributed, I mean phone and fax and I mean that, that's what happened. Like people were literally taking printers home to their, to their homes, taking fax machines home to them taking. And so this whole work from home preparedness about digital transformation you know, involves communication and malls. You know, your products and where they're, where they're at and how we sell them and how we inform people about shipping. I mean it's just, it's just the whole gamut. And when, when you think about, but you know, you, you spoke when, when you started this talking about this, that
Justin:
You know that there's a,
Peter:
The shift is, is it's definitely happening when you think about who had to
Justin:
Move off of their long held positions that these things were necessary. Like what, what's the dynamic well that of that power shift, is it, is it CEO's waking up and saying, enough of this sort of debate about whether we need to do this? Clearly we do. Like I just, I dunno what's, what's happening inside the room?
Peter:
Yeah, that's an interesting question. I mean, I think, I don't know too many CEOs that, that didn't believe this. They just didn't know how to do it. I know a lots of middle managers that didn't believe it or how those close positions in my experience, people that hold very closed no close minded viewpoints tend to hold on to them no matter the facts. Given to them. So I don't know if that, you know what you're talking about. It changes organizations, right? So as I think you'll see, I think you've seen groundswell things where every part of the company, I did a, I did a talk about digital transformation and change management a couple months ago before all of this hit. And what I said to them was, this is a very large distributor. What I said to them was, listen, it is every one of the leader's responsibility to deal with digital transformation. You're not supposed to ask your digital transformation leader what they, what the plan is for them. What you're supposed to say is, here's my plan for digital transformation and whoever's in charge of digital transformation, can you help me? Can you help me bridge this gap a little faster than I'm doing it on my own. So, and I, and I think that's what's going to happen. I mean this is gonna have to have a ground swell of digital transformation leadership changes throughout the entire,
Justin:
Yeah, on the so yesterday on the we're, we're recording this on Friday, so on Thursday of, of of this week rolled van Wyck who is the creative director of Accenture interactive, was doing a presentation on sort of refreshing the digital shelf. And he had kind of the latest cartoon from Marketoonist, I think it's called of, you know, the, the executive sitting in a, you can see through the window of a building into a meeting room where they're like, Oh, no, digital is still ways off. We don't have to worry about that. And this time it's a wrecking ball that says covert 19 on it, then just swinging towards it. That's awesome. Yeah, there's been a bunch of those which both funny and terrifying at the same time. There's no question that change is coming. And then I think one of the, you know, another signal that we saw recently is in terms of agility and responding to this time, Amazon business I saw just stood up. A
Peter:
Covered only store. Yeah. Amazon business, right? Not just amazon.com Amazon business. I think this really speaks to that. Like if you have the foundation, if you have the foundation of a, a digital experience already in place, it allows you to be creative, right? So Amazon business sees this common creates a curated a health care sanitation's store for their customers. So you can go on there and buy just COBIT 19 type supplies. I'm looking at the site right now and they have products like protective apparel, infection prevention, respiratory, telehealth. That last category is interesting. And inside of tele-health, they have a bunch of these voiceover IP phones to enable tele-health and video chat with their customers. So Amazon business then can create this very kind of highly curated experience just with products that are appropriate for this time. But you can't do that unless you have that foundation. I mean, they had the foundation to be able to do that quickly. I mean mobilized. I mean, they mobilized that within a very, very short period of time. I think my 14 days.
Justin:
Yeah. I M J Walker Smith, who's the chief knowledge officer at Kantar research, he did a video for us about signaling the recovery and there's like great new data that, that he's got on sort of on what's, you know, what's been going on, but also looking back at past disruptions, if you sort of take the, the cause of it out and you are just, are able to look back at past economic disruptions, what does it take for companies to signal to their buyers and consumers that it's okay to spend. And he, he ends with a conclusion, which is that we're going to have to make our buyers and consumers feel safe. Mm. And that's feeling safe to be in a store or feel safe to receive things or, or that things are going to be okay. It's a really fascinating thing. So just a quick log roll plug on Tuesday, it'll be available@digitalshelfsummitdotsalsify.com. But I think particularly for distributors and B2B businesses and industrials where as you said, it's always been kind of go get the donut and pick up your stuff. How do we say that that's going to be safe? And as a brand leaning into and being transparent about what you are doing to make that safe for your
Peter:
I think is going to be a really, really interesting thing for people to think about. Positioning out to the customer. One, safety is such a, I mean, safety is different for every person too. So, so you really have to take that to heart. Peter has a great, great way of looking at that. You have to take that at heart and really understand how will our people, how are our employees, how are our partners, how our customers feel safe in this time? What does that even mean in this industry, data that shows that that when that the brands do have the power to help spark a recovery. And so I'm just, I definitely, and you know, you can sign up if you want the notice when it goes up. There's an email sign up and we'll make sure you get notified, but it will be available tomorrow.
Peter:
And definitely worth a watch. Sorry, Jessica, go ahead. No, I was gonna I was going to talk about, you know, along with safety, I think, I think one of the interesting parts of the B2B business that's actually seen significant increases is on the B2B kind of medical device distribution. We're seeing lots of growth. Another article from digital commerce three 60 parts source part sources, a I think, I believe they're out of Cleveland, Ohio. They're primarily an online technology based healthcare services company and they've seen 30 to 50% growth and the number of orders, a thousand percent increase in respiratory equipment, 400% increase in patient monitoring infusion pumps. So while many companies are struggling from work, from home companies like part source that I've already kind of been digitally enabled, they have 90% of their orders processed digitally. They, they were used to these types of environments.
Peter:
They were able to, the transformation, they've already been in the midst of digital transformation being online only. And they're able to really react to this very quickly. They're able to really concentrate on those, the supply chains to make sure they have the right, they're the right products. And so I think, you know, you've kind of talked, you know, there's been some negative things obviously that affected, we have some bright spots in residential. But there's lots of areas lots of areas and in kind of retooling where companies have said let's pivot and shows them these products going back to Amazon, they were able to take, you know, a small group of products and just create a highly curated store. So there's definitely lots of areas of, of, of bright spots in the middle of this. And yeah, I mean maybe a great place to close cause you know, we've sort of seeing what's happening out there.
Peter:
You've been spending a ton of your time doing nothing but talking to this doctor about what's happening on all sides of the equation. So think of as one of those brand manufacturers or distributors who's coming to you and saying, all right, Justin, what do I, what do I do, you know, right now and over the next, what's the first step? What are the first steps? Yeah, I mean, I think that's the most appropriate question. So if you're looking at digital transformation and how do we accelerate this significantly from our three to five year plan to a five to six months? You know, I, I've watched three different companies recently that I've gotten to know one distributor, two manufacturers. One core thing that they've all realized is that the product information and expertise was in the heads of their baby boomers. So they realized this, this was six months ago or 12 months ago, they realized all of our expertise about our products is in the heads of baby boomers.
Peter:
Now that was scary then, but it's even more scary today as the baby boomer population. Is that the most risk? Right? and so, so you have all of the information, all the expertise in the heads of baby boomers that are now at risk. And the distributors or manufacturers also realized that what retail did was better than B2B cause they, they looked at their product content and they realized that it's the center of a good experience. If people are going to buy this, you know, as we call it the digital shelf, but the content better be good and a better, we better control. That concept meaning meaning product content actually increases conversion or decreases conversion on a website. That's kind of the foundational premise. In addition, when you look at work from home so much of, so much of the interactions instead of a manufacturer distributor are like, Hey, if I have a question about that, I'll go ask Bob.
Peter:
Right? Bob knows it. Bob is a baby boomer that, I mean he's, he's amazing. He's got all this expertise. However, now everybody's working from home. Access to Bob is now limited and so companies have realized, listen, the very first step, and I'm going to give you one step is that you've got to digitize your product information and the expertise around that product information that doesn't cost any money. That's just effort. Like that's just you working within your teams to take the information out of the heads of your baby boomer experts and digitize it and put it in a place where people can access it, whether they're working from home in the office. And then obviously the, the, the ability then to use that content in a bunch of other places is there at these companies, who are you seeing is, is being given the responsibility and the job of extracting that content?
Peter:
So first of all, that's a role that can't be hired. It's gotta be internal, right? Because someone, someone's that has some kind of political clout within the organization has to be able to go and lead this effort, right? So it can't be where the bodies are buried. They've got to, right, because they, they've got to motivate the organization to respond to this, to, to this effort. It's across the board. So one is a VP in marketing that I've seen, but the VP of marketing grew up in the company, so they were part, they were in sales and service. They know every part of the company. So they know every part of the product. So they're, they're experts in the product themselves, but they know the people and they can extract the information from the people. Often it's a, I mean there's product content leaders or, or PIM leaders, but they typically don't have the political cloud. Most of the time I'm seeing a lot of marketing and I don't know if that's good or bad. But coming out of marketing is most of the time where that leadership comes from Peter.
Peter:
Yeah. It's always interesting to me. At the end of the day, I'm sure it comes down to Mmm. Cause it's interesting because product content is a combination of, of expertise in detail, but also positioning, you know, it is telling you that's right. Yeah. but yeah, I think you're, you're so right that the cloud matters. The leadership matters in this case and certainly to to staff it and then make it urgent in the face of everything that's happening right now is that's leadership and that's the success or failure of the organization as always. That's right. And with all of the work from home and all the private networks and people realizing all of our information about our products in our ERP. And it's bad there by the way. But to get to our ERP, we have to use the VPN tunnel and logging.
Peter:
It takes time and it's slow and it's lagging. Imagine having that information at your fingertips that wasn't behind that firewall. That's what, when you look at these three companies, that's what they did. They digitize their product content. By the way, they didn't digitize it once. Like they're digitizing their product content. There is no such thing as good content. There's only content that's getting better. Right. Which means it's gotta be a program, not a project. And so it my, that's my, that's my call to the distributors and manufacturers. We want a place to start digitize your product content. It's easy, simple. It doesn't take this, it's not, it doesn't cost a lot, but it does take effort. Did you say it is easy or it's not easy? It's simple. It's simple. It's not easy, but it's straightforward. Yeah. Cause I'm just hearing everyone out there listening. Not easy, not easy, simple. Well, with those sort of hopeful Clarion calls to action, that's going to close out our episode. Justin, thank you. As always, just bringing the, bring in the truth of the B2B world to our listeners and and giving us a positive direction to go is, is really appreciate. It's great to have you have you on. As always, thanks for having me Peter and
Justin:
I just want to remind everyone, as I said earlier, the digital shell virtual summit rolls on. Definitely a look at the site on Tuesday for that research from Kantar. We also, next Thursday we'll have a live session with with John Carroll who used to be a VP of eCommerce at Coke and now runs his own consulting firm on sort of foresee BG, new the new marketing platforms, new selling platforms that they can be using during these times. So lots going on digital shelf, summit.salsify.com and make sure you get all that information. As always, if you enjoy the show, please leave a review wherever you get your podcasts. We really appreciate it. And thanks as always for being part of our community.
