Thomas P. Gale President Gale Media

Transcription

1 Lessons from other channels A Strategic Scan of Wholesale Distribution June 4, 2013 Thomas P. Gale President Gale Media tom@mdm.com

2 Download today s presentation 2

3 Reach = 20,000+ WD executives daily MDM Premium Subscription 2X monthly online/print Research Reports Wholesale Distribution Economic Reports WD Industry Landscape Report Industrial Markets Size/Segmentation Top 40+ Industrial Distributors Sector reports: PT/MC/FP, Electrical, HVACR/Plumbing, Industrial, BM/C

4 United States Canada Mexico 150+ product consumption profiles MARKET ANALYTICS Market Size & Segmentation Market/Account Potential Wallet/Market Share Sweet Spot Analytics Customer Lifecycle Management Recency-Frequency-Monetary Analytics PRODUCT SECTORS Industrial MROP supplies Power transmission Fluid power Fasteners Electrical HVACR 4

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6 Agenda 1. Lessons from others 2. Keys to competitive advantage 3. New rules of engagement What is your company s attitude toward change? How do you move forward? CULTURE TEAM Gale Media, Inc. All Rights Reserved. 6

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8 Rewiring distribution Travel agents Travelocity in 1996 Kayak.com Music business itunes Book stores (Borders) Amazon B2B: Multi-channel Gale Media, Inc. All Rights Reserved. 8

9 Rewiring distribution New technology Traditional distribution disrupted New intermediaries, alternate channels Gale Media, Inc. All Rights Reserved. 9

10 Wholesale Distribution Industry Real Revenue Growth, 2004 to Present (adjusted for inflation) % change from year ago Source: 2013 MDM Wholesale Distribution Economic Trends Report

11 More complex, fragmented Industrial Distribution $227 billion market size Source: Industrial Market Information data 11

12 Top 10 Distribution Trends 1. Uncertainty drives the market 2. Generational shift takes hold 3. Distributors face competitive shift 4. Vending continues explosive growth 5. Channels are changing fast 6. M&A activity rebounds 7. Distributors expand global reach 8. Analytics take center stage 9. Digital gains critical mass 10. Mobile is a game-changer Gale Media, Inc. All Rights Reserved. 12

13 Uncertainty drives market Very hard to commit resources More difficult to plan Gale Media, Inc. All Rights Reserved. 13

14 Generational shift takes hold Handing business to the next generation Youth impacts business decisions, particularly technology Customer preferences shifting From sales to search Gale Media, Inc. All Rights Reserved. 14

15 Vending continues growth Distributors are targeting vending and inventory management services as key growth drivers. Sales with these customers grow faster Programs increase loyalty with these customers Usage & product lifecycles data/accountability Efficiency versus traditional tool crib Gale Media, Inc. All Rights Reserved. 15

16 Vending continues growth Fastenal 1,925 machines installed as of Q410 21,095 machines installed at the end of 2012 ~1000% increase over two-year period Vending sales more than 25% of sales in Q412. Profitability challenges Gale Media, Inc. All Rights Reserved. 16

17 Changing channels Product technology converges channels Accelerated channel convergence Distributors expanding product breadth E-commerce & master distributors allow broader reach, expand drop-ship capabilities Life is less simple now Gale Media, Inc. All Rights Reserved. 17

18 M&A activity returns in force Strategic buyers look to expand reach Geographic Product focus Private equity activity grows Exiting deals from 5-7 years ago Cash to spend Gale Media, Inc. All Rights Reserved. 18

19 Distributors extend global reach Canada (Applied Industrial, WESCO) Mexico Europe-based distributors expand in North America (Wurth, ERIKS) Distributors continue to follow customers overseas Reshoring trend Gale Media, Inc. All Rights Reserved. 19

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21 Experts sometimes possess more data than judgment. Colin Powell 21

22 It s not about: Key takeaways: Playing field is leveling Big data & carpet bombing Biggest wallet wins It s about: Individual user data Leveraging new tools and core strengths Listen closely to customers

23 Analytics takes center stage Distribution analytics evolution Quality, inventory, operational Pricing, cost to serve, profitability Sales and marketing analytics emerging Data/Management-directed sales force Best-in-class distributors drive analytics Gale Media, Inc. All Rights Reserved. 23

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26 THIS BOOK Tells just what your storekeeper at home pays for everything he buys and will prevent him from overcharging you on anything you buy from him. Pricing Transparency

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28 It does not do to leave a dragon out of your plans if you live near him. J.R.R. Tolkein, The Hobbit 28

29 No. 9: E-commerce gains critical mass AmazonSupply launches in Gale Media, Inc. All Rights Reserved. 29

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31 Amazon by the numbers 2012 online sales = $61 Billion 2011 online sales = $48 Billion 2012 web sales growth = 27% Monthly visits = 481 million Monthly unique visitors = 90 million Conversion rate = 4% Average ticket = $220 Goal = dominate the world

32 Grainger online by the numbers 2012 online sales = $2.7B (30% of total sales $9B) 2012 web sales growth = 21.5% Monthly visits = 9.9 million Monthly unique visitors = 3.7 million Conversion rate = 8.7% Average ticket = $280 Goal = web sales 40%+ of total sales

33 AmazonSupply beyond the hype Slow build-out: smallparts.com in 2005 Revenues est. less than $75 million Not multi-channel service Targeted segment of spot buys No technical expertise Evolving supplier relationships Convenience, transparency

34 E-commerce gains critical mass Gale Media, Inc. All Rights Reserved. 34

35 Mobile is a game-changer ~30% of distributors have mobile device-optimized e-commerce solution. Additional 20% implementing a solution in the next 12 months. Source: 2013 State of E-Commerce in Distribution MDM/Real Results Marketing Gale Media, Inc. All Rights Reserved. 35

36 Mobile is a game-changer Gale Media, Inc. All Rights Reserved. 36

37 Mobile is a game-changer NOT just e-commerce/customer widgets Improve accountability/performance of sales force and engage customers more deeply Gale Media, Inc. All Rights Reserved. 37

38 Mobile is a game-changer Netsuite / IPad / Bakken Oil Boom 6+ months for building permits Job sites are remote/dispersed High service levels with accurate and immediate data Gale Media, Inc. All Rights Reserved.

39 New rules of engagement = Omni-channel Marketing Sales Customer care Product/service development Operations Collaboration Search

40 ebusiness 1.0 Commerce Silos Content Community

41 ebusiness 2.0 Content Commerce Community Multi-channel Frictionless Usability Analytics Integrated

42 Lessons from others 1. Adapt: Distance is dead 2. Leverage: Big data Big wisdom 3. Plan: How do you rewire? 4. Change: Hire a kid 5. Execute: Make it easy to open every door 6. Create the culture & team to succeed in this new landscape Gale Media, Inc. All Rights Reserved. 42

43 Two core success factors to compete Internal accountability Connecting with customers Three key differentiators technology talent analytics Gale Media, Inc. All Rights Reserved. 43

44 When you can understand what customers are trying to do, how they re trying to do that, and create solutions that fit together with that knowledge and create a culture of innovation where you re going to be trying stuff and improving upon what you ve done, that s where you see the kind of growth we ve been seeing Paul Miller Grainger Vice President of ecommerce

45 Additional resources Sign up for free industry daily report: Ongoing trend analysis in MDM Premium If you re not a subscriber, join us at Look for the 2013 Distribution Trends Report, released with 2013 MDM Market Leaders lists in June Gale Media, Inc. All Rights Reserved. 45

46 Important Books Business Model Generation On Innovation, by Terry Jones The Little Black Book of Strategic Planning for Distributors, by Brent Grover Gale Media, Inc. All Rights Reserved. 46

47 Thank you Thomas P. Gale President Gale Media/Industrial Market Information Publisher, Modern Distribution Management