No Prices in Your Inventory? No problem. eCommerce and the Power of Search

Posted on October 29, 2009, by Cheyne Rood

There is a misconception among electronics distributors that the transition to eCommerce is a one step process - that their entire inventory, complete with pricing and detailed data, must be a part of their eCommerce website from square one. This is not the case. Besides making the transition more manageable, there are clear benefits to gradually filling out your eCommerce website over the course of several months.

Let's start with an example. Joe, the owner of ZYX Electronics, knows online selling would be a great way to open his business up to new opportunities. Like most distributors, however, Joe is not prepared to sell directly online from day one. He needs to develop price breaks and more detailed product specs. Undaunted, Joe begins building his website with the inventory information he already has - part numbers, quantities, manufacturers, and some basic specs - even though he cannot offer any of his inventory for direct web sale yet. While Joe spends the next few months developing prices and grabbing datasheets, he is surprised to find that more and more prospective customers are finding his website and calling his business. Joe's business is beginning to show up in Google search results for parts and manufacturers in his inventory, and his website is beginning to yield results without even offering a single item for sale.

A website without pricing information can still drive new business. Your inventory data - even when incomplete - is a gold mine of relevant keywords. Adding keyword-rich information on your website greatly increases your chances of appearing in search results - and can drive promising customers straight to your business. When information is added to your website, and organized in the right way, search companies like Google will crawl your website and collect that information. In this way, your website will be more likely to appear when people search for parts, manufacturers, or other relevant information you have stored in your inventory. Search engine results are a key factor of web success, and cannot be provided by other web channels like listing websites and stock checking services.

We present DistiSuite as a sales tool - and it is - but it is also a marketing tool. We have built a system that focuses on the power of search engines to attract new customers to distributors. We help our clients make the most of the information in their inventories, however limited. Electronics distributors agree: Online selling is an increasingly valuable means to generate new relationships and revenues. Rather than feeling daunted by the end goal, think about the benefits of a gradual approach to online sales.

How Much Are Small-to-Midsized Distributors Losing When They Ignore eCommerce?

Posted on September 24, 2009, by Cheyne Rood

No business owner wants to spend resources without the right return on investment. For electronic component distributors, the benefits of eCommerce must outweigh the costs. In previous newsletters I've written about important aspects of eCommerce, but this newsletter is about results: The experience of our DistiSuite clients, small-to-midsized electronic component distributors. I will break down some statistics for your consideration. The numbers may surprise you.

First, some notes about the industry in general. Industry magazines and conferences are eager to talk about the increasing role of eCommerce in the marketplace, and many larger companies have dedicated entire departments to handling their eCommerce website and strategy. Where does this leave the businesses without resources to create an "eCommerce staff"? Where does this leave the small-to-midsized distributor?

Because of its apparent cost and complexity, many smaller EDs have avoided eCommerce altogether. Some believe eCommerce to be contradictory to their unique strengths -- particularly, long-term customer relationships. This is a mistake. Would it make sense to never use email because phone calls are more personal? Of course not - a sales website is simply another way to communicate with customers, and to provide the service and information they expect. With a solution like DistiSuite finally in the mix, the real question becomes - How much revenue does your business lose by ignoring eCommerce?

Let's look at some numbers. Our DistiSuite system costs a certain fixed amount to install, and then an ongoing monthly rate. Because of this installation cost, the total costs for the first year would be higher than subsequent years where only the monthly rate applies. For our top 25% performing clients, here are the statistics:

• Non-installation year, where clients are only paying their monthly rate:
• Revenue-to-cost ratio: 91 to 1
• In other words, these clients averaged $91 of revenue for every $1 spent on DistiSuite annually.

• Including installation cost this year:
• Revenue-to-cost ratio: 21 to 1

Because some revenue opportunities occur outside our system, there are likely even more revenues generated via DistiSuite. Our top performing clients average over 400 new web-registered customers every year. Those new customers may start with small orders on the web, but as that business relationship develops may begin calling our client direct with larger volume orders.

What about our bottom 25% performing clients? These are the clients who typically have been with us at DistiSuite a shorter period of time, perhaps wanted to integrate just our inventory management and shopping system into their existing website (cutting out our search-engine friendly infrastructure), and foregoing any search engine marketing. The numbers are still great:

• Non-installation year, where clients are only paying their monthly rate:
• Revenue-to-cost ratio: 20 to 1
• Including installation cost this year:
• Revenue-to-cost ratio: 7 to 1

The average client in our bottom 25% of performance has only been with us at DistiSuite for 9 months. Although these numbers are certainly respectable, the difference with our top performers shows why we advocate search engine marketing. Most electronic component distributors take simple steps to work with us and optimize their search engine traffic, and are happy with how markedly it impacts their bottom line.

Because every business is unique, and there are so many factors involved, we of course cannot guarantee results. It is clear, however, that eCommerce is increasingly important in this market. Online sales in this industry will only continue to grow, and provide new opportunities for revenue streams and customer relationships. We at DistiSuite have focused on this sector because we know how valuable and important eCommerce can be for small- to-midsized distributors, and we welcome you to contact us to discuss the specific needs of your business.

Notes: The statistics presented above are based on DistiSuite pricing as of August 2008.
Because every client is unique and many factors can affect results , these statistics merely describe trends among existing DistiSuite clients, and in no way guarantee similar performance.

More News...

» Managing Inventory Online [8/18/2009]
» Principles of Online Sales Success [6/26/2009]
» Finding New Customers Online with eCommerce [5/28/2009]
» SourceESB and DistiSuite Partner to Offer eCommerce Packages [4/27/2009]
» Welcome to the DistiSuite Newsletter [5/27/2008]