How Manufacturers Can Overcome Channel Conflict With EcommerceHow Manufacturers Can Overcome Channel Conflict With Ecommerce

How Manufacturers Can Overcome Channel Conflict With Ecommerce Transcript:

Announcer: You’re listening to The Kula Ring, a podcast made for manufacturing marketers. Here are Carman Pirie and Jeff White. 

Jeff White: Welcome to The Kula Ring, a podcast for manufacturing marketers brought to you by Kula Partners. My name is Jeff White and joining me today is Carman Pirie. Carman, how you doing, mate? 

Carman Pirie: All is well. All is well. Good to be chatting with you today. 

Jeff White: Yeah, it is. We’re gonna be talking about one of our favorite topics. 

Carman Pirie: Well, being manufacturing marketing writ large, or you getting more specific than that?

Jeff White: I think that delving into the value of ecommerce and where it fits in a manufacturer’s mix in terms of how it’s going to go to market, it’s a pretty interesting and near and dear topic to our hearts.

Carman Pirie: Yeah, and I think it’s fair to say that it’s an area that a lot of manufacturers struggle with. I think… Yeah, excited for today’s conversation, as well. Let’s get it going. 

Jeff White: Me too. All right, let’s do it. Joining us today is Kris Harrington. Kris is the President and COO of GenAlpha Technologies. Welcome to The Kula Ring, Kris. 

Kris Harrington: Hey, guys. Thank you for having me. Great to be here. Wonderful to talk to your audience today. Love sharing my experience, so interested in having a great discussion. 

Carman Pirie: It’s awesome to have you on the show, Kris, and just so far, for our listeners who don’t know, GenAlpha is really ecommerce for manufacturers, but look, I’m sure you’re going to do a better job of explaining it than I, so why don’t you give our folks a bit of an intro to GenAlpha? 

Kris Harrington: GenAlpha is a software company. We got our start back in 2011. As founders with experience in the manufacturing industry and specifically heavy equipment for the mining industry, we understood the challenges equipment owners face in identifying and ordering parts to keep their equipment running. We believed there was an easier way. To solve this problem, we used our experience to create an intuitive ecommerce platform designed for organizations who sell and support equipment. 

One thing that makes us unique is that we reuse engineering 2D and 3D drives and bills of material to create an interactive Ecatalog, so that equipment owners can easily and safely identify what they’re looking for, add it to their shopping cart for easy quotes and order creation. We really like to say that we equip manufacturers, distributors, and dealers with the tools, the information, and the services they need to sell online. That’s what we do. 

Carman Pirie: And it’s really from the point of view of this kind of just hard to find parts and basically structuring the information the way that you have many on-ramps into it, isn’t it?

Kris Harrington: That’s right. You know, I like to say that people come to an online store with what they have or what they know, and oftentimes that can be, if they’re lucky enough, they actually know the part number. If somebody’s been around a piece of equipment, or some consumables for a long time, often they know that SKU right up in their head and they’re gonna search by that SKU. But so often, especially as we think internationally as equipment operates, people don’t know that SKU. They may know that it goes into a piece of equipment and that equipment has a serial number, it might have a model number, a year, might have a VIN, something that is that unique identifier that they will know, that really gets them to a safe piece of equipment that then they can start searching within that equipment for the thing that they need. 

And that might be an assembly, it could be a structural area of if you think about an undercarriage, or a cab, or some area, and then they just keep refining what they know. And this is the way for so many years customer service departments, technical service departments supported customers in helping them identify the right part number to order for their regular maintenance or because a machine is down, right? We have to translate that now today into what is the thing that they’re gonna know when they come to your website that’s gonna start the process of ensuring that they safely have the piece of the part number, the piece of equipment that they’re gonna be maintaining, that they’re picking up the right materials? 

Again, vendor numbers, there are so many different things. As we think about the way Canadians say some things, and we in the U.S. call other things, you know, we have to think about all of those terms that… I was using an example the other day. Some might call it a spare tire, some call it a wheel, some call it a spare. They don’t even use the word tire. When you’re saying spare, will somebody know what you’re talking about? Adding all of those little things to make that search easier, this is what we are challenged with in manufacturing distribution dealers when they’re really selling to their market. 

Carman Pirie: Now, the good news is to Canadianize it, you just need to add “eh” about every six or seventh word. 

Jeff White: But it is a real niche. 

Carman Pirie: Yeah. Exactly, exactly. There’s not a lot of us. But look, Kris, as you’re telling me this, I’m like it’s a wonder you even have time to talk to us, frankly, because it seems like to me that there’s just such a huge need for this. We see it daily in the manufacturers that we speak with and interview on this show and have the pleasure to work with, so it just makes a ton of sense to me. But I guess I also know that manufacturers are challenged to move into ecommerce, and I think one of the reasons that often comes up, and I think connects to this in some way, is the notion of channel conflict and how that stands in their way, especially when it comes to these types of parts manufacturers, et cetera. 

I guess how do you help people kind of navigate that and move through that? 

Kris Harrington: Yeah. I think the first thing is realizing that you have to do something. A lot of it is just drawing awareness to what is changing that’s gonna create a change in the first place? Because many manufacturers have really not even engaged in the conversation thinking that their distribution network is responsible for those downstream activities and leaving it up to them to solve this problem, which isn’t really the right way to do it, as well. 

First, we’re engaging in helping them understand what’s changing that’s going to create this need for you to do something about this, and I think once we do that, the next step is really communication. I think the best companies out there that are doing this, and the good news is retail had to face this, right? Retail has had to overcome this. They’ve gone through the challenges of these things, so we know it can happen. But it’s communication with your distribution network or that dealer network to start opening the doors to say, “How are we gonna ensure that we’re relevant in the future and we don’t lose market share as we go?” Because that’s really what the risk is. 

It might not even be overwhelmingly here yet, so you’re planning for something that you’re anticipating to happen in the future, so how do you get started now? Because when we talk about search and finding parts online, there’s so much work to be done to digitize. The information’s in disparate locations all throughout a company. If you’re a part of a manufacturing organization that has acquired any businesses over the last few years, and we know there’s been a lot of consolidation in manufacturing, you’ve got manufacturing locations all over the world. You’ve got multiple ERP systems. There’s a lot of challenge in just doing business with a manufacturer and having one voice to the market. Now how do you ensure that through your distribution and your dealer network you’re maintaining all of that?

I think it starts with breaking down the communication that needs to happen between the manufacturer and their distribution network. They both have to be in agreement that they still provide value in the value chain to the customer. In that supply chain that does reach the end-user, there’s value, not just today, but in the future. And how are we going to highlight the value that each brings? I think that communication is really the initial step. You know, some people have dealer counsels, they have larger dealers, and then some smaller dealers, and I find that when you get some dealers on board, then others will follow. And it’s really for manufacturers, they’ve got to find a way that the dealers are gonna be compensated in this process, as well. 

Carman Pirie: Just as you said, does it just boil down to kind of still continuing to give them their piece? Whether or not they end up handling the end product? 

Kris Harrington: It can. You know, it can be that. And I think it depends on the manufacturing organization and their distribution network. If you have a very good and loyal distribution network that has done well by you, then you’re going to want to leverage that and certainly ensure that they have their piece. And I think it’s important to highlight, again, the great value that each brings. Manufacturers traditionally were really responsible for engineering and designing a great brand, a great piece of equipment, and the distribution network sold it, maintained it, and provided all those aftermarket services. If we as owners of equipment are now in a self-service industry or in a self-service buying mode, where we’re gonna go online and identify what we need, if we’re do-it-yourselfers, and we’re gonna do our own repair work, we are only gonna think about the brand that we own. We’re not thinking about all those little, small dealers anymore when we just want to order an oil change kit, right?

We do think about that brand and we know, I own a John Deere. I own a Polaris, right? I’m gonna go back to that original equipment manufacturer and making it easy for me to identify my oil change kit and buy it is really important. And what the manufacturer does to compensate the dealer when I just want to order parts, that should be left up to that manufacturer and dealer, but an easy experience for me. And that’s really what we’re talking about here. Now, at the same time, if I need some service work on my John Deere or my Polaris, something that I can’t do myself, I would expect that dealer to be available to support me. 

And in those circumstances, I definitely want to know they’re there. I’m also the type of person that still likes to touch things, ride things, try things out at a dealership before I’m actually making my purchase, so there’s that value for the dealer, as well. But you know, that dealership could be a great stocking location, that if I’m going to the manufacturer’s website to order something and it’s available in a warehouse which is a dealer warehouse near me, it could be very easy to ship that good to me from that dealer warehouse. There are so many beautiful advantages to having that distribution network that we have to overcome the thought that because an equipment manufacturer builds an e-store that now we’re competing against each other. 

That shouldn’t be. That dilemma, that dealer dilemma that we talk about, or that channel conflict, we have to overcome that, because we should all be winning in that situation.  

Announcer: Are your digital marketing efforts bringing in too many junk leads? Stop wasting time and distracting your sales team. Account-based marketing can help give your marketing strategy the laser focus on the qualified buyers that you need to increase your pipeline velocity, close more deals, and grow your business faster. We’ve created a sample manufacturing ABM plan to help you get started. Download the sample manufacturing ABM plan at bit.ly/sampleABM. That’s B-I-T.ly/sampleABM. 

Carman Pirie: Yeah. I mean, I can certainly see, and there’s no question there’s some merit to the argument that the rising tide lifts all boats, you know? And not to get to Atlantic Canadian on our audience. Highest tides in the world, ladies and gentlemen. Anyway, but I think that where the rubber meets the road is in who owns the relationships in some way, and I think that that’s where the distributors/dealers start to get a little concerned. I feel like, not that there isn’t wisdom in everything you said, Kris, but the real piece that stood out to me was that notion of as you start to look at order online from the manufacturer or pick up at the dealer, those kinds of situations, those are going to enable a lot more customer data sharing in that network and visibility about that customer relationship and would drive a bit of a data advantage to both the dealer and the manufacturer. 

And I think when we get to that situation, it feels to me like we’re getting closer to truly navigating the conflict inherent in all this. 

Kris Harrington: Yeah. No, I don’t disagree with anything you’ve said there. I think especially as marketers, right? What you do with that information to maintain the relationship and bring people back to your brand, to ensure that they’re coming back to purchase from you, somebody needs to be responsible for that relationship. And the question becomes is that, for an OEM, again in this self-service world, is that the OEM’s job or each individual distributor in their localized area to do that? And can they manage that sufficiently in a way that truly does ensure that both that manufacturer and the distribution network win out in the future? 

I happen to believe that there’s so much data that you get when you open an e-store that you never get if you don’t. And the ways in which you can market and maintain a relationship with your customer are so very important. So, if you do nothing and your distributor channel does nothing, then you’re missing out on all of that information. But the question becomes who’s responsible for that? And I think in this age of self-service, somebody has to answer that question. And I think it will be harder for brands to rely on their distribution networks to do it consistently for what’s expected at that brand level, so there has to be some sharing. 

Carman Pirie: Yeah. And I mean, at the distribution level and the dealer level you have a way of subject matter expertise and things of that nature that build up over time, that allow them to navigate the complexity of the parts environment in the given manufacturer. But as new people come into those roles that aren’t as sophisticated, they’re going to lose that kind of tribal knowledge, if you will. 

Kris Harrington: Yes. 

Carman Pirie: And it feels to me, and I kind of think this is what you’re saying, is the manufacturers need to step up and take responsibility there and say, “We’re the ones that made this. We have the product data. And we’re the ones that hold the key to every piece of this, really. And we need to be freer about getting that out there to our distribution and dealer networks because as you structure this information to present it online, it also makes it easier to share with them so that they can serve their customers better.” 

Kris Harrington: Yes. 

Jeff White: Well, I think too, I mean, one of the things about this idea of a hybrid model where you have the ecommerce enabled by the manufacturer but integrated fully with local stockers and local dealers and things like that, I mean, that makes a much more complex beast of a site that’s gonna be a lot harder to build and a lot harder to maintain, and a lot more systems to integrate together. But it also helps… You know, part of the positive for that is that it can take some of the marketing pain off the dealer’s shoulders. Because you could say, “Look, we’ll manage that side of that and we’ll direct people who are near you, who are gonna buy from you anyway, especially new, but we’ll manage that relationship. We’ll manage the marketing. We’ll keep them informed about new product launches and all of that. And we’ll be directing them to you.” 

But you know, at the end of the day the impediment there is just the beast of a build that’s going to be required in order to create a site that is going to power that kind of relationship. 

Kris Harrington: Sure. Yeah. There’s no question that, you know, building the site is the challenge. And that’s why manufacturers should be starting now, because if you don’t start now, you could face a point where the onboarding and adoption of that self-service is so high that you’re left behind and you don’t want the adoption rates to get that high and you haven’t done anything about this, and even helped your distributors be successful through this. That distribution network, and that’s why it’s so valuable for them to come together. 

I think there’s a ton of value in the fact that all of these stores and these locations already exist. In some ways, it can really prevent competitors in coming in to… Because warehousing and delivery can be such a differentiator. If you have localized repair shops, maintenance shops, and stocking available so that your turnaround delivery times are that much faster, it really prevents new competitors from coming in, and can really make sure that you’re leading the way with your own brand and you continue to maintain that success part without losing market share. 

Carman Pirie: Yeah. Similarly, almost the flip side of that is true in that you can deliver stuff to almost everywhere on the planet in a reasonably short period of time, and if somebody… and in every one of these opportunities that you’re talking about, the competitor that’s hanging out there, if they choose to do it first, if they choose to not… even a competitor that doesn’t have that level of dealer network or what have you, but they choose to create a better online experience, and actually cater to how people are self-serving as you mentioned online, then that competitive advantage can erode incredibly quickly. 

Kris Harrington: That’s right. Yeah. 

Carman Pirie: Not to sum up fear, uncertainty and doubt here, but my goodness, you know? 

Jeff White: But I mean I think that’s really part of it, right? And in selling this to manufacturers and getting them to help get their dealers on board, giving them the ammunition that they need in order to be able to say like, “Look, guys. This is how people want to buy this stuff now.” You can either get busy living or get busy dying and we have to do this.

Kris Harrington: Yeah. 

Jeff White: So, this is the research we have that shows what consumers want, this is the researchers we have with a younger buying demographic in manufacturing, and in parts, and in things like that, and bringing that story to them to give them the information to be able to go to their distributors and dealers and say, “Look, guys. Let’s do this, because if we don’t, somebody’s gonna eat our lunch.” 

Kris Harrington: That’s right. Yeah, and expecting one, or five, or all dealers to do it individually, that seems to me not to be the winning strategy, right? I mean, that is more challenging. Many of them are not gonna do it to the OEM standards in the first place, and then you have all of the rules around territories, and where you can sell to, how will you manage that? I do think it’s on the manufacturers to take control of this but to do it in a way where their dealers believe everybody’s benefitting. And that’s why the conversation, that open communication, is so very important. And it needs to be happening. We can’t say it’s a conflict. The best are having these conversations. They’re bringing out the best in their dealer network. And then they’re taking all of that great information they have internally and making it available online so that information is breaking down the barriers to buy. 

That’s the key. 

Carman Pirie: And as you mentioned, those manufacturers are… The ones that are choosing to do this, and have those tough conversations, and navigate these waters on the back end of that, not only is there more market share and brand strength, but there’s a wealth of data that they wouldn’t otherwise have access to. 

Kris Harrington: You got it. 

Carman Pirie: And I’ve certainly seen that and I’m curious, because part of that wealth of data, of course, simply just helps you administer a profitable ecommerce experience. I’m curious, what are the other uses of that data that you’ve seen? Is there something that stands out to you, where you’re like, “Man, this company would not have known about this trend or not have seen this happening within their customer set had it not been for having an online presence”?

Kris Harrington: Yeah. You know, it’s hard for me to pick out any piece of data that doesn’t ultimately lead to more sales, because that’s what’s happening in the channel. But I think that, you know, initially understanding if you’re even getting traffic and who that traffic is can be very revealing. When a manufacturer or distributor opens up a store and some come and some do not, there’s information in that. Who’s not coming and why are they not coming, and how do we get them there? There could be an expectation of who would have come first, and they didn’t come, so why didn’t they come? And it could reveal something about your brand. It could reveal something about your information and the way that you’ve even communicated that you have a tool, right?

Even that visitor’s presence of coming to your site to even check it out and to potentially even search for a product is something that is revealing. The other thing is that because you get so much search data, I find also that it’s revealing to understand what people search by. And what you wouldn’t think that they would search by, because you’re gonna get search results and maybe there is in fact no result, because what they’re searching for, you didn’t either put on the store, or you didn’t think that they would search for it in that way. That becomes very revealing to you as a business. It’s an insight that you get to take back and say, “Hey, they’re mostly searching by vendor number, so we have vendor numbers stamped all over our products, and that’s the thing that they know. They don’t know other things.” 

That’s just an example, but it could be search terms that you need to make sure are in your keywords that are also in your descriptions of things, to make sure that those things are there. So, what they’re searching for, and then what they’re not searching for. I love the not stuff. I have to say for me, having run an aftermarket business before, the hardest thing for me to… I could always say, “Here’s what people were buying and here’s who was buying from me.” But who was looking for information and didn’t buy and what were they looking for? Or what didn’t they even search for that I thought for sure they would look for this, but maybe they don’t even know that we carry it? So, now we get an opportunity to tell people that we do this, which is so very challenging to do through technical support and customer supports, because everybody’s so busy. 

So, I love all of the things that data reveals about who’s not coming, and trying to uncover, that’s where you can send your sales force to understand how are they still doing business that we need to make sure we’re managing well? Until they come along this channel. Or is there something that they fear that’s not bringing them here that we need to overcome for them? So, the things that they don’t do, that’s the stuff, or the people that don’t come, that’s where I always think the gold is, is in the what’s not there. 

Jeff White: That’s brilliant. I love that. It reminds me a bit of we built a site for a set of car dealers about 20 years ago and they all wanted to be known for preowned vehicles. And everyone wanted to search for used cars and they couldn’t understand why they weren’t being found.

Kris Harrington: Great example. Yeah. 

Jeff White: Being able to dig into your search results and see, like okay, these are all the things that people are looking for and most of them aren’t finding us as a result or aren’t finding the thing they want. I mean, that is… There’s gold. 

Carman Pirie: And I like that notion of who’s not coming because what points to me is there’s some… I think a lot of businesses can fall into this trap in that they get this, maybe there’s one customer that they know, or that they think in their mind is prototypical, and as they build out a new initiative or they do something, they’re thinking, “Well, this is gonna be right up their alley.” And then, as I say, flick it live and they don’t show up at all, but this one, this one, and this one do, right? 

And yeah, that kind of recalibration is hard to otherwise come by. It’s hard to get that little jolt in the behind. Yeah, no, maybe I need to rethink how I’m looking at this. Hm. 

Jeff White: Well, I think the other piece of that also that is truly wonderful, and I think a lot of people don’t even think to do what you’re saying, to look at your internal site search logs and see what’s there. A lot of people tend to rely on what are the terms people use to find the site more globally or find the content more globally, but of course, Google is obscuring most of that data. If you can get the thing on your owned property that you have, that’s part of the value of, as you were saying earlier, of having this ecommerce site that you control and that you can work with the data from. So, it’s really powerful. 

Kris Harrington: Yeah, and you know, one thing that we didn’t talk about with channel conflict, but what always comes up in discussions too is your sales team often will think of an ecommerce store as a conflict to their potential ability to sell. We didn’t talk too much about that, but certainly, that exists, and what I like in analytics is understanding if my internal team is coming to the site, and what they’re doing on the site, because if your internal team members, including your sales team, are not using your ecommerce platform and your tools, and still logging all that data that they would be searching because a customer is asking them questions, or something’s happening, first I would doubt do they know how to use that tool? Are they most efficient with the client? Are they showing the client the new tools that we have? Because these tools are designed to make everybody’s job easier. 

I do think it is the ability to not just understand what customers are doing, but those internal customers or users, as well. There’s so much valuable information in that, in how you train, how you teach, when you onboard because we do have this younger demographic who’s coming in, who’s more inclined to use these tools. We want to make sure we’re getting the most out of the information so we can teach them properly the best ways to use these tools. So, there’s that, too. 

Jeff White: They can find out that Jimmy in the back cubicle has no idea what any of our stuff is actually called and we need to let him go. 

Carman Pirie: Why does Jimmy always get it?

Jeff White: I don’t know. 

Carman Pirie: We should bring Jimmy back in recurring episodes, kind of like… My God, it’s escaping me. Kenny that always-

Jeff White: Oh, that always died in South Park. Yeah. 

Carman Pirie: Yeah, yeah. That’s a… Jimmy always gets fired by the end of a Kula Ring episode. That’s dark.

Jeff White: Our new shtick. I’m gonna tell Laura, our head of marketing. This is the new strategy. 

Carman Pirie: Oh, my goodness. Well, look, Kris, this has been an absolute pleasure to chat with you today and just kind of unpack this. It’s just been a wealth of knowledge and information for us, and for our listeners, and I really want to thank you for sharing it with us today. 

Kris Harrington: Yeah. Thanks so much for having me. As I said, it’s a real pleasure to talk to you guys. I love the show, so it’s great to be a part of it. 

Jeff White: Wonderful. Thank you so much. 

Carman Pirie: Awesome. All the best. 

Kris Harrington: All right. Thank you. 

Announcer: Thanks for listening to The Kula Ring, with Carman Pirie and Jeff White. Don’t miss a single manufacturing marketing insight. Subscribe now at kulapartners.com/thekularing. That’s K-U-L-Apartners.com/thekularing.