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We're recording on location in Chicago, Illinois at this year's B2B Next, and I have Brian Beck with me. Brian, what was your topic that you discussed in your workshop?
We talked about mastering the art of building a post-digital enterprise. What the heck does that mean?
Oh my gosh, how are we post?
I don't know. This is one of our friend, Andy Hoar's topics. That was my first question to him.
Andy Hoar, who's running this whole B2B Next Conference.
Who runs this conference. Yeah, he runs the B2B Next Conference. It was interesting trying to define what exactly that meant, but breaking it down into non-consultant speak, it means, if you've got some basic eCommerce in place, you've got the foundations, what do you do next? Where do you go next? How do you better connect with the customer using digital means, et cetera? So it was actually a great session. We had a lot of folks in there that were already engaged, and in fact, it was the first time I've been at one of these conferences speaking where I ask the question to the audience, "Hey guys, how many of you are in eCommerce?" And the majority of the folks raised their hand.
A bit of a self-selected audience of course, but gosh, that's really encouraging, and the first time I've actually seen that. Where the-
Well, to have roles, that are eCommerce directed, inside of a manufacturer or distributor. I mean, that's a big deal.
I mean, I spent 17 years in B2C eCommerce, so that's a very mature business, with retail and brands and such and eCommerce. I started to hear things yesterday that I was hearing at retail conferences. Where they were like, "Oh yeah, we're engaged in personalization or 'omni-channel activities', where we're tying our channels together. Our sales team, our branches together, with the online, et cetera." It's great to see that finally happening. The fact of the matter is, you've got 50% of B2B companies still don't have eCommerce sites at all. So you've got a huge part of the market that we don't even necessarily see at this conference. I mean, they're just not coming because they haven't gotten over that hump.
I was just excited to see all those folks engaged, and I like to ask questions and engage the audience as we go through the session. I was passing the mic around asking people, "Hey, what are you doing in your business?" And they were sharing things that were "B2C like". I mean, it's different, but some of the concepts of personalization and product recommendations and cross-channel messaging and marketing, that was coming out. And that's the first time I've ever seen it come out this way.
What do you think of those 50% that still aren't doing it yet? What percentage of that should be doing it, and is there a percentage that just doesn't need to do it?
I think, look, digital is the part as younger and younger buyers come into the marketplace. I mean, every company needs to have a digital strategy. You can't exist without one. The extent to which eCommerce is relevant to each specific company and vertical may vary a bit. I mean, the eCommerce penetration in some categories is going to be higher, naturally, but I mean, I would argue a digital strategy is necessary. If you don't have one, you're likely to die as a company. That's just my opinion, and it might take 20 years.
I mean, part of commerce is experience. Part of commerce is, how do I engage with you and I want to engage with you where and how and when I choose to, and if you're not doing that in the digital realm, you've cut off more than half of the ways that people will want to receive the experience from you.
The other thing that I hear missing from a lot of conversations, which is frightening to me, is the word customer. Understanding what your customer wants and where their preferences have shifted. We're going to talk, I think, a little bit about Amazon. And Amazon, clearly customers, business customers and certainly consumers, have voted that they want to purchase there. Talk about digital strategy is a part of that, you need to have a strategy for Amazon. I think those are the realities that the B2B companies need to confront and understand and not be afraid to take some action.
To me it seems like those 50%, a lot of the challenges they've had in moving things forward, have just been about leadership taking steps in the face of uncertainty, and not paying attention to their customer. The customer, particularly as younger customers come into the buying roles and influence roles for B2B purchases, they're demanding some kind of digital transactional capability. I see this evolving, and listening to the customer is a thing they need to start with.
In all the consulting work that you do, is there a consistent role or kind of person that you see the drive for change coming from? Because at the end of the day, we're not companies, we are people inside of companies that have to step forward and take on these battles. Is there a consistency?
Well, number one, it has to come from the top of the organization. If the CEO and board are not saying, "We have to do something," it's not going to happen. You've got junior level folks who have good intentions, who know they need to do something, but they're not empowered to make the change. Is there a type of personality, I think it's more about something changing in the business that finally gets them to take action. That change might be a change of leadership, because the older guard retires. I have examples of companies I've worked with that ... for example, I worked with food. Industrial food service, food service businesses.
I was working with a company a few months ago and the sons took over. It's an Asian-owned food company, family-owned business. The sons took over, guess what they're doing? They're implementing eCommerce, they're getting their products on Amazon, they're providing product data to all their resale channels, they're finding ways to upgrade the business in terms of modernize it, they're embracing this. And guess what they're doing as a result of that? They're transforming the business and they're starting to win more business from their customers because they're making it easier for those customers to buy from them.
They're a couple of 40 year old guys who grew up like me, grew up with technology and are natives, and they've got a great business. It would be easy for them to sit back after they got this business from their parents and just milk it. But they're not doing that. They're saying, "I understand what the modern buyer's looking for and I'm transforming the business to accommodate that need."
First part of my point was, change of control, or the new generation coming in, in the case of a family owned business. It could also be things like you're losing to competitors, you're losing a major contract, a major change in business results. Those are the things that are starting that will cause action with an existing management team.
Last year at a session at B2B Next last year, there was a guy, must've been in his late twenties, who had joined his dad's distributor. His dad was like, we are not doing digital, I have no interest in doing that. So the son actually left and started up an online distributor, and now he's competing with his dad.
Oh, that's funny.
I can imagine what Thanksgiving is like.
Pass the stuffing.
Exactly. But ultimately, if customers are screaming loudly enough, I mean, that's another catalyst for change. I give an example of a large medical product's manufacturer that I worked with. And they're a big public, $3 billion company. What drove them into eCommerce? Well, it was their customers saying, "Guys, we're not going to buy from you anymore if you don't enable eCommerce." There's other examples, some companies are shifting procurement through Amazon Business; they're forcing suppliers to go onto Amazon Business. The world is changing and you've got to listen to where your customer preferences are, and you've got to listen to what their needs are, and those are the companies that are going to win.
I think you're just going to see a very different landscape in 20 years in B2B, where companies that haven't changed, some of them will be gone. And the world will just be different.
I had a customer say to me, "We're not a distributor, we're a technology company." I said, "Oh wow, that's amazing. Introduce me to all your technology people." "We don't have technology people." Then I talked to the CEO and I said, "People are telling me you're a technology guy and you don't have any technology people," and he's like, "We want to be a technology company." "Oh, that clarifies it." You talked about an interesting about e-procurement in Amazon Business. I'd love to talk about Amazon Business. I mean, your business has gone through quite a transformation in your career, where you went from technology consulting to what are you doing now and how are you doing it?
Well, a lot of my career was as an operator. So I was the guy running eCommerce. 17 years of sitting as the VP of eCom or COO of companies where I was leading the eCom team. So I was dealing with technology for sure. I was also dealing with marketing, dealing with supporting the customer, omni-channel initiatives. In my career, for example, I used to run eCommerce at Harbor Freight Tools. And Harbor Freight Tools has now, about 800 stores, something like that. We were doing omni-channel, seven, eight, ten years ago. We were thinking about how do we use the web to drive store traffic, things like that. My career has evolved. I mean, but most of it was as an operator. And about four or five years ago, I got into the consulting side.
These days I focus a lot of my time with my company, Enceiba, which operates Amazon programs primarily for manufacturers.
How do you spell that?
E-N-C-E-I-B-A. I know it's a ...
Just like it sounds Peter.
I know, I should have instantly known.
Everyone puts a V in there, but it's B-A. We took the name from the Ceiba tree, which is the tallest tree in the Amazon Rainforest.
So the notion is that we're helping our clients stand out in the rainforest.
A little ironic.
Yeah, well, that's true. Anyway, these days it's a lot about Amazon strategy and working with Amazon Business and also Amazon, we have some clients that sell Amazon consumer as well. So we have both. They may sell the consumers end of businesses, but there's a lot that goes into an Amazon strategy. Really, a lot of what we're doing is helping companies think through how they should approach Amazon, and think about their assortment, think about their selling approach, but then execute it. Actually grow the program for them depending on what the strategy is. And then think about it beyond just Amazon, because Amazon has an influence on other channels as well. Amazon is best in the world at transactions. That's what they're great at. Transactions, fulfillment. There's a whole other world out there that's beyond transactions and fulfillment.
Talks about, meeting your customer's needs beyond that. So service, application knowledge, expertise, things that go beyond the Amazon world, and we help companies think through that too. So how do you use Amazon as a part of an overall strategy, is what I'm getting to.
I imagine when you walk into these consulting engagements, do you feel like you're arriving where people are in a crouch about it? If they had their druthers, they wouldn't be doing this, and then is it your job to ... how do you bring to life to them the opportunity that exists?
Well, change is uncomfortable for everyone. I think this is broader than just Amazon by the way, I think it's really about embracing eCommerce as a channel. And certainly, Amazon comes with concerns that a lot of manufacturers have, particularly around channel conflict. What a lot of companies don't realize, is that by taking certain approaches with Amazon, specifically using a third party marketplace account selling approach, you can actually mitigate some of that channel conflict risk because you control the pricing, the retail pricing.
One of the scariest and somewhat fun, in an evil way, exercises that I like to do is, I'll sit with a CEO of a manufacturer and we'll go search their products on Amazon. We'll look at their brand name. And up pops something that, maybe it was discontinued three years ago, is a horrible, horrible picture taken by some 15 year olds iPhone, and it's their listing and it's got three bullet points about it with one word each. That's how their brand-
... is represented on Amazon. Amazon's getting 70% of product search, Google's 20%. So this is the biggest engine in the world for search. It's consumer and business.
Business too. Increasingly. Not as much in business, but certainly for business too. And Amazon is now also indexed in Google. So not only are you in your 70% being represented with a terrible picture and bad brand presentation, but then it's also getting indexed in Google. You're in both places. I mean, your brand, in the world of the place where people go, the younger buyer, the young procurement person going on trying to look for products, they're guaranteed to get that bad listing. If you're not controlling your brand on Amazon, someone else is, and it's not just on Amazon, it's in Google and other places.
This has huge implications if manufacturers are not really controlling their brand presence.
What do they do about it? When you approach a manufacturer from the beginning, what are some of the first steps that they need to take to do this, without giving away your secret sauce?
I mean, look, the good news Justin, is that this has all been addressed. It's addressable is what I'm saying. What do you do? This isn't even secret sauce, I mean, there's ways to approach Amazon that are well documented that help you do this. So what you do is, you start by looking at your selling approach, and you want to use a selling approach that doesn't give a lot of resellers the rights to sell on Amazon or Amazon, frankly, in what they call first party selling. There's some disadvantages to selling to Amazon that way, and it's because it gives the price control to Amazon.
Now, it's called first-party or 1P selling, that's a fine way for many companies to still sell, but quite frankly, the place that we see a lot of our clients moving to, who have a brand, is what they call 3P. A third-party selling approach usually is a good place to start. You need to have an internet policy, not a map policy. Map policies are fine, map policy is minimum advertised price. You can have a policy there, but that's not really the most effective approach. You need an internet policy, which talks about, as a company making products, I'm going to authorize companies to either sell on the internet including Amazon or not, and I'm explicitly going to authorize those companies to do that.
There's a foundation that happens outside of Amazon that you need, it's channel control, basically. It's channel management. You may authorize some distributors, you may go to some distributors and say, "Hey guys, let's work together on Amazon," and that's also a fine approach. The point is you need channel governance. You need to make sure you have a path and a plan to manage your channels. And that together with a third-party program, allows a brand then to control the content. Amazon has this thing called brand registry, and it allows companies to register, if they own a trademark, to register their brand and it gives them some level of control over branded content on Amazon. That includes a storefront, they have something called enhanced brand content, which goes into product list pages, and the product content itself. So, that if you're a brand, a company that's making product, if you take those steps, you now have control over that listing on Amazon.
Regardless, even if you're selling it, by the way. You don't necessarily, as a manufacturer, have to sell your product. You could authorize your resellers to actually get the, what they call, win the buy box. You can do some things to control the channel even if you're not selling. The important thing is though, that you want your product and your brand to show up in a way that's appropriate for your company on Amazon. Because it goes, again, beyond Amazon. It gets into Google and other places.
Most companies just aren't even ... they're not even paying attention.
Well, that's why the exercise is disturbingly fun.
That's why it's fun. So Amazon-
You see a bead of sweat dropping down his or her face.
Can we talk about the distinction between Amazon Business and amazon.com? What's the difference between them, and is this Amazon Business thing going to last? Do you see it as a future for business purchasing?
The second part of your question, yes, in certain categories, and some they're going to have a harder time in because of the nature of the product and what's required to sell it. Remember, Amazon has a legacy, a long legacy, as a consumer selling platform. Within the world of Amazon ... and by the way, I really admire that company in terms of how focused they have stayed on being innovative and putting the customer first. It's very difficult to do that with 600,000 employees and billions in sales. So admiration, yes, but they also have this long legacy, so I think as you try to ... And Justin, I mean, you guys know this really well. I mean, there's a lot of complexity in B2B selling that doesn't exist in B2C. Amazon is a bit, I wouldn't say it's struggling with that, but it's going to have some evolution it needs to go through to meet certain categories of business purchasing that are a little more complex and harder to achieve.
That all said, I think that in certain categories, MRO categories like office obviously, office supplies, to some degree-
Jan-San kind of thing.
... Jan-San, safety, things like that, you're going to see a continued impact there. And I think you're going to see more impact into certain parts of healthcare. It's a little harder in that industry, but things like electrical and other categories where there's ... you've got to look at what Amazon does well. They're a wonderful transactional and fulfillment platform, and what they do well is they take a lot of data and they make it easy for a customer to find it. Quickly. 600 million products on Amazon.
If you guys are Prime members, think about how quickly you can find product on that site. Now, you could argue that the search results aren't great in some cases, sure, but ultimately, they deliver on that. And that's been proven by the customer. They're voting for it. In categories where there's an enormous selection and it's about price and selection and getting the product quickly, Amazon has a good chance of winning a lot of business.
And that's where it seems like investing in Amazon Business ... and I'm still to the degree to which those things really are separate, Amazon versus Amazon Business.
I'll describe that in a second.
But, I think that's where the investment in really deep and full content experiences on Amazon is so important, because if you win the search bar, then your content is the thing that's making you ... There's a bunch of stuff in the algorithm, but you don't want them to not be able to get their answers on your Amazon page. Is that right?
Well, exactly. And again, given the prominence of the platform, as an owner of a product or brand, you need to really control that content. And Amazon has given you tools to do it. It's not that they're not there, you're just not using them, a lot of the folks listening, so use them.
To answer your question about what's different between Amazon and Amazon Business, it's the same site, it's the same platform. Amazon Business, it's different than ... you guys might remember Amazon Supply, which was their precursor to what they're doing today. Amazon Supply was a separate site. It didn't really work, but Amazon is great at learning things from things that don't work. They're not afraid to fail. Easy to say that when you have the war chest, they have, but they're not afraid to fail. So they have the war chest reality of business, they fail, they learn, Amazon Business launches 2015, it's the same website. What they do, is they allow a business buyer to set up an account, which puts a filter on Amazon. There are differences in the experience for the B2B buyer. They can name preferred suppliers they want to buy from through Amazon for procurement if they have a particular supplier, they can access business level pricing. So if I'm a seller on Amazon and I want to set up my pens to sell them at a discount in bulk to a business buyer, I can do that. As a business procurement professional in a large company, if I have certain criteria I need to meet for buying from women owned or minority owned businesses, I can filter for those things on Amazon Business.
Yeah, that's right. Amazon business is extending credit terms to me, so I can buy on credit with Amazon. I can manage my spend on Amazon in a spend management tools. Look, all these things we profess to businesses about being a good B2B partner to your customer, again, Amazon puts the customer first. They go out and they're learning what the buyer needs to be successful in their role and make their jobs easier, and they're implementing them on the site.
And by doing so, they're essentially commoditizing that experience. It's no longer, when you think of, all right, how do you differentiate yourself as a distributor from Amazon? The stakes now have risen.
Other things have to come into play. To your point, the categories where Amazon can't provide that, can't support the complexity of a sale or the information requirements that just can't be offered up through their experience.
I mean, the first chapter of my book, which will be out soon Justin ...
What's the title of your book?
It's an inside joke for those of you listening. Justin beat me to the market with his book. The title of the book is Billion Dollar B2B eCommerce. And if you put a dot com at the end of that, you get to the website and you can just register.
Billion Dollar B2B eCommerce.
Is the dollar a dollar sign?
No, it's not that cheesy man.
It's fully spelled. Just checking.
There is a dollar sign in the middle of the O though, so I guess I am cheesy. Anyway, The first chapter of my book is, The Time is Now, and why is the time now? It's because this story has all been told. I mean, if you think about retail, look at the businesses you used to buy from all the time. Your Circuit City's back in the day, Sears, which is just about out of business. What happened with those businesses? Well, a lot of the way they differentiated for hundred years was, it was on price and selection and convenience to the customer. Well, the world has changed and they all have an excuse to some degree because no one saw eCommerce coming the way it's come on.
But in the distribution world, guess what guys? The story's been told. If you're a distributor, it's a very analogous business model to the department stores and the retail chains. And as a distributor you got to step it up, man. You've got to be looking at, how do you differentiate in the market beyond price and selection? So the bar is continuously being raised by Amazon. By the way, that's not the only threat. I mean, this is not just about Amazon guys, this is about distributors who are getting it and manufacturers going direct, but also distributors who are getting it and they're investing heavily. If you're not investing, you've got to really think about what you can do to differentiate.
I have a great example. I interviewed a guy from a company called Bay Fastening Systems, which is a small distributor, and they have, this is incredible, they have doubled the business in five years by using eCommerce. Doubled the business. And I'm not just talking about eCommerce, I'm talking about their entire channel. Their eCommerce is somewhere between 35 and 40% of their total sales. This is not a huge company and they're selling fasteners. This is a commodity business. But what are they doing? They went to their customers, they listened to them, they implemented eCommerce in a smart way, and they're getting more share of wallet from their customers. They're in Google now. They're ranked really highly in Google and they're getting new customers. He says 15 to 20 new customers a week from eCommerce and I mean, that's a business that moved. They're not Grainger, they're not MSC, they're not a huge company, but they're making moves.
This isn't reserved just for the high, the top of the-
Digging into that just a little bit more, in fasteners, that's as about as commodity as you can get.
Is it because it's still kind of open season out there, you can go in and you can start winning just by investing in search?
Yes. The time is now. I mean, you move now, you can actually still establish advantage. I was in eCommerce in 1999 and 2000, 2001, when this same dynamic was at play in the retail sector, and we're talking, that's 20 years ago. So that's why I say the story has been told. This thing is happening in B2B and your time is now, and you can be a Bay Fastening, and be a small distributor, and double your business, if you move. But you to move. And it came from the CEO. That's where it has to come from. A family owned business, it has to come from the CEO.
Because we've seen, in B2C, that there was definitely the value of early mover advantage. I lived this in B2C retail guys. I mean, the foundation becomes harder and harder to establish as you grow the business. I'm going to give you a quick story, in 2004, I was a CEO of a furniture company. An online, pure play eCommerce furniture company. We launched a site called totalbedroom.com, doesn't exist anymore. We're talking ancient history guys.
And you're telling me you're not cheesy, geez. But go ahead.
Hey man, this thing was ... so within a month, we were ranked number one, on Google, for all of these terms related to bedroom furniture. We were raking in the dollars, it was great. This business grew from zero to $10 million in no time, because we knew how to play the Google game. We knew how to optimize sites and grow them just by opt ... why does that exist? You can't do that anymore with using a Google or even increasingly, it's hard to do that on Amazon because you have so much competition now. But the point is, those days that existed, 15, 16 years ago, it doesn't exist anymore. That kind of dynamic, still to some degree, exists in B2B if you serve your customer well.
Bay Fastening shows up right at the top of the Google search results for non-branded search terms. Meaning, people aren't looking for "Bay Fastening systems," they're looking for specific types of fasteners. Well guess where they show up? Right at the top of the search results. He's the Total Bedroom of today in B2B. He's earning all kinds of money on this, but it's the timing.
Is there an opportunity on the Amazon Business side, do you see the open frontier?
It's definitely early for Amazon Business in many categories.
Office not so much, but in other categories, yeah, for sure. I mean, Amazon is out hiring people out of industry so that they can recruit the sell side to the equation. They're doing the same thing on the buy side too. Yeah, if you're early in selection in Amazon business, you do have some advantages today. That won't last forever though because they're building the assortment, just like they've done on the consumer side.
And the tactics now are pretty well understood, you just need to learn them and then you need have the right people to execute them.
Right, and that's why we have a business quite frankly, is because it's very easy to screw up Amazon when you get started. Our business helps to make sure that you're building an asset in that foundation on Amazon and you're doing the content right, you're not screwing up the service levels and other things. It's really easy to get your account suspended. I don't care who you are. You can be a $2 billion company, you can screw up some things on Amazon and it's very hard for you to restart.
Inventory is so important.
Inventory is critical.
You run out of inventory, you can be off in the search results for three months before you climb back up.
Shipping times, customer service, just meeting their criteria.
It's interesting, it's sort of Amazon forcing companies to be customer first, by their policies.
I think they're the great leveler, I really do. I think it's raised the bar, certainly on the retail side, on the consumer side, and it's happening in B2B too.
You had mentioned earlier about Bay Fasteners, that it was the CEO that got it. If you were at a manufacturer today and you were looking at your CEO and going, "They aren't getting it," would you stay and try to convince or would you go, "This is not happening"? How do you evaluate it?
That's a great question. I think you have to take that on a situation by situation basis. However, look, I believe Jim Collins wrote this great book, Good To Great, and I would say, confront the reality of your situation and what do great leaders do? What do great businesses do? They confront the reality of their situation, the brutal reality of their situation, is how he puts it. And I think, look, if somebody doesn't get it after presenting clear facts, you got to go somewhere else. Because, not to say the company is going to die, but it's going to be an uphill road for them and it's going to get harder and harder for them to continue to differentiate in the future without a digital strategy.
And the demand for digital skills is so strong out in the marketplace. There are places where you can be the first mover and that's going to be a cool experience, I would think.
I have to tell you guys, I mean, you guys, you live this. I mean, you know it, you see it. The companies that truly take advantage of this are winning.
Huge opportunities. Your book, Billion Dollar B2B Business?
Billion Dollar B2B eCommerce. Talk to us a little bit about your book. What made you write it? I mean, eventually write it.
Oh, come on Justin, I didn't have armies of people helping me, man.
If you had so many people at your workshop, we got to have some balancing.
Okay, fair enough. Touché. What made me write it? Well, about three years ago I was doing consulting, helping B2B companies try to map their path and I was getting asked questions about, "Hey, what, what can I read? What is out there?" I went and looked and I didn't see anything, really. I mean, this was before your book was in the market, Justin. There just wasn't anything really out there for people to reference. At the time, I had 40, 50 articles written on LinkedIn and I had done all this content, I've been doing it for a couple of years. I said, "Gosh, how hard could it be to put this together into a book?" That was three years ago.
I've heard it's one of the hardest things to do, is to ....
Now I know why people don't write books every day, particularly if you've got a day job and you're trying to build a company and other things. But it's a lot of work, but I have to say, a lot of it is that I had a lot to say. I've got 12 chapters in there, it's almost 400 pages. I mean, it's like the Bible for B2B in some ways, and it's got everything in it. I mean, leadership, organizational change, it's got channel conflict management, I have a whole chapter on Amazon Business, talk about digital marketing for B2B, user experience, selecting a platform. It really covers a lot of the foundational items that an executive needs to understand if they're going to invest in this.
If this is building our audience's appetite for cracking open that 400 page book, they can go to your site. You have an email address signup so people would know when it's coming, or certainly you're on LinkedIn.
Well, Brian Beck, thank you so much for talking with us and joining us and talking about, what is really, the amazing opportunity for B2B brands that start doing this now.
Exactly. Thank you guys so much for having me. I really enjoyed it.
Absolutely, thanks for coming.