The Secret to Beating Grainger

My last blog called The Secret to Being Grainger drew a lot responses, and the gist of many of these was, "Thanks for telling me how they win – but how do I beat them?"

The bad news is that only a handful of distributors have both the systems and scale to compete directly for the "speed and convenience" business that Grainger has, as I explained. However, many distributors are losing business to Grainger every day that they could win back with some smart changes in how they operate and market themselves.

The best thing about these recommendations is that they each require little or no capital. My focus is on helping you compete more effectively without changing your business model.

Make Your Inventory Highly Visible
Customers perceive that Grainger carries just about everything and are highly confident it will be in stock. Why is this? Because between Grainger's huge catalog, marketing flyers, easy to use website and extensive, professional branch displays, customers are constantly exposed to their product line. When you interact with Grainger, you see overwhelming numbers of images of products and brands. You get the sense that no matter what you need, Grainger has it.

In contrast, how visible is your product offering to customers? I work with a lot of distributors, some of them very large, and for the most part, what I see is a very old fashioned merchandising approach. Branch displays are unattractive, unimpressive and incomplete, website inventory is sparse, hard to find and often lacks images; catalogs and flyers are either poorly done or missing entirely.

Distributors are primarily in business to market products – how good are you at this core task? If you aren't continuously educating your customers about what you carry and presenting your merchandising attractively and aggressively, who do you think customers will call when they don’t know where to buy a product? Grainger, that's who.

Build a Great E-Commerce Website
There is simply no excuse anymore not to have all of your products online, with available inventory. Strive to make your website easy to use, with quick product look-up, quality images and very fast transaction processing. Don't require new customers to register to place an order (Grainger does this). Extensive research shows that customers will often abandon a purchase at this step. Instead, let customers complete the order without registering. By the time they're done, you'll have all of their registration information anyway.

But that's just a start. When you begin selling on the web, you automatically expand your geographic reach as a distributor because everyone in the world can find your products. Over time, this will allow you to stock items you couldn't afford to carry prior to being in the web business. This allows you to expand your product range, making you more competitive with Grainger.

Remember that building a great website is just the beginning. You must do "search engine marketing" effectively so that Google, Yahoo, Bing, et al, refer customers looking for your products to your site.

Send out "Offers"
One of the best ways of educating customers about your product lines is to promote them with paper and electronic flyers. Developing and implementing a long-term, profitable database marketing strategy takes time and investment, but if you are disciplined in your measurement and testing, this can become a significant new revenue stream for you. This strategy also educates customers continuously about your product and service offering. That means customers who have seen your promotions for awhile will begin calling you more often because they have a better understanding of what you sell. That's why long-term database marketing initiatives don't just drive sales of promotional items – they grow more frequent transactions of all types.

You may need a catalog. I say, "may" because catalogs are vital in some kinds of distribution (MRO, a la Grainger, MSC, Fastenal, McMaster Carr, etc.) and are not as important in others (e.g., electrical supplies). The reasons for this are too complex to explain here, but suffice it to say that if your competitors have catalogs, you probably need one, too.

Lately, I've encountered sizeable distributors who send out quarterly or monthly "newsletters" but no direct mail flyers. I tell them, "If your customers like you enough to read your newsletters, they won't mind you offering them products to purchase." Customers know you exist to sell products. Give them a reason to buy.

Price Everything
I often meet with distributors who don't put pricing on their promotional materials, websites and branch displays. Their logic is that since they have multiple of levels of pricing that vary by the customer and even by the transaction, it's impossible for them to publish pricing.

I encourage them – and you – to price everything. It's important for customers to have some idea of your products' costs. Customers who have discounts will know that they do, so you won't scare them away with the pricing you publish.