Innovation of Longtail: How to Conquer the Market of C-Parts?
Players in the market of c-parts know all about that: longtail goods keep being in heavy demand, but don’t usually get much attention in the business. However, even though the market is extremely fragmented, those who do it smartly and help customers save money, can count on having a sound business model in place. The question just is: how do you do that? This is what the experts were working on in the 9th meetup of the B2B digital commerce group.
In this article, the members of the B2B digital commerce group share their experiences with the challenges surrounding innovation of longtail. Herbert Pesch (director of B2B digital agency evident) and Roelof Swiers (Intershop) invited the group to the family-owned company Manutan. Manutan is a supplier of articles for office supplies, warehouse, workshop and outdoor products in the Netherlands and Belgium. The international Manutan Group is active in no less than 25 European countries.
Growth = investment
Manutan operates in the extremely fragmented c-parts market, in which a lot of potential is still not harnessed yet. Manutan has 3 divisions: Enterprise (streamlined, indirect procurement), Local Authorities (equipment and consumables for local government and education) and Traders (expert in products for the construction sector). Ramon Kok (Managing Director Benelux, UK & Germany at the Manutan Group): "We are and want to remain one of the largest players in the market. We saw early on that we had to transform digitally if we wanted to remain of value in the market. Since 2012, we have invested 25 million euros in digital innovation, which is now bearing fruit. For example, we have more than 220 million visits a year to the retail websites and already 47% of the transactions are digital. Manutan has 24 websites, but for the whole group we use a single e-commerce platform.”
5 drivers of digital transformation
Ramon Kok: "To understand the potential of digital B2B, take a look at Amazon. In B2C, it took them 12 years to grow to 10 billion dollars, but Amazon B2B experienced this growth in just 3 years. However, there were many factors influencing this rapid growth. At Manutan, digital is doing well, because we have put a strong focus on it. Our best practices are:
(1) We started working in agile mode. This way, we were able to achieve results at a fast pace.
(2) More than ever we put the customer first: What does he or she want, what are their needs?
(3) We ensured that we had the right competencies in-house and brought in missing knowledge. For this purpose, our European Centre in France, for example, established the Manutan University, where people are trained to acquire skills that are of value now and in the future.
(4) We are working in a data centric way and use KPIs.
(5) Passion! Otherwise, you simply won't make it, because such a transformation is anything but easy.
Customer input wanted
Manutan found a way to approach the customers in a very unique way: lifelike cardboard figures of their personas are positioned throughout the entire building. By this, as an employee, you stand face to face with the customer every day! Kok: "But it doesn't stop at paper. We ask customers specifically about their wishes and invite them to evaluate what we have built. This allows us to make adjustments where necessary."
Virtual Reality to innovate sales
Kok gives two examples of innovations that have been implemented together with the customer: "We can arrange a Virtual Reality tour of a warehouse. This allows us to design and measure at the customer's premises within 2 hours. Before we leave, the customer already has a personalized offering in the mail." Another Virtual Reality example: "Customers can view their new sports hall with VR. Our sales people can show what the space will look like on the spot and convert it into an offering."
Does all this technology mean that in the end there is less human contact? "Certainly not," says Kok. "The importance of human interaction must not be underestimated. We have 350 people on the road every day to advise our customers. You could see it this way: the VR technology replaces the traditional catalog. You can see them slowly disappearing internationally, but not consistently so. It is no longer used at all in the UK, but is still being used a lot in Germany, for example."
Innovation can come from all aspects of the organization. Manutan is very active in involving all employees in digital innovation, for example by organizing “Digital Innovations Days” where everyone thinks along and comes up with ideas. Kok emphasizes the importance of the involvement of the top management: "It starts with board-level commitment. You have to make sure that digital becomes part of your DNA".