Today’s OEMs are seeing a shift to servitization, where companies will no longer just sell products; instead, they will offer the value of business outcomes those products deliver. This new model will encourage a shift to subscription-based business models, completely redefining how manufacturers operate and serve their customers. This change creates a major opportunity for OEMs to separate themselves from big-time e-commerce players such as Amazon, which are still set up for ad hoc repairs.
With more than 63% of all product searches starting with Amazon’s search bar, Amazon stays at the top of the eCommerce food chain. Moreover, Amazon owns almost 50% of all U.S. online retail sales. The equipment manufacturing and retail industry are no different.
With this in mind, here are three key things heavy equipment OEMs should keep top of mind as eCommerce players potentially venture into aftermarket parts.
1. Focus On The “Next Phase Of Aftersales”
The sale of original equipment accounts for far more than merely the exchange of capital for a piece of equipment. That transaction initiates a relationship ripe with opportunity and can lead to revenues beyond the initial transaction and possible additional capital purchases from the same manufacturer. The customer-OEM relationship is just the beginning as the initial transaction or sale closes; what will happen to this relationship hugely depends upon how well an OEM cultivates it. The old saying “the aftermarket is the before market” has never been more true when cultivating and maintaining new relationships.
Following the first sale, you will have entered the “after” of the aftermarket, and what you choose to do in that period can dramatically impact your overall business and profits. Most OEMs focus on the design and manufacturing phases of delivering product value to the customer and leave most of the service element to the dealer network. And all OEM’s and dealers know this is where the money is made and relationships cemented. It’s a perfect time to reinvent the best possible service experience.
2. Traffic Is King In The E-Commerce World
On the surface, Amazon and other e-commerce players seem to have a considerable advantage in e-commerce. They have a significant platform to search, showcase, and sell products to customers that already have trust in them. But any technology has its limits. In such a competitive environment, the best bet is to focus on acquiring sales through traffic from search engines or optimizing through organic means your parts and SKU catalogs. This approach often leads to gaps in a successful customer Total Lifetime Value (TLV). If you buy traffic and fail your follow up systems to keep your customers “in platform”, you are missing out on the best opportunity to create new and ongoing customers. Part of any successful e-commerce strategy will include getting and keeping customers transacting in your platform, as often as possible. An ideal experience includes that same customer with a browser open to your store to get your promotional specials tailored just to them, in real time, based on their needs and search habits.
With recent advancements in commercial software and services, particularly in AI (artificial intelligence) and ML (machine learning), the technology that Amazon and other e-commerce giants have spent a fortune on is available for a fraction of the price. These new tools allow any company to incorporate these same, open source technologies to your own platform and strategy. Doing so can significantly improve your conversion rates through the original sale and recommendations, which lead to upsell and cross-sell opportunities on algorithmic autopilot when installed properly.
3. Established OEMs Need To Invest To Fly Solo
For any company to start their online retail journey, the major pain point is to form a trustworthy customer connection and increase brand loyalty. Amazon has this covered; customers simply visit the platform and are more than ready to purchase because of Amazon’s customer-centric and long history of E-commerce. Moreover, they’ve also created a platform where their branding is always in the spotlight regardless of the manufacturer’s hard work on the product. For example, any customer who buys your product from amazon will say, “I got this from Amazon,” and couldn’t care less about who the manufacturer is.
Furthermore, Amazon does nearly all the communication with customers, and sellers are prohibited from marketing to their Amazon customers. This approach is practical as it would be an annoyance for any customer to get into an email list each time they buy a product. But, this is devastating from the manufacturer’s POV; all it does is increase sales while decreasing brand awareness.
Amazon’s marketplace has created a slew of new businesses solely to sell on Amazon. For example, the FBA (fulfilled by Amazon) model allows an individual to purchase goods online from overseas, add branding and marketing and ship them directly to Amazon’s distribution centers. For these sellers, Amazon’s rein on user communication is a major component of their success. But for established OEMs, it’s just a key to brand confusion.
In such scenarios, the option to sell directly to the consumer seems like the perfect plan. This way, you have full control over your interactions with your customers, learn about them through their data and communicate directly with them. A successful approach will adopt a strategy that runs both scenarios simultaneously. But the truth stays that the better you get at D2C sales, the less you’ll need Amazon.
Moreover, adopting a D2C strategy doesn’t mean losing precious B2B clients. On the contrary, a good strategic partnership with an IT company or hiring qualified developers can help you create a customer-centric platform that is in harmony with B2B clients.
Once in place, your OEM eCommerce platform will become a catalyst in developing and cultivating your customer relationships and brand awareness strategies. The information and guidance presented to the customer can be tailored to their specific needs and interests based on the data specific to their equipment. Rather than going on a wild goose chase for parts, the customer will now have a safe, reliable path to ordering what they need with complete confidence through you. Providing such an environment post-sale to your customer offers them tremendous added value and ultimately will result in improved customer satisfaction and loyalty.
How Can EquipmentFX Help?
Our services have evolved throughout time to meet each client’s unique needs.
The first step is to conduct an in-house A3 evaluation to determine where the company stands in terms of strengths and weaknesses. After that, we can discuss what other services we can provide each other.
As a result of our evaluations, we frequently receive requests and inquiries like “just do this for us” or “we have marketing people; how can we make them and our procedures more efficient?”
There are instances when our only responsibility is to present a road map and provide support as needed.
Our experts can help you improve your business strategies or design a new one from scratch to attract more new customers and enhance sales with existing ones using the formal structure and internal audit system you receive at the end of any engagement.
Please contact us if you have any questions concerning EquipmentFX’s A3 evaluation, digital marketing services, or technological advice.