Aligning Sales Channels & Managing Channel Conflict

Brian Beck:
Hello, everyone. Brian Beck here, author of Billion Dollar B2B Ecommerce. I am thrilled to welcome you to session five of our virtual book tour. I wrote this book to give B2B companies a roadmap to their own digital transformation, and I'm excited to share it with the market. You can find out more about the book here on this website, billiondollarB2Becommerce.com. The book is now available on amazon.com in paperback, ebook, and audiobook formats.
Before we go much further, I want to thank our sponsors, particularly our platinum sponsor, Elastic Path, for this virtual book tour.

Brian Beck:
So, we're well along our way in our virtual book tour. We're covering all the concepts in the book and breaking them down. I've got 12 chapters in the book, and a lot of content in there. We're interviewing practitioners. All of our sessions will be aired at 8:00 AM Eastern Standard Time, and are available on-demand after the initial airing.

Brian Beck:
Our first four sessions are now available, Leadership and Alignment Through Organizational Evolution. Today, we're talking about aligning selling channels. We've got three more sessions after this, Digital Marketing, Online Experience, and Our Digital Future. So I hope you join us for the remainder of our sessions as well.

Brian Beck:
Today, we're going to be talking about aligning selling channels and managing channel conflict. These are chapters five and six in Billion Dollar B2B Ecommerce. We have a lot of good content in here to cover. What I'm going to do today is start with some context around the concepts. Now, I can't share everything, obviously, that's in the book, you don't have time, so you have to get the book to read everything. But I want to give us some context.

Brian Beck:
And then I'm really excited, we have Shalin Shah who was recently with Georgia-Pacific and has a long career. They're really dealing with some of these issues we're going to be sharing in just a minute. And Jamus Driscoll from Elastic Path is also on our session today. I'm excited to dive in on that. We'll take some back and forth, and have a little bit of a fireside chat as we go through.
Let me start with some context. This is what the traditional value chain looks like. For hundreds of years, many B2B companies have sold the same way where they make a product, manufacture it, and sell that to an offline distributor or retailer or other type of reseller, a dealer perhaps. And then that reseller would then sell it to the end user or the buyer of that product. This is how the business worked for a long time. There was clear value added at each step. Really, a lot of the control of the end customers' use of the product, perception of the product, and how it compared to other products was controlled really by the middle of this screen here, the offline distributor.

Brian Beck:
But the world has changed. Buying and influence channels have changed and are now heavily digitized. Up to 90% of the buying processes, in research, is done online today. So, the product manufacturer today is often now selling direct to the end customer, that person who uses the product in the field. The center has also evolved. You've got distributors and resellers that have become digitized. They have their own ecommerce channels and other digital channels. You have ecommerce pure play resellers that have emerged. You think about the Zoro division of Grainger and other pure play ecommerce players. And then you've also got marketplaces playing a huge role. These are Amazon, but it's also other companies that are selling products that are vertical-specific marketplaces. I have a number of them profiled in the book as well. What really this is telling us though is that the buyer or the end user in this world has more power than ever before. Not only to see product information, they have multiple buying options and paths. They're more informed. They can see pricing more easily. There's more transparency.

Brian Beck:
I tell a story in the book about how the auto industry, for example, has evolved over the last 20 years. Think about your process of buying a car these days. You go online, you research the product, you research the car. You are more informed with both the information about those vehicles, how it compares to others and the pricing, and you have many different ways to buy. That has forced the product dealers, the auto dealers to change how they're delivering value to that customer. Those same dynamics are coming to B2B in different industries. It has changed the margin profile for the auto dealer as well. They make less on selling the product, the car, than they do on other things like warranties and service.

Brian Beck:
I think Jeff Bezos, who was the founder/CEO of Amazon, says this really well. He has this quote, I love this quote, I use it all the time. Back in 2010, he said, "The balance of power is shifting towards buyers and away from companies. The right way to respond to this if you're a company is to put the vast majority of your energy, attention, and dollars into building a great product or service and putting a smaller amount into shouting about it or marketing it." When you think about how channels are evolving and how you need to align them, this is an approach, I think, that is reflecting on for all of our B2B folks in the audience, how does that ultimate customer make their decision about your product? If you're a distributor, sitting in the middle of that, you've got to make sure you're adding value to the end customer in ways that go beyond just price and selection because, guess who does that better than anybody, it's that guy. Right? Amazon.com.

Brian Beck:
Is this Death of a Salesman? A few years ago, Forrester came out with a report, the fellow who wrote the foreword of my book, Andy Hoar, and he proposed, "Hey, this is Death of a Salesman." He was actually not saying that. What he was saying really was that this is the evolution of the traditional selling channel and evolution of how the internal sales teams can become more effective. It's a leveling up too because, if your sales force is just selling based on price and relationship, their role has now expanded and has become more strategic and has been leveled out by digital.
I believe, and we see this in practice, that digital transformation doesn't replace effective account management. It actually enhances its effectiveness, and it empowers the relationship. It allows customers to browse, obtain support, and purchase at their own convenience. And then allows the B2B selling teams to focus on building customer relationships, new customer acquisition becoming more strategic. It also allows sellers, whether you're a distributor or manufacturer, to more profitably sell to smaller customers through ecommerce. You can expand your reach, while also potentially commissioning your sales team on the sales that are generated through ecommerce. You can also credit your dealers and third party channels. We'll talk about this with Shalin; there's ways to align your channels around these things that avoid channel conflict. And also self service. You see, it frees reps to be more focused on things that matter for their function, and not "where is my order?" You go online to do those things.

Brian Beck:
What is channel conflict? The Internet authority on everything, Wikipedia, puts it this way: Channel conflict occurs when manufacturers/brands disintermediate their  channel partners such as distributors, retailers, dealers, and sales representatives by selling their products directly to buyers through general marketing methods and/or over the Internet. I think this is fine but I think the definition actually needs to evolve and this is straight out of the book.

Brian Beck:
Channel conflict, in my opinion, actually really applies to all levels of the chain that I shared earlier. So I define it this way: Channel conflict occurs when any participant in the value chain, disintermediates any portion of the value chain including manufacturers, brands, distributors, et cetera, et cetera. What I add to this is manufacturers and brands because I looked at some of the distributors that I work with some very large, some mid market, they are buying suppliers. They are launching private labels. They are going backwards in the supply chain. It's not just about manufacturers having all the power to go to the end customer and selling, it's also about the distributors and resellers themselves competing for that end buyers' dollars with their own products because they realize that there's more margin and more differentiation longer term by meeting those customers' needs at the end of the day. So this is a very fast moving and changing world we're dealing with. We'll talk about this with Shalin.

Brian Beck:
Before we get into our fireside chat, I just wanted to share a few things about some approaches to managing channel conflict and some of the dynamics. You see that these channels compete for the same ultimate buyers' dollars, and that's really the source of potential conflict. When you think about the internal conflict, your sales team and ecommerce and, again, conflict I think, in many ways, is more of a perception than reality, but when you think about what could cause it or what is the sales force, for example, thinking about, it's about relationship ownership. It's about commission. It's about pricing. It's about things that are related to that, the relationship and the fear that will be taken away from the internal sales team. And the external conflict is often centered on price. So you think about the manufacturer selling direct, you pick up all that retail margin, oh, my goodness, you have pricing power, right? But there are paths to manage that.

Brian Beck:
What I always tell companies is it's important to understand the ultimate customer, the user of the product, and the path with which companies or your products take to get to that customer and the value at each step of that distribution process, the supply chain. You wanted to find your selling channel mix and the value of each channel, and what it does best. I say, be realistic about it because this is a "confront the brutal reality situation," if I coin Jim Collins from the Good to Great. You got to confront what's happening in your market, understand that it's digitized, but that ultimate buyer has more power than ever before, so you need to understand them. There's no single right answer here. Remember, the ultimate buyer is in charge.

Brian Beck:
You all have met me. I'm Brian. I'm the author of this book. I'm also the managing partner of a company called Enceiba. We help companies manage their Amazon programs and particularly focus on B2B ecommerce. I also do strategic advisory consulting with my firm, Beck Ecommerce.
I'm thrilled to be joined today by Shalin Shah. Shalin is formerly with Georgia-Pacific, has a long career there. I want to welcome him.

Brian Beck:
Shalin, you want to say hello to everyone?

Shalin Shah:
Hi, everyone. Shalin Shah. Really nice to meet you. Looking forward to chatting with you today about a topic dear to my heart on B2B ecommerce and channel conflict.

Brian Beck:
Awesome. Thanks, Shalin. And Jamus, welcome back. You were at our last session, and thrilled to have you. We had a great conversation last time with Pella, and we're going to have another great one today. Welcome.

Jamus Driscoll:
Yeah. Thank you, Brian. It's great to be here. I'm really looking forward to our session today too, as much as a listener as a participant.
I'm Jamus Driscoll, executive VP at Elastic Path. I've been in the ecommerce world and retail tech world for, close on now, 20 years. I've seen a lot of permutations and a lot of changes in the marketplace, and certainly believe that we're at the next step of one of the great, great changes that's going to shape the industry.

Brian Beck:
No doubt, no doubt. I'm thrilled to have both of you.
So, Shalin, a lot of folks use GP products, Georgia-Pacific products every single day, businesses and consumers. They may not realize it, and a lot of people are familiar with GP but some aren't. So, please, tell us more about the company, and then also your role within the company.

Shalin Shah:
Yeah, definitely. I think everyone's either touched or seen Georgia-Pacific, hopefully, somewhere in the US. So, Georgia-Pacific, real quick, three business units relating but one is building products, so any kind of building that gets built. There's other products that go into that construction. The one consumer products, which is the business unit that I was in, which I'll talk about in a second. And then the third one is packaging and corrugated, so any package that anything can come in. We build all that stuff.

Shalin Shah:
I was in the consumer products division. We would sell paper towel dispensers, soap dispensers, toilet paper and toilet paper dispensers into buildings. We're making sure everyone stays clean and things like that, so hospitals, airports, office building, hospitals, all those types of things. That was the business unit that I was in, and I was responsible for ecommerce and marketing strategy.

Brian Beck:
I have to ask you about the great toilet paper crisis that happened earlier this year with [crosstalk 00:13:38].

Shalin Shah:
Demand changes very quickly.

Brian Beck:
Particularly in a pandemic.

Shalin Shah:
Yeah, it's pretty great. But the cool part was I saw our Pro products sitting on a public shelf, so there's channel conflict right there.

Brian Beck:
There you go. Jamus.

Jamus Driscoll:
Figure out how that happened. It's interesting to hear about the evolution of a business that's as widely diverse as yours from building products to consumer to packaging. Obviously, the company has grown, been around now for a long, long time, been incredibly successful, 30,000 employees-plus, phenomenal story. I guess the question would be, how did it get to that type of growth? Prior to the world of digital, which clearly not existed at one point in time, what were the primary channels to market and ways that you would thought about selling?

Shalin Shah:
Good question. To your specific question, primary channel is one. There was actually a lot of acquisitions that were made in the '60s, '70s, and 80s, either at acquisitions of companies or acquisitions of capital assets. The reason I give you that background is that kind of created the different routes to market. And the routes to market where we're primarily through resellers, so the way Brian just outlined it. It was, "Hey, we're going to get you the best product we can very quickly," and then surrounding those resellers with lots of services. That was pretty much the primary way that GP really grew was having really strong products with the right services and getting it there on time, right across all three of those things. You think about anything you can make out of a tree, we basically make, and we make sure that we can get it to them really quickly. That was a primary growth channel.

Jamus Driscoll:
Predominantly service routes were focusing in on getting as many marketable assets out of the tree as possible and then reliant on a reseller channel to reach those three major distribution or those three major markets around consumers, packaging, and building materials.

Shalin Shah:
Yeah, correct. We had a large manufacturing network and then we built out the distribution network to get it out. But if you think about getting a construction site, getting to a building, getting to somebody's home, getting to factories or wherever, we needed the resellers to do that and get the services and all those [inaudible 00:16:01].

Brian Beck:
That's where you guys started, Shalin. It's really is, like I described earlier in the slides where you had that sort of flat distribution structure, right?

Shalin Shah:
Yeah.

Brian Beck:
And then the world started changing. You worked there 10 years, right?

Shalin Shah:
10 years, yeah.

Brian Beck:
You were in charged of the digital for this particular thing, for this particular category you're in. What was that journey like? Where did you start when you joined a decade ago, what agenda? Tell us about that whole digital transformation journey, and then we'll get into some of the things you saw along the way.

Shalin Shah:
It's interesting. When I joined, a lot of this selling was obviously done through resellers and things. And then the second thing was a lot of our marketing was traditional marketing methods, television on the retail side, trade shows, sell sheets, dinners, that type things. And so, when we put it together, we said, "Look, we're going to put a business case together that says we believe our fair share online, somebody, by the name maybe Amazon or others, is not what it is offline." And so we actually made a bet that, "Hey, the business case that is we think we can grow online faster," and we put reasons as to why. We also said, "But it's going to be joint with marketing because we want to shift our offline marketing spend to digital spend." We've actually put a business case together, so we think we're getting at a higher ROI because we can measure it.

Shalin Shah:
The transition made sense from a business case level. To your point, it just took a long time to kind of get the change going. I still remember calling on Amazon. It was a third party broker with my head of sales, and it was $99,000 of business. And I think the vendor manager was like, "What are you doing here?" But the journey evolved pretty quickly, actually, from there to, "Hey, we can do things differently, how do we get improvement and where things are going?" We kind of took a challenger mentality as well, like, "Hey, we can do things differently that we couldn't do elsewhere." And same when we started calling with Grainger and Staples that we wanted to do the journey evolve more to, "Hey look, we know you like our products and kind of the services we have wrapped around our field sales team, we want to make sure we have all those same services wrapped on our digital components."

Shalin Shah:
We then started to investing in data and product content, in search terms, and then we invested in assortment, then we invested in merchandising, then we invested in supply chain. We kind of took what I call like a Lego block approach almost and kind of built from there to the point now where several hundred million dollars of ecom sales through the resellers. There's no ecom sales that are direct to certain customers that want it and need it; and we'll talk through some of that as well. And we now have marketing tied in with the sales, so we can go do some of these kind of digital demand generation activities tied into that as well that we weren't able to do as well before. So, pretty long journey.

Brian Beck:
I know it's a decade, right? GP is not a small company but a lot of the folks listening to this series are not... they're larger companies and they want to transform which is why they're interested in this topic. You guys ended up really where, that thing I showed earlier, you had all these channels. They're digitally-enabled. You're selling direct. You got reseller selling direct. You got retailer selling direct. You got distributors selling through their ecommerce. It really was and I know Amazon. So what role did that end customer play? What role did, what I call, the ultimate customer in the book, the user of the product play in that journey as we [inaudible 00:19:35]?

Shalin Shah:
It's a really good question. One of the things that we looked at was we kind of did like a table or a matrix. You think about it the columns in the top where what are the different types of end users, so vertical segments in a healthcare or food service, or et cetera, et cetera. And then in the horizontals are the ones you kind of laid out; these are the resellers, marketplace, et cetera. And then in the box, we kind of said, "Who is a type of end user that's most likely going to go buy from here?" That was pretty helpful because then that end user is kind of dictating. What you talk about is the end user's then dictating what information do they need, what products do they need, and as well what services do they need? You have to find commonality, otherwise, you couldn't make money but then you also define the nuances where we thought there might be some growth.
One example for us is there was a big segment of the small and medium business kind of end users, that we didn't have a very good way to reach with how we traditionally went to market. There were some of those boxes that we highlighted in green that say, "Wow, we can really go after small medium businesses, and we went after them that way.

Brian Beck:
Yeah.

Jamus Driscoll:
Yeah, just listening to you also about the number of different ways that you can go to market and the traditional ways in which you've done to market. It is a role to the rep really in making sure that the value prop is being nuanced to almost each and every buyer, I presume. But I think as you're imagining, explain this well in the matrix, but even as you're attempting to move over into ecommerce, there is the chance maybe that you're disintermediate and that sort of value connection that happened right at the last mile. How did you guys think about that? What was the approach that you took maybe to figure out the right way to manage the user experience such that... and to do so in conjunction with your selling partners in a way that was going to be most effective?

Shalin Shah:
It's a really good question. To be honest, we struggled with it for a little while. It wasn't easy, right?

Jamus Driscoll:
Mm-hmm (affirmative).

Shalin Shah:
Even just do the simple thing of what do you write in the bullet on a product detail page because we're used to saying, "Hey, the paper towel dispensers system gives you this benefit in restaurant," but the benefit's very different in an office building. But guess what, you only have one detail page in our reseller and they're all coming in. So we found ways to add all that verbiage into the product content and copy.
The other thing that we learned along the way was we made some decisions on which systems or products we did not think we're going to be really self serve, and which ones we're going to almost always be assisted selling, if that made sense, right?

Jamus Driscoll:
Mm-hmm (affirmative).

Shalin Shah:
We changed how we did the product content, the visuals, the search terms, et cetera, and even the types of PDFs and spec sheets we would put on if we felt like it was something that the seller was going to actually sell or the distribution rep would sell on our behalf versus a end user might come directly in the reseller site and self serving, get it done. And so we tailored our content and our assortment kind of along those. Once we were able to do that, that was actually super helpful because, then, we were enabling the sales reps in two way: one, if they had an account and there was these long tail items they didn't have time to sell, but they were getting credit for the sale; or second, the stuff that they spend time talking about in the consultative sale, that Brian talks about, hey, now, they have more time to talk with consultative sale, but they have a guide or a tool to remember all the information when they need it, and they can kind of close those sale for the product.

Jamus Driscoll:
That's really interesting. If I'm understanding this correctly, you almost took a hierarchical approach or a category-based approach to the products and said, "Which is most likely to be a direct sale, which is likely to be a facilitated sale?" and then set up the ecom experience and a way to facilitate one of those two different paths.

Shalin Shah:
Yes, you got it.

Brian Beck:
That's fantastic. I love that. I think that's a great framework to think through it, Shalin. It's awesome. I'm sure the folks listening will appreciate that. Oftentimes when I'm talking to B2B folks, executives of B2B firms, particularly if they're a manufacturer, like GP is, well, really any of them, but they're worried about channel conflict. If I launch ecommerce or if I enable these channels or if I sell on Amazon, my dealers, my distributors, my retailers are going to freak out and they're going to stop buying from me. No more orders from Home Depot for you or whatever. You know what I'm saying... or Henry Schein or Grainger [crosstalk 00:24:21].

Shalin Shah:
All gone, right.

Brian Beck:
They're all gone. My business is gone. I lived in the consumer side of ecommerce for 18 years almost, and saw that evolution happening to consumer, but you lived this in B2B.

Shalin Shah:
Oh, yeah.

Brian Beck:
What's bigger? Is it the perception or is it the reality? When you guys started going into this and saw these changes, did all your channels suddenly stop buying from you because you have an ecommerce site?

Shalin Shah:
It's a good question. I'll tell you my experience. It was perception versus reality. And so can give you a little bit of a story. Two of them, one when we were starting to bring on Amazon, have that relationship up and coming, that's channel conflict which is no different than other channels kind of coming on. When we did our own site, there was a lot of internal concern. Every customer is going to be upset and never going to do business on this, going to take everything away.
And so, one of the things we actually did and listening, and that was months and months of these conversations, which were adequate... People needed to understand what we were trying to do. And so we then said, "Okay, well, let's go talk to the customers directly." So we went and talk to 16 of our most strategic thoughtful resale partners and customers of all different sizes, the national, the $40 billion resellers to the smaller ones. To a tee, all of them said, "Yeah, you should do this. Can you make sure you share your learnings with us and let's make sure we're going on round." I say, perception versus reality because when you explain who you're going after, what you're actually trying to accomplish, and how that benefits the joint business, it makes almost all sense.
We had one customer that made a lot of noise after we launched it, and it's because there was a promotion we ran on a product but we managed it. We explained to him what we were doing, how that was going to work, how that didn't destroy any part of their business, and we went from there. Data won the way, right? That reseller was not selling any of the products that we were promoting which is why we were promoting it. For me, the perception was way overdone versus what the reality of the situation was.

Brian Beck:
You just touched on something really important which is you segmented the assortment. You looked at the product lines, you said. And so you [inaudible 00:26:46] about that strategically as it relates to the channels. Right?

Shalin Shah:
Yeah.

Brian Beck:
I think that's an important takeaway. It's a fantastic example. That's kind of the external side. Let's talk about the internal piece. The other part of conflict I highlighted earlier was the Death of a Salesman. You and Jamus were just talking about this a little bit. How did you guys align the internal sales team? Did you incentivize the sales team? Did you align them with commissions on ecommerce sales? Take us down a little bit into more detail around how you aligned internally these different selling channels.

Shalin Shah:
It's a good question. First and foremost, I actually sat on the senior sales leadership team. My boss was the head of sales, and so there was shared incentive, number one, which is, "Hey, got to make sure we're doing whatever-"

Brian Beck:
Your boss is happy.

Shalin Shah:
Yeah, I got to keep the boss happy, and keep my peers happy. Otherwise, you can't do it. But it does actually create a very different MO because it's like, "Hey, you are in the boat with us. We're going to build this boat together." And so let's figure out how to make all those things happen. It does actually create, I think, a nice forcing mechanism.

Shalin Shah:
A couple of things that we did is when the sales leaders that kind of had account ownership for some of our resellers, they still own the overall customer relationship. They own the entire customer strategy. All we would just say is, "Well, what part of your customer strategy is ecommerce going to be there?" We just said, "Look, we got to make sure if they have an ecommerce platform or going to." How is that going to play into what our overall customer strategy is with them? So I would have responsibility for the overall ecommerce strategy, they would have responsibility for the customer strategies, like you mentioned earlier, Grainger and Zoro, someone had the Grainger strategy and the Zoro but had to have the ecom fits in with it. That was a forced tension but it was good and then, same, to your point on incentives, we'd have shared objectives. If we need to sell this much through Staples or this much through Henry Schein, here's how much we think we want to sell on ecommerce through them or on our own.

Shalin Shah:
And then the part that we did on our own, which is helpful on the incentives, we just said, "Look, you have a target and what you need to go hit in terms of number of dispensers placed or new product rollout or whatnot. As long as you hit those and you're using the ecommerce site, great." And then my profitability was [inaudible 00:29:23] is that a profitable sale or not? We didn't hold them accountable for that because we wanted just make sure we're getting the tools to help either enable them or if it was a self service sale that we'd get, depending on where the lead came in from as well. That's kind of how we share through that.

Shalin Shah:
And then the other piece on the sales part that helped a lot is we put some expectations and responsibilities, what we call them at Georgia-Pacific, into the supply chain and marketing teams as well. That actually helped quite a bit because, now, you had the entire customer team really having shared responsibilities across all of those because, sometimes, ecommerce would have a different marketing need a different supply chain need as well.

Jamus Driscoll:
We talked a little bit about channel conflict almost from the point of view of the rep or the selling channel. It seems like you had a very robust and mature distribution mechanism from product conception through to ultimately getting it in the hands of the consumer. Certainly, the sales team is a component of that. I'd be curious to know in that evolution, did you run into other points of conflict things that suddenly created contention that maybe you didn't anticipate on the way in?

Shalin Shah:
Yes. We all learn something, right?

Jamus Driscoll:
Right.

Shalin Shah:
One of the things that I learned was... so we have a commercial ops and sales operations team that really looks at all the pricing deals and helps with the annual negotiation programs with channel partners and resellers and things. And one of the contingent points was if we were selling through ecommerce or wanting to do marketing in the ecommerce or spend time or resources in ecommerce, it didn't really fit the bill of fitting into the existing tool set and processes of how we looked at those operations. Right?

Jamus Driscoll:
Right.

Shalin Shah:
And so that took quite a bit of, one, learning on me on how the heck we do this internally, and then, two, how the heck is that going to work in a digital world because the outcome still needs to be there. We need to make sure we're profitable on both sides, mutual value, but it's going to be done in a different way. And so that was probably one of the bigger unexpected ones because sales and sales ops, as we call them, are so intertwined, and we had taken care of this part. But the sales ops piece is something we needed to work through more work.

Jamus Driscoll:
I listen to you talk. There's something about the evolution of... all we've done digital, right? We're calling maybe 20 to 25 years in.

Shalin Shah:
Yeah.

Jamus Driscoll:
All through businesses that have been around for 100 years, and so there's well established processes and well established ways of doing business. While we think ecommerce is mature, we're still reasonably new at this. It's been so disruptive in so many different ways. And one of the things that we're trying to be conscious of too, I think is how it is relating to what used to be relationship-driven businesses where we're so dependent on how we talk to one another, how we engage knowing each other and having that as the channel and ways in which we sell and communicate. I guess, in your observation, how have we done, how have you done on that in terms of maintaining the human side of the relationship while also building a much more digitized business?

Shalin Shah:
That's a really good question. When you mentioned it, it reminds me of something real quick. We were in a kind of joint sales and marketing sales ops leadership kickoff, and I remember our my boss had a sales stood up and his slides said simply relationships matter. And then he went through it and he said, "But they're going to be really different," and so your relationship with someone is going to matter, to your point, the human side.

Shalin Shah:
Our sales rep relationship with if a field seller or a headquarter to headquarters, they all still matter because there's still that trust factor that will not go away and there's a human factor to trust. But then you think about the same thing, there's a digital factor to trust as well, right. The information that we put on a product detail page, information put on a marketing asset, all of that needs to be just as trustworthy in a digital way if we send them an email, if we want to help them troubleshoot a paper jam, if we want to help them troubleshoot cleaning data or various different ways. All of those relationships matters. I think, externally, what it really did was really help us understand which pieces were really core to gaining the trust and which pieces were just essential to kind of keeping the lights on more in that transactional. In a lot of the digital [inaudible 00:34:03] transactional.

Shalin Shah:
In the internal thing, Jamus, that was probably the most surprising to me was how much it created the need for this faster collaboration, right?

Jamus Driscoll:
Mm-hmm (affirmative).

Shalin Shah:
We weren't using agile methodologies or anything but, immediately, we get a phone call they didn't get their shipment. "Oh, wait, our reseller put a really bad price out there. Now, everyone's arguing will they match it or something, right?

Jamus Driscoll:
Right.

Shalin Shah:
And you didn't have... Okay, let me think about it. Let me get everybody organized. Let me get a steering committee together. Let me get a couple weeks. I'll put a response great. It's like, I gotta go find somebody in three minutes. I gotta go find an answer. But it was also very energizing when you explain to people like we can just get things done quickly with the knowledge. But that changed a lot of internal relationships as well of different groups that probably didn't talk as fast as they used to, especially if I think through kind of now from eight years ago. So that's how I would say kind of the human piece has kind of evolved.

Jamus Driscoll:
You used an important word there around trust because that's certainly been made up between a sales rep and the customer. It's always been that relationship of can you trust that I'm going to serve some product and offering.
Fascinating to hear about how you can take that same word and then bring it back through the company's digital presentation of itself and understand what can be digitized and what needs to stay with the humans; not really fascinating sociological experiment as well.

Shalin Shah:
Yes.

Brian Beck:
Yeah. Jim, it's interesting you said too. I think the trust also extends from the sales team to the digital organization, right?

Jamus Driscoll:
Right.

Brian Beck:
I've heard cases of, well, these aren't aligned and selling you guys did a good job of aligning those channels going to market. Well, the sales team is not supportive of the B2B ecommerce effort regardless of whether it's selling to Amazon or other pure plays or selling direct. That can kill an effort, a collaborative effort. I've heard where you know sales teams working actively against ecommerce. "Don't do that. Call me. I'll give you better price," or whatever, and so that trust needs to extend the other way. I love the way you guys structured it where you're in the sales organization. It takes real leadership, I think, from your sales organization to evolve, to think that this digital can be enabling. I love that example you gave just a minute ago. That's fantastic. Kudos to GP on that.
You guys have ended up or GP has ended up with a lot of these different selling channels. We alluded to this a little earlier. You've got your large distributors, your midsize distributors, your Ciscos, your Henry Scheins or whatever, all these different. You alluded to this. You've got some value that you've learned and pulled from your own ecommerce. How do you, on a consistent basis, help them because a lot of companies don't realize that as you're learning for your own ecom and your own digital efforts, you can actually then feed that to these channels and help them become better? You alluded to this earlier. Let's go layer down on that. What are some of the specific things you did there?

Shalin Shah:
A couple of ones. We talked a little bit some of the pure play resellers, you mentioned Zoro in the introduction as an example. One of the things we did is we would look at our promotions and our conversions, our return on our marketing investment, lack of better wording. How many sales did we get for the digital ad dollars you put out? And then we use those as benchmarks to then take that to our customers. If we said, "Hey, look, we think we can invest X thousands of dollars and get X thousands in return with you. Does that make sense to you? Do you have a program like that?" That was one that was actually super helpful. And then if we got into the program, we would say, "But here's what we learned that worked." So, sometimes we'd say, "Look, if they're off your site, don't show my product. When they're on your site, show my product. When off their product, show them who they are and their business." And so we could use a lot of those data points.

Shalin Shah:
Another thing that became super helpful was we spent a lot of time working on what is the right wording for search. The simple example was... it sounds pedantic now, right but it's a journey... bath tissue. Nobody's typing in bath tissue. Everybody types in toilet paper, right?

Brian Beck:
Yeah.

Shalin Shah:
In our data, it's a toilet paper, but in all the resellers' data, it was still saying bath tissue and everyone would type in toilet paper. We would show them the differences and they would go, "Oh, right." That would help their whole category, not just us, sometimes.

Brian Beck:
By the way, Shalin, you just explained the toilet paper crisis.

Shalin Shah:
Yeah, there we go.

Brian Beck:
All the while, everyone's still typing in, you know.

Shalin Shah:
They just type in toilet paper. I got to change that real quick.

Brian Beck:
And you filled the demand and all the toilet paper's gone. So, anyway, go ahead.

Shalin Shah:
I have no inside way of getting toilet paper [inaudible 00:38:55]. The search ones, the conversions and that were some of the ones. One of the other things that we would test is, sometimes, we'd start testing whether or not certain messages or certain products or certain sales scripts might work as well. We were doing some new product innovations.
I remember we just recently launched a pretty neat, hygienic, touchless cutlery system. It was new. We had a lot of different ideas on how to maybe go sell it. Well, we just tested which words work, what sales groups work, what types of customers actually got interested, and then we use those learnings to then go to the reseller and say, "Hey, here are the types of accounts we want to target. Here's the language we should be using. Here's the value prop that work, and that became pretty powerful we could even take 100% online self serve and impact the offline world, as well, and then kind of hybrid world. That's how we learned some of those learnings.

Brian Beck:
That's fantastic. I think that's part of also how you probably message to the channels. You alluded to this earlier when you go out to the distributors, to the retailers you're selling to. Did you find that the retailers and resellers over your 10 years there, will they be coming more receptive to those messages? Is that resonating with them more? Do they understand that you could actually add value from your own ecommerce efforts? Did you see kind of more acceptance of your own sort of ecommerce channels over time?

Shalin Shah:
Yes, absolutely. Early on, your point Brian, they kind of do the head knob but I think it was when they left the room, they're like whatever but they got to the point more recently where the resellers are coming back and saying, "Here's my program. I can give you this search boost, this or that or that. Here's how much money, and here's a return we think you're going to get." And I'm like, "Wow, we used to do the other way." I mean I definitely saw a pretty big change in the destination and they're thinking that way.

Brian Beck:
That's great. We've talked you talked a lot about some of your traditional distribution channels, how to digitize. Anytime we talk about ecommerce evolution, we have to talk about the company that's responsible for 50% of US ecommerce. It's insane if you think about it, right?

Shalin Shah:
Right.

Brian Beck:
By the way, it's not just consumer now. It's also B2B. I'm talking about Amazon, of course. The dominant player and consumer, they're anticipated to be $52 billion in B2B transactions within three or four years. RBC Capital Markets came out with a report on that. The B2B side of that business is incredible. It's now the fastest growing part of Amazon. So that's a lot of the work that we do at my firm, Enceiba. But tell us about how you guys with that. What were the aspects of conflict? How did you approach Amazon? What was your strategy? There's multiple ways to think about Amazon as a manufacturer? What was your strategy, and how did that evolve over your time working with them?

Shalin Shah:
I think it involves weekly, one way, but I would say that the overarching kind of strategy is we didn't look at them as a traditional reseller. We took the framework and said, "Look, they are a technology services partner. If we were to go ask the world what are all the technical ecommerce things that maybe we can't go to ourselves or that we think the industry might need, can they go do those?" The reason that was helpful for us, Brian, is, to your point, we looked at them as a partner, we looked at them as an innovator, we looked through them as a competitor. I think we looked at them as a vendor as well because we were part of, obviously, Amazon Marketing Services where we're buying media.

Brian Beck:
Mm-hmm (affirmative).

Shalin Shah:
Right? And so we looked at them as the entire ecosystem, which is painful but I think it had some merits to it. I think the thing we always knew is if we came up with ideas that wouldn't help their category grow, then we just had to do our part to make sure we're growing with that part of their category, and we had to do it in a way that made sure that the profit was going to kind of make sense for both of us. But we said no, as well. I mean our top two brands in Pro, we did not directly sell in Amazon. We said no. They met our criteria and requirements of what's required in the market for those types of products given their premium nature and things that kind of go around it. But, yeah, we were worried about what they're going to do in private labels, so we would always go, "Okay, if we do this, here's the data. What are they going to do that data? What if they do that? What are we going to do? I hate to use it, we have to game it out a little bit just to make sure that we kind of knew what we were managing. But that was kind of our strategy.

Shalin Shah:
The other part that was super helpful was what we had mentioned which is because we didn't think of them as a traditional kind of distributor, we tried very hard to not use all of our processes for everybody else's force fit onto them. What we did hard as we said, "Here's our policies and principles but we're going to update our processes with Amazon. We're going to force them to help us innovate some things that might help us." That's kind of how we thought about them. It's been a successful business. I think we've done lots of partnerships. We have dozens and dozens of failed experiments, to say the least, but a couple that worked. Right?

Brian Beck:
Yeah.

Shalin Shah:
The couple that worked, worked really well. That's kind of how we've thought about them.

Brian Beck:
It's interesting that there's a lot of nuggets in what you just said. I think you got to realize with Amazon, it is different than maybe your other channels that you traditionally sold to. The approach you took is interesting where you broke it down really on a product by product basis, and that's what you're saying, product line, brand, specific product, does it make sense on Amazon, doesn't it? That kind of thing. I think it's a wise approach. How did your other channels react when you were selling on Amazon? How did you manage that?

Shalin Shah:
That's interesting. When we first went on there, they got very up in arms, to say the least primarily, for two reasons. One, they were talking about price which is no surprise. The other one was some of these premium products, they're just long sales cycles and either like, "Wait a minute, we have all these agreements in place. But over time, we put in some specific processes. We put in a minimum advertised price policy as an example and a few others that really showed to the partners, "Look, here's what you can do really well, and that's what we want to do with you, right? You have these complex set of services that Amazon business doesn't have, then we're going to use those. But here's some things that they have that you don't," and we would actually show them, "Well, we'll be more profitable together if we do these things versus that." It goes back to the trust they were talking about with Jamus. It was not easy. The other part is it's never-ending once you get the mentality of "they're just going to get upset."

Shalin Shah:
The one thing that was helpful though is we would always look at the numbers and go, "Are they losing a lot of share or are they losing a lot of profit we believe in? Is that why they're complaining? Let's solve that problem, and are they just using Amazon as an excuse. That helped quite a bit, actually. We wouldn't tell the customer that obviously but [inaudible 00:46:30]. But that was actually super helpful. Our sharp sales ops team said, "This is their real problem." "Okay, let's solve that one." We I don't need to solve the Amazon thing."

Brian Beck:
The other thing you said in there, which was really cool, and that moves back to what I was sharing in the beginning that understanding the value that each company, each reseller provides. So, what does Amazon do differently than, say, some of your other resellers? If I think of Amazon, my opinion is the great equalizer in the sense that they forcing everyone to up their game, including all your distribution or retail channels with digital, with ecommerce, with making sure they understand the value they're adding to that ultimate customer. That's why I say anybody in this world now has to start with that end customer and are you doing the best job for that customer whether you're making the product its own to somebody else or whether you're reselling the product. It's that making sure you're adding value.

Brian Beck:
Good stuff, guys. This is a great discussion. I asked this question to everybody that joins the virtual book tour. Jamus, I would ask to you again, maybe you put a different spin on your last answer but, Shalin, what is... Okay, so I talk to companies who have never started their digital transformation journey. They're just getting going in ecommerce, 50% of B2B companies don't have an ecommerce site, believe it or not still. What advice would you give to a CEO of a company that's just starting its digital transformation journey now that you've been down the path, you work with a leadership? What advice would you give?

Shalin Shah:
I think the advice I would give would be very clear on what your business plan strategy is, whether it's speed to delivery of a customer or whether it's cost-efficiency, it's acquisition of customers or innovation. Whatever that overarching business goal has to be crystal clear because that, to me, is the guiding principle for what the digital transformation needs to be because the reason I give that advice is, otherwise, I think everyone just says go digital and you don't know what to do with it, you know why you're going. It's like, "Okay, I turn my paper into Microsoft OneNote. I went digital," I'm like, "Well, that doesn't solve the business problem, right?" Maybe it does if it's efficient working. But that I think is a big advice I'd give because I also think that forces you to go and understand what we talked about the processes. Don't digitize analog processes. Come up with the new ways of working and how that that world works. That'd be the thing I'd give them most advice on.

Brian Beck:
Awesome. What about you, Jamus?

Jamus Driscoll:
Well, I'll try and be consistent with my previous answer. The good news is Shalin left an opening for me to do that-

Shalin Shah:
There you go.

Jamus Driscoll:
... where somebody's said few minutes to go which actually took a note onto which is we did dozens and dozens of things wrong, and a few things were right. That just speaks so well to the attitude of the business around let's test, let's learn, let's be comfortable failing, let's be comfortable [inaudible 00:49:31] quickly and learning something. As we talked before, or at least in our view, so much of what we're doing in a young industry in 20 years end, it's still a young industry. It's about learning. Generally, when I speak with digital leaders, I often encourage them to get really comfortable with the expression of "I don't know, what do you think?" because we're all learning along the way. And sort of having the right culture of test, learn, it's something [inaudible 00:50:00] fails. In fact, it's just the way we pay tuition now. So having that attitude that we pay to learn and we pay to learn through trial and error is a wonderful thing and, being very comfortable admitting that, we're all going to get a lot of things wrong on the way to getting it right.

Brian Beck:
I love that. It's funny you honed it on the testing and Shalin, I think, said that, talked about failing and learning. That's at the core of Amazon's approach of the business. I work and talk a lot with the Amazon teams particularly Amazon business team, and almost a million employees still maintain that approach. It's the customer first, but it's also, "Let's try things and fail." I think you failing is a win. When they fail, that's successful because they learn something. Even if you look at the history of Amazon business, their first iteration was Amazon supply it. It didn't work. They rebooted, they learned, they're doing things differently, and they're succeeding. So great, great advice guys from both of you.

I want to thank both of you for joining us on this. This has been a fantastic discussion. You guys are giving some great advice for our listeners, so thank you for that.
You all met me, Brian. Here's my contact information. My cellphone number's there, and the more information about the book on billiondollarb2becommerce.com. I would be happy to hear from you, so please reach out. Shalin's information is here, his LinkedIn, and then Jamus as well. I want to thank my guests again, today, It's been a great conversation today.
Our next session is Session 6: Leveraging Digital Marketing with Big Ass Fans. If you've ever gone into a large volume space, like an arena or an airport, you looked up and saw a 30-foot wingspan fan, that's likely a Big Ass Fan. It's an awesome company with great products, and I'm super excited to have Dan Gdowski as my next guest in session 6.

All of our sessions going forward will air at 8:00 AM, and then will be available on-demand. That's Eastern Standard Time. We have Creating a Successful Online User Experience with Cardinal Health coming September 2nd, and Our Digital future with Illumina on September 16th.
More information on the book is available on the website. You can email myself or Meg Purcell.
Thank you all for joining. Good luck on your digital transformation journey, and I hope to see you as a digitally mature company really soon. Thank you so much.