TRANSCRIPT:

Brian: It is the Friday 15 with Master B2B. Another fun week and exciting announcements and a special surprise guest. We’re going to be talking about should manufacturers sell directly via e-commerce. This is a hot topic even now. I mean, we we’ve been talking about this for 10, 15 years, right? Manufacturers. Pick your category. If you’re not selling those directly as a brand in e-commerce, the retailers look at you and go, “What the heck’s wrong with you? Why aren’t you selling direct, you’re not supporting the brand properly.” But in B2B, it’s a different story. Most manufacturers are not, selling directly. In the meantime, B2B e-commerce is growing really quickly. B2B online sales reached 28.1 trillion dollars last year. 10% of all B2B sales are transacted via digital channels. And this B2B commerce is twice as big as B2C. At the same time though 35 full 35% this is from McKinsey 35% of B2B firms do not have an e-commerce enabled website and a lot of that 35% is made up of manufacturers. And when you ask a manufacturer why aren’t they selling on Amazon excuse me e-commerce directly it’s about channel conflict. Channel conflict is when when a manufacturer brand can has the ability to disintermediate their channel partners such as distributors, retailers, dealers and sales reps by selling directly through e-commerce through through internet channels, right? There’s powerful economic incentives to do it. They have more margin. They have, relatively speaking, lower cost of goods than a distributor does. So there’s an incentive there. But then again, when you’re a big giant superpower company or even not not even any really player who’s making a product, you can disintermediate those channels by by doing this. So, how do you balance this? It’s really about striking a balance. Do you engage in direct e-commerce? Do you enable the channel? And that is the topic we’re going to talk to today with our super superstar guest, Mr. Anthony Locke, who is with Schneider Electric, which is this tiny little company no one’s ever heard of. Global director of distribution e-commerce and he’s clearly also a Texan. So, let’s introduce Anthony. 

Anthony: Yeah, absolutely. good afternoon, good morning everyone. Anthony Locke, Schneider Electric. Good to be meeting with you today. I’m originally from Australia. But I’m currently based in London, UK. And so I’ve been working with Schneider Electric for, we were talking earlier, it’s my 30th year. Wow. Um, so I kind of I feel my age sometimes. but yeah, I’ve been through quite a quite a journey with the business and I guess also in B2B distribution in terms of being along for the ride in terms of the digitization of selling and the implications of that as a manufacturer and to our partners. So it’s been an interesting journey. 

Brian: Yeah, no question. I was just with you. We were just hanging out in Copenhagen in Denmark which I was fortunate thank you Anthony for the invitation to speak at your conference related to global enablement digital and what it was it was so awesome to see some of the things you guys are doing and want to get into that a little bit so but we want to start the conversation well actually let’s so so tell actually tell the group what Schneider does.

Anthony: Schneider Electric we’re a global leader in energy management and automation operating in more than 100 countries globally with more than 150,000 employees. So at the core of what we do, we combine hardware, software, digital services to help homes, buildings, data centers, and industries use energy safely, efficiently, and sustainability. So we’re about empowering everyone to make the most of their energy and resources. And that’s really the core of our mission. 

Andy: And you’re a tiny little company at I think about 38 billion, right? 

Anthony: So yeah, around 38 billion in 2024. 

Brian: So clearly a leader in your space and from that conference I was at with you there were lots of big distributors, midsize distributors, the Rexells of the world were there, all these different, really prominent companies that have their own e-commerce, right? They’re looking to enable their business. You as a leader, you have a huge presence in the market. Every electrician in the world knows who you are. industrial automation companies etc. What should a manufacturer sell direct? I mean this this that’s the question here. What’s the role of the manufacturer as you think about this dynamic? e-commerce presents an opportunity. What do you think?

Anthony: It’s a good question and a very interesting one. I mean the way that we see it is that it’s really about a partnership of two specific types of expertise. And I think that’s a little bit of what we saw in Copenhagen. we Schneider Electric is about partnering and so for us you talked about the 38 billion more than 50% of that goes through our distribution partners and we’re really about focusing and enabling that to happen and for them to be successful with us. So, so if you consider I mean we work with a wide range of different partner types who are at all different steps of that digital journey in terms of the maturity some of them extremely mature in terms of digital selling and full omni channel some of them more focused on proximity with a consultative engineering solution play and some in the middle but what we try and do is basically bring our understanding of the segments and types of customers that they are serving. Understanding the pain points, understanding what they are trying to achieve in terms of what part of the buying process are they in. Are they in the investigation, prototyping, production, MRO, etc. and bring those two pieces of expertise together really to win and for us to establish ourselves with those partners as a category champion. 

Our strategy at a point in time we’ve looked at taking a direct play to market but it’s something that we quickly established was really not something we wanted to focus on and so today we’re we’re about enablement with our partners. 

Brian: So you’re not selling directly. 

Anthony: No. So we so again a few years ago we we took an experiment in a few countries really to to open some web shops and to use that I guess number one as a way of perhaps doing some fasttrack entrance to market with new products collect a bit of data understand appetite number two use it as a bit of a flagship selling experience as well putting these ecom shops out really with the best content best customer journey, etc. But we really quickly established it wasn’t our skill or expertise to be doing that. And so, quite frankly, we looked at it and we thought, how do we manage, kind of that get those values but do it with our partners. And so, we pivoted away from a web shop approach. And what we’ve now gone to is to a marketplace enablement approach. So, we’re either helping our partners launch and execute on their web shops or in some of our countries, we actually launch our own Schneider Electric marketplaces, but they’re fully backed and supported by our distribution partners. And it’s a way to help them fast track, digitize and capture e-commerce revenue in situations where perhaps they don’t have the expertise or the investment or whatever the challenge could be to enable them to actually set up their own their own e-commerce shop and start selling. 

Brian: Got it. So yeah, so some of those so so you’re not selling directly. You were you backed away from it. now you’re now you’re fully engaged and and one of the things I was really impressed with Anthony at the conference at your innovation summit was some of the tools you guys are bringing to the market to enable these distributors. Can you describe some of those? It was amazing to me to see you creating like micro sites in real time from like 500 people. I’m like this is amazing. 

Anthony: You’re just so anyway you want to just talk about some of those well absolutely I mean look the way again to to win in that dynamic that we talked about we need to make sure that we’re kind of bringing a full stack of capabilities to support our partners to execute deliver the right customer experience and really tell the customers that they’re serving like I I know who you are I know what your challenge is I know your pain point and I can help you and especially when we start getting into the kind of more technical domains of the products that we sell towards manufacturing and water utilities these these businesses these end users are looking for partners who understand their needs and they think are competent to support them. 

So the question becomes how do we support our partners in demonstrating that competence as part of that journey and that’s exactly where the tools come in. So we do start at basic things around kind of content enablement basic advanced landing pages tools and capabilities to allow end users to put together more complex baskets of goods to solve specific problems and transact those online. And so then in terms of what you referenced and we were demoing in Copenhagen, one of the pain points that we’ve seen is that so we build selectors and capabilities and different tools which allow an end customer to go put into configuration build a basket and then check that out. But there is a technology requirement sitting behind the execution of those tools. And as simple as it may sound, what we can often see is getting that onto one of our partners’ site is a nightmare. Um, and I’ve seen it take two months, I’ve seen it take 12 months, I’ve seen it start and never end. So, the strategy that we’re working on right now is that, we know that because we have such a mix of different maturities and also technology challenges. It’s not always even a maturity thing. it can just be, the technology, capabilities you’re using don’t allow you to be as agile and integrate things in the way that you would like. we looked at that and we said how the heck do we solve that and really serve all and so one of the capabilities to your point was we’ve developed a a micro site setup where we can basically execute and launch a custom micro site branded with the partner that has all of those selection tools in it which are typically super difficult to deploy and integrate and they get them like that and that was incredible. I mean it was it was it was good fun. It was literally like 30 seconds. You were like, “Somebody raised their hand.” Yeah. Let’s make a let’s make a micro site for you. We were calling out to the audience. We had the logos ready and we just popped it in. And it was it was great. And I mean, the response we got in terms of the, our partners in the room recognizing, kind of the friction that we were removing in that process. It’s not even about the friction with their customers. It’s about the friction between them and us in terms of enabling them, you I mean, it was super well received. So, yeah, so that was it was a pretty good pretty good demo and I think a lot of follow-ups come from that. 

Brian: I had one other question that I want to ask you before we run out of time here. as it relates to because you and I had a quick conversation on this in Copenhagen, it’s about the changing relevancy in search, right? So, and where people are searching and how they’re getting answers, SEO, answer engine optimization versus SEO. And I know as a manufacturer, you told me you view helping companies to show up in search and stay relevant, your resellers, your what’s changing there? I mean, how are you measuring this new impact with, with all this volume shifting to LLMs now, including on Google itself? How are you maintaining relevance? Is  it something you’re still figuring out? 

Anthony: It’s a new strategy in itself. I mean there’s no getting away from it. And I mean look I reflecting on my on my 30 years in terms of working in distribution and working with these partner types and looking at the new technologies that come. It was like the revolution of e-commerce and oh my god e-commerce is going to be the death of a salesman. You you talk about that Brian but of course it wasn’t. it’s about how it enables and so forth and and then also the impact and the time frame that the introduction came especially into B2B industries is a bit slower sometimes than maybe we anticipate this whole thing about SEO GEO I mean to me this is a revolution and I think it was only months ago that we were all speculating around what could be the impact we’re in B2B Chicago and I think the topic was being touched on lightly is to yes this is something to reflect on and let’s let’s consider this in our strategies and then suddenly before we know it it’s there and people are doing it and we’re doing it. I mean I’m sure you’re doing it right. We’re all doing this. Like Google’s not obsolete and nor will it ever will be in my opinion. But for sure as heck, I’m using about four different LLMs now, to do some of that data crunching and tell me something versus, kind of having to go and raw interpret data. And that is happening in B2B and then and then and then how do you’re staying relevant? Our response is what we’ve done is immediately started to launch some pilots and investigation in how to both measure and impact and and there are ways to measure you can start to understand whether you are an authorative source in AEO you can you can start to get a data point on that you can start to understand what are the authority sources and who’s winning and then how do you start to you bring your presence towards those sources in whatever way possible. So for us what we’re doing is we’re working with some of our channel partners. We’re actually running some different pilots in different geographies to look at this impact and really establish the baseline of understanding of how to drive it. but make no bones about it. Do not kid yourself. this is here. This is landed. It has happened. Right. Yeah. 

Andy: I want to ask the controversial question now. So you mentioned about the channel conflict that was mostly deconflicting on the back end. I want to ask about the front end. You brought up AEO, SEO, GEO. They’re kind of all merging together. How do you handle this scenario? Somebody comes to Somebody goes to Google, types in I’m looking for an electric a Schneider electrical capacitor. Just making this up. Okay. Can you compete on SEO and SEM against Rexel and Sonar? 

Anthony: Yeah. I mean, look, I wouldn’t put it the our strategy is we’re not competing with them at all. What we’re doing is we’re complimenting. And so the way that we take it is we take it as a unified web strategy. The reality is that us as a brand we do have a very strong digital brand presence. it is very likely that we will be kind of at the top of the organic rankings and and in some cases maybe even around brand terms on the paid rankings. So we’re going to be there but what we don’t want to do is cause friction in terms of that end users buying process. So the simple answer is is that whether we win or whether they win all parts go to them. And how do we do that? We do it with things like commerce connected capability. So even when we do get customers coming into our site if they have a transactional intent and intent is important because if they don’t have a transactional intent it might be quite appropriate that they are in our domain and the understanding more about our solutions capabilities applications the way we our product can help them. Um, but when they get transactional, it’s about getting them into the channel and pulling as much friction out of that as possible. So tools like Commerce Connect, the fact that we launch things like our our marketplaces, etc., for us, it’s just a core mission about partnering and enabling our distribution partners to sell. It’s very black and white. Well, we’ll have to bring you back to talk about this because I think there’s some specific use cases that I find fascinating here. If somebody literally is looking for a Schneider electrical capacitor, Yeah. You just defer to Rexell and so they’re going to buy those keywords, right? Those are your distribution partners. Plus, you’re there. Yeah. And you might win on the SEO end of things and increasingly the GEO AEO end of things. And then how do you deconlict that? I mean, once the once they’re on your site, that’s kind of easy, right? But before they come to your site, yeah, in the battle for the buy box, so to speak, and I’m not sure what the AO equivalent is, how do you fight that battle? That might be another interesting conversation. Yeah, but but what? But but I’ll give you a little snippet of an answer. I mean, we’re not fighting for the buy box. That’s the simple answer. we’re we’re enabling our partners to go after the buy box, but we’re not putting ourselves in it. so everything we do is about channeling the traffic and opportunity and towards them. So it’s it’s not as controversial unfortunately as it could be. It’s it’s it’s a simple strategy for us. Before we do, I’ll try and make it a bit more spicy. I’ll reflect on it. Andy, this is great stuff, man. And we can talk for an hour and and frankly, I think we’ll need to have you back because this is a really been a fascinating conversation.