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Twice a year, B2B Online brings together America’s leading manufacturers and distributors to uncover learnings and industry trends. This October, Algolia had the pleasure of spotlighting the transformative digital journey of a longtime HVAC distributor and ecommerce powerhouse, Watsco. With over two decades of ecommerce experience, Watsco showcases significant scale, consistent online volume, and still has plenty of growth opportunities. In this post, we’ll delve into Watsco’s challenges, their pivotal learnings, and offer insights on how to accelerate the digital transformation to shift more revenue online.
Based in Miami, Florida, Watsco strategically acquires strong regional distributors primed for digital expansion, integrating them into a state-of-the-art tech stack in mere months. Today, about one third of Watsco’s staggering $7B annual revenue is generated through ecommerce, spanning 30 distinct stores across the Americas. Building this kind of ecommerce presence is a journey, so whether you’re just starting out, or fine-tuning a fully ecommerce-powered enterprise, evolution is key. Watsco is just one example of the digital transformation journey that many manufacturers and distributors are making to offer ecommerce options for their customers. Here at Algolia, we commissioned a survey with 700 B2B decision-makers to understand how they are investing in online solutions during these challenging times.
With macroeconomic uncertainty and competition heating up, scaling revenue unsurprisingly remains a top priority for ecommerce businesses, and is closely followed by shifting revenue from in person channels to online. This shift not only paves the way for operational and cost efficiencies but also expands revenue potential based on new reach of global audiences.
A major paradigm shift along this journey is to rebalance the roles of the website and the salesperson. As companies embrace online selling, evolving from facilitating basic transactional sales to providing a consultative ecommerce experience is vital for deepening customer relationships and driving growth. To achieve this, the site needs to mature along a spectrum of customer use cases.
Each of these stages unlock a new level of ecommerce revenue. There is a certain amount of orders that are very simple transactional, re-ordering and SKU-based, but this segment is finite. So, if you launch your first website with basic functionality and are seeing limited adoption, this can create a misleading proofpoint that ecommerce doesn’t work. The reality is that the bulk of your customers have more advanced use cases that the site isn’t solving for yet, and we’re starting to see new generative AI solutions coming to market to help address this exact need.
The foundational ecommerce layer is for the site to help buyers find all products they need quickly and easily, and with information on pricing and inventory availability at their specific branch.
One challenge many customers face is comparing similar products to determine the best fit for their needs. If a customer searches for a specific product and receives 3 matches, but the site isn’t prepared to help the buyer compare and decide between them, the next thing your buyer is going to do is call a sales rep because they need the answer to be made easy and accurate. This then translates into lost revenue for your ecommerce channel. Instead, to improve customer satisfaction and lower support costs, the website should be handling these kinds of questions.
For example, in the screenshot below, Watsco’s largest subsidiary, Carrier, allows buyers to sign in and see the inventory counts in their locations at their custom pricing. It also helps buyers determine which of the three results is the true replacement product by making it easy to compare them across different specs. This is an example of what a site would need to do to free up the time it would take a salesperson to do that very same thing.
Beyond product listings, enriching your ecommerce platform with supplementary content can drastically enhance the user experience. For example, when searching for a specific part number on Pentair’s site, users can access related spec sheets, safety information, and more.
This is especially important when a product is discontinued and buyers need guidance on fitment and supersedes. A broken user experience might be that a buyer searches for that part number and gets no results or gets results for a different part number without any context on why. The UI needs to flag those things and tell the buyer that this search result is an accurate replacement for the part you’re looking for.
Consider an example from the auto industry: most auto parts have very specific dimensions or compatibility with car make or model so the site needs to make it very obvious which part is compatible with different models. In the screenshot below a 2023 Ford F150 is pictured in every search result, which communicates to the buyer that everything you’re looking at is going to be compatible with that car. Such enriched content not only helps in the purchasing decision but also reduces the likelihood of post-purchase complications.
A significant highlight of Watsco’s ecommerce success is its ability to integrate with best-of-breed microservices. This empowers a lot of very specific-to-Watsco experiences. For example, given Watsco’s acquisition-driven growth and hub-and-spoke operating model, it’s crucial to ensure that different brands within their portfolio can seamlessly share data. For example, if a product is unavailable in one brand’s catalog, Watsco’s integrated system can quickly check its availability across its other businesses.
As your website evolves to a more consultative ecommerce experience, it’ll understand and address the specific needs of your customers. This frees the sales team from basic administrative tasks such as submitting an order or answering simple questions, and allows them to focus on cross-selling, upselling, and growing strategic accounts.
For example, Watsco’s platform empowers sales teams with data-driven insights, enabling them to identify growth opportunities. A customer consistently reordering the same inventory might be a candidate for a broader product exploration. Another showing a 25% increase in order volume could be ready for a more personalized sales approach.
Leveraging the insights shared by industry leaders like Watsco can offer a roadmap for businesses at any stage of their ecommerce journey. Embrace the evolution, prioritize customer needs, and ensure that your platform is flexible and integrative. The future of B2B ecommerce is consultative, and with generative AI tools on the horizon, the acceleration of growth is about to hit record speeds.
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