Shift towards digitalisation causes change in ordering behaviour
The installation market is very traditional, especially when it comes to purchase behaviour. Although direct delivery from the manufacturer is increasing, the specialised installation wholesaler is still dominant in the ordering process. Traditionally, installers ordered at the wholesaler every day. Nowadays, it is relatively easy to order online. Also, the labour shortage is very high, especially in the installation market. To work efficiently, installers should order in advance and have it delivered at the jobsite.
So the ordering opportunities have increased. People are able to order online, but to what extent does that happen? For the European Mechanical Installation Monitor 2019 Q3, not only did we research where installers order and how much money they spend per channel, but also how they order. Is their ordering behaviour more traditional or online?
Traditional versus online
Zooming in on European countries, we see a clear distinction between two groups. In Poland, the UK and France, the ordering behaviour is very traditional. This means that installers order via telephone, fax, email, the sales representative or by visiting the store to place an order. In Belgium, Germany and the Netherlands, the share of online orders is increasing. In the Netherlands, this is already 50%. This can be explained by digitalisation being highly implemented in the Dutch construction process, such as Building Information Modelling (BIM).
Delivery versus pick up
Not only do Dutch installers order more online, they also get more of their orders delivered instead of picking them up at the wholesaler. Looking at the reception of ordered products per country in 2019, we see that 73% of Dutch installers had their order delivered whereas 27% picked it up. In that same year, 56% of installers in the UK had their products delivered as opposed to 44% that picked up their order at the wholesaler. These are expected results because labour shortage is much higher in the Netherlands. Also, the digital infrastructure is much better and Dutch installers are already used to it.
Clearly, this shift towards digitalisation is important to wholesalers. But why are these results interesting for manufacturers? Firstly, by creating a strong online position, they steal the thunder of pure online players. Secondly, wholesalers do not lose any market share, because they also offer online ordering and delivery services. In the Netherlands this is already quite successful.
On the other hand, digitalisation of the ordering process has a disadvantage. Manufacturers rely on wholesalers to promote their products. The less installers visit the wholesaler on a daily basis, the less close their relationship becomes. Wholesalers depend on a good relationship with their customers, because it creates customer intimacy. Furthermore, traditionally, wholesalers are able to promote specific products and brands when installers visit them. When installers order online, their connection with the wholesaler becomes less strong.
Nowadays, it is becoming more important for manufacturers to connect with installers, because in some countries, like the Netherlands, most installers order online. Relying on wholesalers to promote their products becomes an issue in the long run, because the only way to reach the installers is online. Therefore manufacturers should get to know the installer and approach him directly. For more detailed information we refer you to the European Mechanical Installation Monitor 2019 Q3.
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