Pure online players can disrupt installers’ traditional buying journey
Price is often considered to be a focal point in purchase decisions in both B2C and B2B. Nowadays, price transparency has a big impact on the consumer market, as we are much more used to check and compare prices online before making a purchase. But how does price transparency affect the purchasing behaviour of the electrical installers, a very traditional target group in a very traditional market? In our quarterly research conducted in 7 major European markets, we investigated the impact of price on electrical installers’ purchasing behaviour and whether their traditional buying journey can be disrupted by pure online players. We found out that price transparency and lower online prices can indeed disrupt installers’ traditional purchasing behaviour in the future.
The traditional specialised wholesaler, still the main purchase channel to most installers, is doing a great job locking in installers with pricing agreements
From previous researches on buying behaviour we know that electrical installers are very loyal to the traditional wholesalers. Based on the results of the European Electrical Installation Monitor Q4 2020, the traditional specialised wholesaler is still the main purchase channel and its dominant position remains unchanged (even during the COVID-19 pandemic). Almost all installers have some kind of price agreement with wholesalers (most often fixed discounts). On average, wholesalers give 30-40% off for most of the electrical products. The level of discounts does differ per country and product group though. For example, discounts given for cables and wiring differ the most between countries and go up to even 65% in the United Kingdom.
Yet at least 1 in 2 installers check prices online and use this information to negotiate with wholesalers
Nowadays, due to the rise of e-commerce, installers can also check prices online and order via online shops to get the best prices and thereby increase their margins. Based on our research, at least 50% of installers do check online prices. Be that as it may, those who check prices online use this information to negotiate with wholesalers rather than to buy online for a better price. If lower by more than 10%, however, online prices could disrupt installers’ traditional buying journey in most of the countries (see graph). French installers are least likely to be influenced by pure online players, as they need 23% lower online prices to decide to buy a product from a pure online player instead of from a regular supplier.
The annual bonus agreements do not impact installers’ brand decisions
Manufacturers should be aware that price agreements do not automatically build loyalty. According to the installers, the annual bonus agreements do not impact their brand decision. The only exception is France, where half of the electrical installers argue that annual bonus agreements strongly influence their brand decision.
For more detailed information about the effect of discount agreements that installers have with wholesalers and/ or manufacturers for various product groups in the installation sector, the economic development of electrical installers, and the Covid-19 impact, we refer you to the European Electrical Installation Monitor Q4 2020.
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