Buying Behaviors Alter Automation Technology Sales

Oct. 9, 2018
Just as consumer buying behaviors have shifted online, the purchase of automation technologies is undergoing the same transition—and it’s changing how technology suppliers and distributors interact with the market.

Historically, automation technology has been sold primarily via long-standing partnerships between end users and technology suppliers. While these relationships remain a key aspect of automation purchases, distributors are playing an increasingly integral role in the purchase process.

Distributors, of course, have been an important part of the buying process for core electronic components for years. The shift we’re seeing now is buyers’ increasing reliance on distributors for the purchase of complete automation systems—even the software that controls them. And it's a big reason why Allied Electronics changed its name earlier this year to Allied Electronics & Automation.

“The name change was a case of the brand catching up to the business, not the other way around,” said Steve Newland, president of Allied Electronics and Automation. “We’ve been moving toward this for a long time, but it really began to pick up steam in the last three to five years.”

During a conversation at the Allied Expo (an event that connects Allied sales representatives and engineers with representatives at technology supplier partners), Newland pointed out that the sophistication of online automation purchases is increasing. “Products that were once thought to require a personal, face-to-face sale are starting to move online. People are more comfortable buying PLCs and HMIs online—and the rich content that can now be delivered online to support this makes it more common for users to want this buying experience online,” he said.

Like many other shifts occurring across industry, Newland noted that the aging industrial workforce is a big driver of this change: “The previous generation of workers is being replaced by a generation born into a digital world. So it’s easy to see why this technology trend is happening; for this new generation coming into industry, that’s just how it’s done.”

While attending Allied Expo, I spoke with several suppliers to get their insights on how automation purchasing is transforming in light of changing customer demographics and expanding e-commerce abilities.

E-commerce for automation
Chris Overbay, multi-channel manager at Festo, said customers are approaching the company armed with more knowledge earlier in the process than ever before. “They're doing a lot of online research first before they even contact us," he said. "People are so used to buying [consumer products] this way that they want the same experience in their B2B life.”

He added that Festo began working with Allied in 2017 to extend its channel reach in response to how customers want to buy products now.

“People want information on demand, they don't want a sales pitch,” said Patricia Carvallo, global director of channel management for Alpha Wire, an industrial wire and cable supplier. “This makes it harder for us to reach out to them, so we focus on creating good content for use on our site and the Allied site to help them solve their problems.”

In response to the amount of business that Alpha Wire processes through Allied's e-commerce site—as well as the insights Allied provides into current buying behaviors—Carvallo said, “We’re revamping our own site to have better product search tools that use information on temperature, gauge size, electrical properties and industry vertical applications to help users find the right products.”

She added that the level of interaction they’re getting online extends beyond searches for information and into requests for specific samples. “More customers want to see and feel the products before buying and they want to do this without having to interface with a person,” said Carvallo.

Another factor driving online automation sales through distributors is a desire—especially at larger companies—to limit the number of vendors they work with. “Big companies can take months to establish work orders based on the required process to add vendors to their approved buyers lists," said Bob Sheffres, vice president at Opto 22. "But through Allied, they have access to hundreds of suppliers that they can order from that day.”

As much as automation buying behaviors have gravitated toward online purchasing, actual purchases haven’t changed much noted Rich Limato, channel account manager for Siemens. “Customers are still largely buying the types of automation products they've always bought, but we are seeing them move toward more IoT-enabled products. That’s why we’ve started promoting our TIA (Totally Integrated Automation) Portal with Allied this month,” he added.

Automation software sales is a relatively new addition for Allied, considering its long history of device and component sales. “Allied’s application engineers are getting trained on TIA Portal now and going through our AE [application engineer] certification process” to support TIA Portal, added Limato.

This trend toward online buying is not only affecting the kinds of automation products offered online, but also the types of products offered by suppliers. Mark Shiring, president and CEO of ebm-papst, a supplier of fans and motors, said that Allied’s increasing focus on automation over the past several years was key to the company’s addition of motors to its product line. “We see the market trends and Allied is providing us the conduit to that market,” Shiring said. “In the past, customers went to distributors mostly for fulfillment, now they want expertise, support and technical input—and Allied is taking on this role to consult with customers. Ten years ago, buyers went to the OEM for this kind of information, but now the distribution channel is as much of a technical resource as the OEM. We’re growing double digits every year because of [our adaptation to] this shift.”

Growing reliance on distributors
As much as changing buying behaviors are driving more automation sales online, the nature of supplier/distributor relationships is changing in response.

“We started working with Allied in 2012, and it was a new concept for us at the time," Siemens’ Limato said. "But our business units have embraced working with Allied because of how customers want to do business today. The younger generation doesn't want to pick up the phone and ask questions. They want to do it all online. Plus, working with Allied has helped us extend our reach to different types of customers—like small to medium OEMs and the MRO market—that traditional channel partners don't touch.”

Mark Sadie, vice president of sales at Omron Automation said speed of delivery and support prompted the company to partner with Allied to ensure that it could meet customer needs. "By investing our employees’ time, as well as sharing information and co-marketing with Allied, we’re able to get information about new product introductions out to the customer base before they pick up the phone,” he said.

Echoing Sadie’s comments, Kevin Zak, vice president of Phoenix Contact, said Allied’s digital framework provides Phoenix with information that teaches it how to position its products in the digital space. "They show us how many times people search for specific products so that we can adjust our product descriptions to better match what people are looking for based on searches of images, descriptions and technical support videos,” Zak said.

“We’re improving our own capabilities based on what Allied needs to put our products on their site,” said Alpha Wire’s Caravallo. “For example, we’re providing more technical data to Allied because buyers want to load that data from Allied into their bills of material. Before users were able to do this with Allied, they had to input all that information into a separate spreadsheet.”

Caravallo noted that Alpha Wire’s increasing use of information about its products extends beyond technical data. “We’re also adding articles and success stories on a part number level, and Allied’s ability to capture 360-degree rotating 3D image of our products helps with this too,” she said. “And all this information sharing goes both ways. Allied tells us what people are searching on and that gives us ideas for product development. We send all that information to our product development team.”

Allied’s Newland noted how receptive suppliers are becoming to selling their most sophisticated products through the company. "It’s been a step process because they often see us for online reach first and direct sales second. But they've found that we have a unique customer base and that we’re not taking customers from existing places, but bringing them new customers,” he said.

Highlighting the level of advanced automation increasingly sold online, Newland noted that Omron’s line of Techman robots will be available on the Allied site later this year. “Omron saw our success with their other products and saw no reason why we couldn't also sell a [collaborative robot] online. We sell PLCs, HMIs and other advanced automation devices on our site, but a cobot will give us a more dramatic presence in this space. From there we’ll look for complementary robotic lines and models. Our digital roadmap needs to support all the trends in manufacturing design and engineering.”