Episode #68: Closing the Digital Revenue Gap: B2B E‑Commerce That Actually Gets Used
In this episode of U.S. Manufacturing Today (powered by Veryable) host Matt Horine interviews Ethan Giffin, founder/CEO of The B2B e-commerce agency and author of Closing the Digital Revenue Gap, about revenue leakage and added costs caused by manual B2B ordering. Giffin explains that most buyers prefer self-service and B2C-like experiences, and argues digital commerce should be treated as a true revenue channel targeting 10–15% of revenue, not a “website project.” They discuss what a multimillion-dollar leak looks like (high order-processing costs, errors, lost customers, and requirements like punch-outs), why projects stall (misalignment across sales/marketing/ops/finance/IT, catalog and data issues, ERP access), and a three-year adoption path. They cover sales-team fears and incentives, how to pilot and activate portals, practical AI uses (catalog building) versus hype, and where to get Giffin’s book and consultation.
Links
- Ethan Giffin on LinkedIn
- The B2B eCommerce Agency
- The B2B eCommerce Agency on LinkedIn
- Secure a Free Copy of "Closing The Digital Revenue Gap"
- Veryable Is Revitalizing U.S. Manufacturing
- Sign Up on the Veryable Platform
Timestamps
- 00:00 Show Intro and Guest
- 03:09 Ethan’s Commerce Journey
- 04:49 Middle Market Reality Check
- 07:07 Defining the Revenue Gap
- 09:14 Where Money Leaks
- 12:55 Top Blind Spots
- 14:52 Why Digital Projects Stall
- 20:58 Diagnostics and 3 Year Plan
- 23:13 Sales Team Fears
- 25:27 Incentives and Adoption Wins
- 27:32 Success Story Shift
- 28:33 Early Portal Wins
- 29:23 Build It They Wont Come
- 31:22 Pilot Then Activate
- 33:39 AI Practical Vs Hype
- 35:10 Crawl Walk Run Maturity
- 37:15 Agents Relationships And ROI
- 40:46 Reindustrialization Digital Edge
- 43:13 Friction Kills Buying
- 47:21 30 Day Action Plan
- 48:34 DJ Lessons In Change
- 51:49 Book And Wrap Up
Episode Transcript
Matt Horine: [00:00:00] Welcome back to U.S. Manufacturing Today, the podcast powered by Veryable, where we talk with the leaders, innovators, and change makers shaping the future of American industry, along with providing regular updates on the state of manufacturing, the changing policy landscape, and more.
Today, we're talking about a problem that doesn't show up on any report, but it's draining margin from American manufacturers and distributors right now.
We spend a lot of time on this show talking about the physical side of reindustrialization, the plants, the equipment, the workforce, the data infrastructure. Today, we're talking about the commercial side, how your customers actually buy from you, and where revenue is quietly leaking out of the process.
Our guest today has spent nearly two decades helping mid-market manufacturers and distributors fix exactly that. Ethan Giffin is the founder and CEO of the B2B e-commerce agency and the author of "Closing the Digital Revenue Gap: 10 Revenue Blind Spots That Are Costing You More Than You Think." Since 2007, he's worked with executive teams at companies doing 100 [00:01:00] to 300 million in revenue, helping them find the structural leaks in their revenue, modernize how their customers buy, and build digital systems that actually get used.
He also hosts the B2B Ecommerce Summit, an annual gathering of the operators shaping the future of B2B commerce. We'll explore what the digital revenue gap actually is and what a $5 million leak looks like inside $150 million distributor, why most digital projects stall, and why it's almost never the technology, the real reason sales teams fear e-commerce and how to fix it, and what it takes to build a buyer portal your customers will actually use, and where AI fits into all of this.
Practical moves, not just hype. So let's get into it. Ethan, welcome to US Manufacturing Today.
Ethan: Matt, thank you so much. Ex- so excited to be here, and that was quite the introduction thank you very much.
Matt: hopefully we did it a little justice. So we appreciate you coming on because it's a great story. We got the chance to meet not too long ago, and I thought this was perfect because this commercial conversation comes up all the time. I've, in past lives as a manufacturer, [00:02:00] talked with our commercial teams, and a lot of the things that you hit on was like, wish I heard it five years ago.
Ethan: It's great. Yeah. It's funny, it's like you mentioned in the intro, it's like there's lots of manufacturing organizations that have automation and Industry 4.0 and IoT devices and all the things, but they're still taking orders on notepads. I think that kind of makes it, really boils it
Matt: Yeah. In 2026, I still think I've seen one of those carbon copy type notepads. So just want to throw that out there in case anyone's listening and they think that they may be at the far end. Don't worry, there's always somebody out there that's probably a little bit further in the past. Very good.
We'll jump straight into it. You've been at this since 2007, nearly two decades working with manufacturers and distributors and how they sell. Take us through that journey. How did you end up in this specific corner of the commerce world, and what drew you to manufacturers and distributors in particular?
Ethan: Yeah, so I was an early digital marketer. I really fell in love with the aspect of creating conversions on a website, and you could track that [00:03:00] all the way through. E-commerce was, like, the perfect formula for that. Typically, especially on the direct-to-consumer side, you could buy a Google ad, you could buy a Yahoo ad at the time, and drive traffic into a, a website, get somebody to add something to their cart and check out.
And I just loved the transactional nature of that. I also was really always very much into customer databases and CRM. And so I got my start on the direct-to-consumer e-commerce side of things, but then as our brand and manufacturing clients that we were helping out with some direct-to-consumer type experiments, asked us to say, "Hey, can you take a look at this system that we've home-built, and is there a path for us to, to, to bring in some of the features and functionality that we're using on the D2C side?"
And so by accident I got involved, but I really fell in love with it because it actually affects all the parts of my brain in the CRM, catalog, ERP, [00:04:00] sales, and then the whole kind of digital component of
Matt: Yeah. That's definitely it's touching all, all sides there, especially on the CRM side and seeing that process all the way through. Something that stood out when we first met, we talked a little bit about the middle market, and it's kind of its own animal, right?
It's big enough that the problems are expensive small enough that there's not really an army of consultants on retainer or people to help you with some kind of implementation. What do you see in the $100 to $300 million range that the giants and the small shops typically don't deal with?
Ethan: Yeah, it's interesting because everybody that we talk to comes to us generally with one or one of two problems. Either they're, they don't have anything and they don't know where to start and need someone to help them on that journey, or they've built something already and it just hasn't lived up to what they were expecting.
We was on the phone with somebody that, had spent basically seven figures building a private buyer portal [00:05:00] for a $400 million organization, and they had done 150 grand worth of orders through it in the first nine months, right? And like they it's either they're not sure where to start or they did something and it didn't really work out the way they expected it to.
And I hear those same two stories over and over again, and it's very surprising, the organizations, they all feel like that they're, like, alone in this but quite honestly, that's not the case. There are many organizations that need that help and assistance. And, we're really seeing, if you think about it the average 23-year-old college graduate that's entering the workforce was five years old when the iPhone came out, right?
So it's, fascinating to think about that they have lived their entire life with a smartphone. And so your customers are expecting you, are expecting to buy from you the same ways that they're buying in their personal lives, right? So there's definitely this gap that's [00:06:00] starting to close very rapidly in all of that.
Matt: Yeah, no you, we talked about that I think previously, and that was something that you kinda have to take a step back and think about, right? I kinda think of my life in terms of the digital side before the iPhone and after the iPhone, and we are getting to the phase where the workforce is now, they were all smartphone.
We've all gotten used to it in our own life. But a world without them is something not known to, to many people coming into the space. Let's jump to the digital revenue gap and talk through that because this is pretty fascinating and something that catches folks, and we talk a lot about margin compression and other things on the show.
Let's define the core idea. Your book is called Closing the Digital Revenue Gap: 10 Revenue Blind Spots That Are Costing Companies More Than They Think. What is that gap, and why can't most executive teams see it on any report they're looking at today?
Ethan: The gap is what they're losing either in, in leakage, revenue leakage, or costs by not having some type of B2B e-commerce system, some type of [00:07:00] buyer portal for their customers to purchase from them. And when you're looking at it in, in much bigger organizations like McKinsey and Gartner have gone out and done numerous studies million-dollar studies on this.
And they're, we're s- they're throwing numbers around like 67% of B2B buyers would prefer a self-service type experience over having to call their sales rep for everything. They still wanna talk to their sales rep, right? But they don't wanna have to do it for every single order, and McKinsey, you know, did a great study on that.
Gartner did a study that said that 80% of B2B buyers actually expect a B2C-like experience in that process. And so you don't have to be Amazon, and quite frankly, you can't be Amazon as a mid-market manufacturer, right? They do more innovation in an hour than you might do in 10 years or even ever. But we need to start thinking like them a little bit more and start [00:08:00] understanding that this-- that digital revenue is a true channel within the organization, not just a website, not just a hobby.
Like the-- you should be striving to have 10, at least 10 or 15% of your revenue flowing through a digital system, if not more.
Matt: Yeah, 10 to 15% mark sounds, really great for people who are responsible for that type of commercial activity, and we'll get into that a little bit on the sales team side. But, just walking, through it a little bit you talk about what a f- $5 million revenue leak looks like inside a maybe $150 million distributor.
Let's walk through that a little bit. Where is that money actually going? Where's the miss? Because I've been at one of those types of distributors before, and I-- you have this sinking feeling like something's not hitting right, and certainly not looking for free advice here, but the expertise on it could help, somebody impact their operations today who's listening.
Ethan: If you really break it down, and every organization's different, but if you have to pick up the phone and [00:09:00] call to place an order, right? Or have manual methods for entering that order and have multiple people touch that along the way, that might cost you 50, 60, $70 an order to process through, right?
And there's gonna be mistakes and errors and problems that happen with that. On the e-commerce side, say you have an established customer, right? They've got credit already. They've got they're-- they've negotiated a catalog, right? Like they've negotiated catalog specific pricing to them. Maybe even like they can only buy a subset of products from you.
They're only allowed to buy a subset under the contract. Imagine having a system where they could log in, have a shopping list, and be able to add all those items to their cart, like in one click, check out and be done, right? And have that be perfect. There's no potential for error, no fat fingering, no mishearing, right?
All of that. And so that's really the heart of it. And there's a lot of ways to slice and dice this, and some of it is through [00:10:00] cost savings, right? Can we save money by having these orders pass through digitally? Both in having less like human intervention, but also having less errors and issues with that.
Or are we losing customers because they've found that friction somewhere? Like they've-- it's created too much friction and they'd rather just buy somewhere that's easier, right? So there's, that's how we think about it in terms of, laying it out for someone. Or one of the other factors that happens is we're working with a large distributor now, a $100 million distributor that one of their key clients said, "If you don't implement punch-outs so that our procurement systems can engage with yours, we're gonna stop buying from you," right?
And and then it's just are you willing to walk away from the business just 'cause you wanna write it down on a or get a fax, right? And so what we're seeing is as, especially with multi-generational manufacturing organizations, we're seeing those that are often in their [00:11:00] 30s, 40s, 50s kind of taking taking the lead in those organizations.
And again, I'm gonna be 52, right? And I got an iPhone on the day it came out. Right? It's literally time. I- if you wait another five years the people that are 23 entering the workforce will have had a smartphone from the day they were born. And I think that I think we're-- I'm always mindful of talking about emergencies or the world shutting down, especially living through Y2K and all these things, but I, but it's gonna be a problem.
It's gonna be a real problem for organizations that are like like I can go buy and I've changed vendors because it, other places made it easier for me.
Matt: No, that, that vendor change conversation can come up very quickly. It's silent, right? You don't-- sometimes you're, as a as a distributor, you're not even expecting the conversation. They sit on those frustrations quietly until somebody comes along and shows them something, better or that they could make the change.
Of the 10 blind spots in the book, which one or two do you see most [00:12:00] often when you walk into a manufacturer or distributor for the first time?
Ethan: I think what often happens, the first one is treating it like a website project and not a true revenue channel, right? All I ta-- the biggest thing is that this is not a technological problem. There's some hard stuff that you gotta get through on these projects, but it's not a technological problem, it's an alignment problem, right?
And the example of the $400 million organization that contacted us, their finance department was making somebody wait three or four weeks to get approved from the day they filled out the form to get access to the system. And by that time, they'd already forgotten about it, right?
They-- at that time, they were like, "What?" They'd forgotten about it. So that's a real example of alignment. And not to pick on the finance folks, so I'd love to pick on the CFOs 'cause they sign the, they write the checks. But another might be somebody saying, "Hey, let's bring that commission back in-house," right?
"We don't have to pay our salespeople with all this these days." And it's like no. Your sales team is actually your boots on the ground. You can increase their [00:13:00] territory, you can increase their quota, but literally this should be a tool that helps facilitate them getting to spend more time growing their long-tail book of business into a lighthouse customer, right?
Being able to put more time in because their, active customers are just logging in now and, adding their shopping list to the cart and going about their day.
Matt: Yeah, really good point there on the commercial profiler. You could get into all kinds of discussions about that on order-taking versus actually selling which, this is something that closes that gap. Just from my f- my first pass on it is that, that type of stuff can be direct traffic ordered from the website, ordered digitally, and then you have people who are actually out there developing better relationships and better customer contacts.
Let's-- you kinda-- I-- You hinted at it in that, that section, but it's been a recurring theme on this show about the nature of, we could call it an umbrella term like AI projects, but digital projects in general, and why they stall. Almost every operator listening [00:14:00] has either lived through a stalled digital project of some kind or knows somebody who has.
I can think back, to the early, mid-2000s. You'd hear about the Oracle ERP, implementation or some type of yeah, of s- some type of stalled project or something that was taking months. You say the problem is almost never the platform. It's what nobody diagnosed before the platform was actually purchased.
What do you mean by that? Are people looking for a quick fix or what's what's really behind that?
Ethan: I think that they're just, and this is a mistake that many folks make, and it's not their fault, quite honestly. What happens is they-- Somebody says, "Hey, we need to do this," right? "We've gotta go in this direction," or, "Somebody's making us go in this direction." And so what the next logical thing to do is to do a Google search and start calling companies, right?
Start calling shopping cart companies, right? And getting demos and talking to salespeople, right? And it becomes very much about what demo they fall in love with and not really understanding the true nature of how this goes together, right? So what they'll [00:15:00] do is they'll say, "Hey, here's the VP of marketing.
He's the hip one in the organization," right? "He does the events. He's doing understands ChatGPT more than all the rest of us. And hey go pick a website and go build a website for us that does this." But the reality is that it touches sales, it touches marketing, it touches operations, it touches finance, and it touches IT.
And you need to get those groups together, and we call it the five-legged stool, but you need to create alignment underneath of that. When we t- when we kick off a project, we do an immersive discovery in person at our studios in Baltimore. And we j- and we just did a, did one of these at the beginning of the year where the CEO said, "Hey, I do I really need to be there?
It's just a website kickoff." And, what I said to them was like, "Listen, this is not just a website. This is a digital revenue channel. And, you're $100 million, and we wanna get this to be 10 or 15 [00:16:00] million in revenue within, pacing to that within y- 18 months of launching this.
Is a $10 or $15 million revenue channel not worth you coming down for a day and a half and like setting the tone that this is th- that this is where we're going and how it's all going, gonna fit together," right? And so that's usually the biggest mistake that we see. There is other problems, like people underestimate what it takes to build a catalog, the, the public-facing catalog, or they underestimate and they're unwilling to change their data to meet what modern commercial systems are looking for.
Or, they, their IT person has walled off the ERP and we-- you can't get access to what you need or you don't, you may not even have it. Those are other ways that projects will fail. But legitimately, if you start with alignment in the beginning, a lot of those things work themselves out if you set the right tone from the start.
Matt: All right. It's a really good [00:17:00] perspective and story there, real-life example, because you can think of I don't wanna call it like abdication, but, when somebody, in charge of revenue steps back and says, "Oh, it's just the website," and you hit on a couple of key things there, the catalog, you know, making sure the data's available, all of those things, your framework around sequence alignment and adoption.
Those-- getting that sequence right, it actually looks, for a manufacturer who's starting from a legacy setup, how much of the stall problem is technical debt in the back office, like you were mentioning, ERP integration versus,
Ethan: just, it depends. I think it depends. If you're you definitely need to have a more modern ERP system or a, or fi- accounting system or warehouse system to connect to, to push these orders into. So that is some table stake stuff. Generally we're-- That's not generally the issue that we run into.
It's often "Hey, how do you price your items?" And they'll be like, "I don't know. Uncle Bob does that." And it's like Uncle Bob has some convoluted spreadsheet [00:18:00] that has formula after formula that, that aren't consistent, and then there's a lack of willingness to break that down and figure out how to fix that.
Those are things that can, that, that create the heavy load within the project. I will say the getting, getting the integration, the technical data, the integration, and getting the systems talking together, that is a heavy part, and that's something that we really wanna understand before we even get started.
If that's gonna be a problem. Before we ever even engage with someone on a project, we do about a three-week diagnostic workshop with them where we're looking at kind of things like catalog, ERP, like all of those elements, 'cause we don't wanna get into a position... if we wanna work with folks, but if you're not ready, I'd rather tell you, "Hey, go take six months," and you need...
you're three versions behind on your ERP. Go take, go upgrade that and then come back to us, and this'll be a heck of a lot [00:19:00] easier.
Matt: Yeah, that's a really good jumping off point, and just like the honest broker, right? If you don't have the systems to do this or take that next level step, then it's gonna be a nightmare for everyone. I've been in a unique situation where we've unwound a WMS and we reverted because it was like the WMS is killing us.
It's not working for our distributors and, it's taking a step back and actually doing that. It was a regression. I don't know if that's a success story or not, but we made the right call to, withdraw at one point. That's for another time and place.
I'll love to tell you about that. But for the executive whose projects maybe already stalled, maybe they've tried something like this before, they think of it, like you said, as like a website project what do they fix before you try it again? And if it's not just that system question, like what...
Is it a, mindset? What is the, the thing you've maybe had to tell people to take a step back and reevaluate?
Ethan: Yeah, I think, I think there's three kind of key areas that we look at during our-- dur- during that three-week diagnostic, right? It's alignment, internal alignment. Is everybody ready or mostly ready? You don't have to be-- You can have [00:20:00] some nervousness about this 'cause it's, it's an, it's, it is a large project.
But we wanna s- see the teamwork aspect of it. The second piece is the catalog. Is the catalog ready to go? Like, how much work needs to go into getting a catalog from something that has a lot of acronyms and internal language into something that could be public-facing. And the third is the ERP.
If we can at least get to, If we can at least know that we can have success with each of those, you can work the rest out. There's-- We, we think that this is about a three-year life cycle from day one to being where you've got digital revenue, like muscle memory within your organization.
And, year one is picking picking a consultant to work with, im- picking a technology implementing, what we call our blueprint. And so implementing that, also piloting with your first kind of handful of favorite customers. Year two is generally activating it [00:21:00] with your full customer base, like getting them used to ordering, placing their first order, second, third order, like getting them ingrained in using it.
And then year three is really optimization and are there opportunities for growth? Are there new channels new ways to sell our products that could generate revenue with that? Along the way, you're keeping a scorecard, you're having quarterly steering meetings, and you're building this internal muscle memory that this should be a real revenue channel for the organization.
Matt: Perfect transition on the revenue channel component because I wanna talk a little bit more about what we hinted at earlier the sales component of this. The sales crew. There's a lot of there's a lot of... I don't wanna say, no accusations here or anything. There's some sensitivity around this.
I think something that you could chalk it up to commissions or, for, from my experience and more importantly, channel conflict and relevance, right? The m- a [00:22:00] lot of commercial teams worry about relevance. So let's talk a little bit about the people side because this is where a lot of those projects quietly get sabotaged.
And by sabotaged, I don't mean actively, sabotaging or blowing things up. Just not the full buy-in that you would probably like to see. Why do sales teams have this kind of general distrust or fear of e-commerce, and what does that fear actually look like inside a company?
Ethan: It all starts, they often get the, the crappy end of the stick with certain things, right? Many of them have had a CRM kind of pushed down, like from above at them, like maybe there was a failed CRM implementation. Maybe there's just a lot of administrative work. I think salespeople spend, 70% of their time doing administrative work and 30% selling, right?
They're very skeptical, right? And they're also nervous of, and I see this 'cause I often get invited to our customers' kickoff meetings or their sales meetings and get asked to speak, and you can see the fear of God in their eyes when I get up there and start talking about all this.
But they need to be a [00:23:00] key part from day one in this conversation, right? They're hearing what your customers are saying, and they need to be sharing that, and they need to be a part of steering, like, where this goes and because they're the ones that are gonna make or break this. If y- if they fall in love with these systems and it helps them to make more money, it helps them to make more commission and bonuses, like they're gonna continue to promote it and grow it.
And they're an integral part of this whole thing of getting somebody to use it, and you've gotta make sure you put the time in to helping them get up and running with it.
Matt: Yeah, that makes a lot of sense. I think one of the big things, you know, on the surface is, commission structure, incentive structure, if they're in a legacy system that's core to their role. How do you structure kind of the incentive around this with sales teams and when they get a win from something like a digital channel?
Does do their comps change? Do things change? Or how do you [00:24:00] see the best path for something like this?
Ethan: I, w- we could talk a lot about different milestones and things to celebrate, like along the way. Hey, the first, the first six-figure order that comes through the system, the first million dollars through the system. There's a lot of different ways to celebrate and highlight those behaviors, and I think that should be a key kind of overall aspect of this.
But I think it's really promoting to them that this is a good thing for their book of business, that it's gonna, it's gonna help their customers create less friction. A lot of organizations are actually hard to buy from, and they've got some unique product that they manufacture that somebody needs, and they're the only game in the country that does it sometimes.
And but th- those types of organizations often get set in their ways. Think about kind of the Soup Nazi or, some place that you go into that has signs all over the place of what you shouldn't do when you're trying to buy from somebody, right? It's "Why are you doing this to me?" And getting the [00:25:00] sales team on board and helping to white glove their customers, in goes a long way.
Just making sure their voice is heard goes a long way. Now, you can, I, like often because they are because they have more time giving them a larger territory or giving them a higher quota, but maintaining that the money that they can make and helping them, like allowing salespeople to continue to make money and earn while they're selling products.
So it should not be penalized for their customer to use the online system.
Matt: No, really good insights there. I think, something that would be good for our audience to hear, because like you said there's a little bit of friction, on the upfront end of it. What's one of the gre- the greater success stories you've seen in an organization that went from resisting the digital channel to being its biggest advocate, and what caused that?
Ethan: I think they had a very rudimentary system that was public-facing. It was more direct-to-consumer than... the company was [00:26:00] 90% B2B, and they had a, kind of a very basic e-commerce site that had been set up, but it was very rudimentary. Customers were entering notes into the order notes field and there was all these types of by-hand things that just needed to be done human intervention on every single order that was going through it.
And only a small percentage of people were even using it. And opening them up with a new system really helped to speed order flow. And they had a younger they had a more digital-friendly clientele. That's one of the things we often hear is that our customers don't wanna order online, right?
And it's like you'd be surprised. You'd be surprised. And they were surprised. It was, almost out of the gate. We onboarded their, a handful of key customers with a white glove level of service. We took their feedback during a pilot to adjust and fine-tune the system.
And they were, out of the gate to 10% of revenue very quickly like flowing through that. And [00:27:00] so then it continues to grow to this day. Like we see that over and over again. Or we have folks that where they figured out how to put their catalog online, but they didn't know how to create transactions, 'cause that's actually much more challenging.
And it was like once we opened it up, people just took to it and there's the, th-these are definitely wins. There's definitely wins for folks some very quickly
Matt: Yeah, really good insights there because I think a lot of folks are resistant to it in the perspective of, we touched a little bit on the relevance on the sales side and maybe not knowing their buyer, the nature of their buyer, which is a really nice transition here to talk about, a buyer portal that customers actually use.
And I've been at the head of a buyer portal that didn't necessarily work out to the best interest of our distributors and customers. Pra- from a practical perspective what does separate a buyer portal that customers actually use from the ones that sit there as more of an expensive brochure or product catalog?
Ethan: I like to say in the book, "Build it and they won't come." It's the [00:28:00] opposite of Field of Dreams, Right. Field of Horrors.
Matt: verse Field of Dreams,
Ethan: and so what w- what happens is that people treat this as a singular project with a beginning and end, and not a true revenue channel within the organization.
So this project is not done on the day it launches. You can't just put this up, give a training session or two, like to your sales team or to your organization, and expect to just be done with it. The manufacturer that I, this, and distributor that I had talked about previously, they did both with the $400 million revenue.
As I started to peel back into that 150K of revenue that had passed through the system, I started to ask a lot of questions. I was like "Okay, how did you launch this?" We have multiple brands, and so we created a new brand that nobody had ever heard of and put it under that." I'm like how did you tell people about it?"
"We sent two emails over the course of 90 days."
Matt: Cheers.
Ethan: How many [00:29:00] customers do you have in your Epicor?" And they were like, "About 200,000." I'm like how many customers do you have in your-- did you invite to the online portal?" And they were about 10 or 12,000, right? And it was just like one thing after another, right?
So one of the, the biggest things that people forget about or don't understand is that you've gotta go out and there's a whole second half, which is piloting the system. You take a handful, like a, a dozen or two of your best customers who adore you, customers who won't fire you, customers who would be interested in saying, "Hey, we're building this buyer portal system.
We'd like you to be a part of the pilot. It's gonna be very white glove. There's gonna be a little bit of there's definitely gonna be like some dust, like along the way, but like the feedback you give will help make the system better. Would you be interested in taking part in it?" "Yeah. I'd actually be-- Yeah, I hate calling in every week."
So you pilot a system, you get early [00:30:00] feedback, you get feedback from the sales team, and then you evolve that system to make sure everything's there. You make sure the products they need are there. And then, really it's then how are you gonna activate this, like with the full customer base?
B2B never really wants to give coupons or discounts, but maybe you offer some-- It's kind of a pain in the butt to go in and set up a system like this as a customer. You've gotta add your employees, you gotta make sure everything's correct, you gotta go through the whole process. Maybe you give them some kind of discount or credit, right?
Depending upon how it best works for you, for their first order through the system, right? And then you start to figure out like when, can you push them to their second order. By the time they get to three orders, they generally like are hooked and ready to go with it. But that's really the big thing is that it just doesn't end on launch day.
That's actually the beginning of it, of getting this, getting people to actually use these systems and think about how they work.
Matt: Yeah, really good point. I think [00:31:00] that oftentimes for most initiatives, not just something like this, people see as the launch date as the value creator, and it's actually the system adoption and how people actually use it. You can for the commercial guys who are listening, it's the same thing for a CRM adoption.
We can launch a CRM and if you're not putting, getting inputs into it, it's not creating any value, it's not doing any work. I, I like to point back to the CRM example 'cause I've been through a few of them which, makes a lot of sense. The just because it's a topic of conversation often on our show and it's the buzz right now we've talked a lot about AI on our show.
Making... I think what most people, or I get the sense of, is most people are trying to find ways to make practical moves and not getting too caught up in the hype. There was a-- We've mentioned on this, on our show a couple times that MIT study that showed something like 95% of, corporations who are using AI have not seen any kind of return on it and, that's all, like, how people use it in their day to li- day-to-day lives.
But on the commercial and selling side of a manufacturing business, [00:32:00] where is AI generally or genuinely useful today and where is it mostly noise?
Ethan: Yeah, it's a big, it's a big part of the conversation, and any time you have-- talk, start talking about AI, people's ears perk up. They wanna talk about it. At the same time, like an example there is like we saw Facebook have a reduction in force, and they actually spent more on AI credits than the employees cost them doing the work with not much different result.
How I think about this is that AI's coming. If you don't have a catalog, one of the best ways to s- work to build a catalog is to leverage AI to help do that. Maybe, AI can read sell sheets, AI can read CAD files, AI can do all these different things that we can leverage to build, help build your catalog from, and that didn't exist five or 10 years ago, right?
That was a real death march to kinda get those things going. So it's fantastic for that. We have a lot of conversation out there about agentic AI, agentic B2B e-commerce, and all these-- That's [00:33:00] the next wave. And I would say that almost all of the companies, the manufacturers and distributors that we talk to are what we would consider a stage one or two of digital maturity.
It means they have a a, a catalog website that shows the products that they build or that they manufacture or se- and sell. Or they might have a very basic or rudimentary e-commerce system that doesn't really take in what commercial buyers are looking for, right? It's more of a, like they just s- they set up a quick Shopify site or a quick WooCommerce site and try to just have at it.
And so our cust- the folks we're talking to are this stage one or two, whereas the agentic AI is like a stage five in, in this, right? And so you've gotta figure out how you crawl, walk, run. And th- the system is only gonna operate at the speed of that the entire market can go at.
And I think, maybe like for organizations that think, "Oh, I've gotta get there," no. You've gotta get to a [00:34:00] baseline s- commercial system where they can come in and buy and do and do that with their terms, their pricing, their information, their approvals and all of that, right?
You've gotta crawl before you run. And quite frankly, that's like agentic e- AI, agentic e-commerce, I feel like is somebody that's gonna do an Ironman. That's not like a fi- like a turkey trot. That's an Ironman, kind of thing.
Matt: Yeah. Yeah there's a pretty big gap between that, that turkey trot to Ironman. Really good visual there. Yeah, so really good point. AI changing the economics of getting the product data, and helping you shape up a catalog and do all the things that would be required for a standardized site that may used to been a heavy lift, now a little bit more accelerated.
A little bit more futuristic, but probably closer than we think. If you're a mid-market manufacturer, do you see people preparing for a world in where their customer could be, in part, some kind of software or some type of agent or a procurement system doing more of the purchasing than maybe a person?[00:35:00]
Or is this something that you still see very human-centric controlled and maybe some AI tools building into that funnel?
Ethan: I think we could get there at some point and, we-- Like AI is fantastic for data analysis and, all of those types of things, and some organizations may get there faster, like than others. I think, I think we're gonna continue to see that evolve. But at the end of the day, people are purchasing and, it's like these businesses are built on relationships and that's gonna continue, right?
Even the organizations that are pushing for punch-outs and other type of like EDI and direct integration, there's still a relationship there that's happening, with that. I think it's something that like as you're evolving that you should be thinking about, but I think that's gonna take some time, I think to go from, to go from like trading in marketplaces in person all the way to being the Matrix.
I think it's gonna just take some time before we we get[00:36:00]
Matt: Yeah. Matrix would be the friendlier version I would think for, somebody in the purchasing part. And if they'd be d- listening right now, they're probably thinking a little bit more Skynet, somebody making purchasing decisions on their behalf or doing something to that effect.
Ethan: We'll see how that evolves, right? It's I think that there's just a lot of unknowns yet when we're looking at that. And again, I'm not trying to to downgrade technology, but it's like, are the AI level of sophistication or maturity that many of our customers are using are, to help write an email or to help create a flyer for, an AI flyer that are all over f- social media these days, right?
It's gonna continue to evolve and grow, and we should all be watching over it and thinking about, like, how those parts have come. And I definitely think it's gonna happen faster. But things like punch-outs and EDI have been around, for 20 years, and we just, we still haven't seen, like the full, a full adoption of those yet.
Matt: Yeah, really good point. What's the test you'd give any AI [00:37:00] initiative before a dollar gets spent by an organization?
Ethan: Like what's gonna be the return on investment and like what is it gonna save? Like what's gonna be the cost savings or the revenue generated from that?
Matt: Yeah. Holding people to that, quantifying it tends to sift out a lot of the hype around it. So
Ethan: A- AI is threaded through everything that we do, everything. It's threaded through product recommendation engines that we work with. It's threaded through, customer data like portals that where we, are analyzing customer data to understand what product are they gonna buy next, right?
Like it's threaded through everything, and it's very important. But I do think that, it's gonna take some time to kinda become fully autonomous, i- if it, if we even decide it goes there.
Matt: Yeah, that's I think, what a lot of people are proceed with caution a little bit on that just because to your point, it is threaded in, but on that surface level or taking over roles from the purchasing side or doing things like that, really good [00:38:00] to get those insights. Shifting a little bit here to digital commerce and re-industrialization, which we spend a lot of time on our show talking about the B2B aspect of this.
Sales were essentially flat last year overall, but digital B2B sales grew double digits, so the digital channel. As production comes back to the US and the reshoring movement what does that mean for those who are, actually capturing the demand, or how does it give them the leg up to actually capture some of that demand?
Ethan: Yeah, I think I have yet to meet a business that wasn't able-- that, that wasn't impacted by B2B e-commerce, where they're-- like when they've rolled it out the right way, they've communicated it, they've built a system that, that, that's, h- has, has as little friction as possible.
I've yet to find an organization that hasn't benefited from that, right? And I think that again your customers are buying from Starbucks through the app, they're buying from the [00:39:00] Target app, they're using Ubers, right? They're buying from Amazon. They're doing all of these things online. And so this is just a table stakes part of it that you should have, right?
And it saves money and can help you to increase revenue. I think as organizations are evolving, are growing they should be looking to implement a system like this, right?
Matt: No, that's really good insights. And just to give you a little background on it and a recap from some other shows that we've had, I've had, owner-operators on this show who are answering the phone during, a recording session. They said, "I'm the guy picking up the phone a, a lot of the time."
And a lot of the complaints that we've heard about buying from, you know, reshorer American-based suppliers is that they can't get ahold of anybody on the manufacturing floor, which, this channel obviously opens that up. Do you think there's a pretty strong competitiveness argument here wrapped in that reindustrialization push that says, like the availability of your products and the availability to kind of self-service and do things [00:40:00] yourself, do you think that gives that competitive edge in light of that broader kind of macro trend that we're seeing?
Ethan: Listen, I think people are key to the relationship. I think this is a relationship-based business, right? You build the relationship, you educate your prospect on your products, they decide to start buying from you, and so you wanna just make it easy, right? And I have a pizza oven in my yard.
I love to make pizza. I'm gonna share a little story about some friction here that's just interesting, right? So I love to make pizza in my pizza oven, have people over, and I like to buy these special pepperonis that are for pizza that cup up, right? It's a special brand gourmet, and they only sell them in Baltimore.
They sell them at one grocery store around here. And so I'm going there, I'm getting three or four things to make pizzas, getting the pepperonis. I'm always happy when I'm going in there to do that, right? But Baltimore recently enacted a 5 cent per bag surcharge that every store, retail store has to charge now.
Most [00:41:00] most grocery stores for their self-checkouts have added a button, "How many bags did you use today? Zero through five." And it just adds it just adds 5 cents times, five bags, 25 cents to the thing. And so I'm getting three or four items, two packs of pepperonis, this or that, some fresh basil, so I'm going to the self-checkout.
This grocery store, instead of doing that, they require you, they lock the bags up. They're locked under lock and key. You have to scan all your items, raise your hand, get the self-checkout person to come help you. They've gotta swipe their key card, put a bunch of codes in the system, go over, get you your number of bags, and then you leave.
And so what used to be an enjoyable, exciting thing for me to be making pizza turned into this pain in the ass that I don't even wanna go back there, right? I hate going there now, because what used [00:42:00] to be easy now has a significant amount of friction. Now, think about that within your own sales process.
How much friction is there when somebody actually wants to buy from you, right? And so this, you wanna reduce that friction. Y- people still get dopamine even from when buying B2B. They're still trying to get tasks done. They're trying to get through the day, right? Make it as easy as possible for them.
And so what this does, these systems do, is you've built the relationship, right? But I'm gonna buy the same box of fasteners or the same pallet of, like doohickeys, like every month from you, right? Why do I need to call that in, right? When I've already got a shopping list that has that on that, and I can hit and pay or, use credit, terms, whatever and be about my day, and I could do that at 10 o'clock at night I could do it on a Sunday morning.
I could do it whenever I care to do it [00:43:00] and be able to do business with you. Why is that not, why is that not a bonus? Why is that not a good thing? So how do we put like all of this Industry 4.0, all of this incredible innovation that's happening on the factory floor, and then how do-- I think sales is the tip of the spear for every organization, right?
And it's like you've you've got all this the factory is like high tech, like the, the salespeople are still using carbon paper. So let's give people every tool that they could have to purchase from you, that they can,
Matt: Man that's a really great real-life example because the the friction I just see with chelf- self-checkout in general half the time. You're weighing the items. You maybe bought just a little more than the 10 items or less, and you're trying to configure it there on the scale so that you can get it bagged.
But adding the bag pay s- fortunately we haven't experienced that here yet. I hope it never really changes. But
Ethan: but businesses make it harder to often do business with them and they don't realize it, like quite honestly
Matt: [00:44:00] Yeah. It's incredible, and that's the point to the baseline consumer, right? Going to the grocery store and you think about it and extrapolate it onto an industrial scale. Man it's difficult when that replenishment order could just be as easy as a couple clicks instead of the, 10 phone calls that it takes and inventory shuffle.
Turning now to the show that we, we- part of the show that we try to integrate as part of our closing and what I call something like free advice. The ques- question we ask every guest for, and for the operators who are listening to us right now who wanna start closing their own digital revenue gap, what's the one action you'd recommend they take in the next 30 days?
Ethan: I- if they have a portal, like I would recommend that they really take a look at the metrics and try to look at what percentage of their total revenue's flowing through it how many customers are reordering. Is like a small group of customers responsible for a majority of the orders through the system?
And they should develop a game plan to figure out how to increase that and get more people going. If you don't have a digital [00:45:00] revenue system, if you don't have a, a, a B2B buyer portal, again, you should start thinking about how that would impact, your overall both your expenses as well as your revenue.
And could this positively help you engage your customers and help them stick around? 'Cause they're gonna go other places if it's easier to buy from somebody else.
Matt: Spot on. I think there's... I've got one more question. But before that, something that I may have missed on the opening of the show as part of a personal kind of touch to the to the episode. You're a DJ is what I saw, and which is really great work. I think you do some work for nonprofits there in Baltimore.
What d- what does that, that kind of what does that role teach you about, reading an executive room who's looking to make some type of digital change?
Ethan: It teaches you to read the room and really start to understand audiences and crowds and to try to get people moving in a common direction. But I've been a DJ, for over 30 years. I, [00:46:00] worked in large nightclubs in my, in the '90s and all of those things, and so I've always loved music.
And as I started to get involved, as we've been around a long time and as organizations around town have started asking me to be on various boards and get involved with various events, I got tired of going to these galas and having a DJ that didn't know how to read the room, right? Because you've gotta think about it, the average, 70, like a 70-year-old that maybe is y- contributing a large amount to a nonprofit or a museum, right?
They were, like, listening to "Thriller" in their 20s, right? In the nightclubs, right? And Prince and, and th- this was in the '80s. So I decided to go out and reinvest in equipment and start doing this where I volunteer time to help these organizations with this and basically have a whole nightclub full of equipment in my garage.
So it's been a fun and very rewarding thing to do because, I I want, If you put all of this work into a gala and you can't raise enough money, right? I [00:47:00] come at it from a sales point of view. If you're not raising enough money from all this effort that goes into a gala, six months to nine months of planning and all these people, then you're not getting the best use of your time.
And so I wanna help them generate more donations, more ticket sales and all of that. And so it's been a very rewarding and fun way to get involved, and a little bit, you know, crazy.
Matt: Yeah. Yeah, no, there's probably a lot of great stories there as well. Probably the same thing you can see some overlap there even with the mid-market manufacturers, distributors who probably come up with the same kinds of challenges, just different scope. So wanted to make sure I asked you that 'cause it's a unique personal touch.
Ethan: It was a real challenge. One of the real big things with it was that I had to have my own digital transformation myself going through that process, because when I was a working DJ, it was all 12-inch vinyl records and turntables that we were using. And now, you used to have to carry crates and have all this stuff.
Now, my laptop has 50,000 songs on it and a software that runs [00:48:00] the whole thing, and there's a physical device that plugs in via USB to control it all. And so I had to go through-- I was very nervous and I had to go through my own digital transformation as part of that evolution to get back into doing this and understanding, how it all works together.
And so it was definitely it affect-- the nervousness affects everyone with it, so
Matt: Yeah. No, it's a really great great overlap to what you do and what I guess we could call the day job. The DJ job might be just as much one. Where can our listeners go to learn more about you, your agency, get a copy of the book? It's been a fantastic conversation, so wanna point them in the right direction.
Ethan: Yeah, so the book is "Closing the Digital Revenue Gap." They can get a free copy and a consultation if this talk has resonated with your listeners. I- we'd be happy to spend some time together and send you a book. You can go to www.B2becommerceagency.com, and click on the free book button, and we'll drop one in the mail and schedule a, a 30-minute call to hear more about what [00:49:00] you're doing. And if it's, if we feel like it's a good fit we could work together in a three-week diagnostic workshop to really tee up, are you are you set up for success to go through a project like this?
And so we would love to talk to you. We love meeting new people.
Matt: Excellent. We will be sure to link all of those in the show and make sure our listeners can get access to it. So thank you again for coming on the show today, Ethan. We appreciate it. It's been a great conversation.
Ethan: Thank you
Matt Horine: To stay ahead of the curve and to help plan your strategy, please check out our website at www.veryableops.com and under the resources section titled Trump 2.0, where you can see the framework around upcoming policies from the administration and how they will impact you as a manufacturer.
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