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Industrial eCommerce – Latest Updates, Trends and Learning for Distibutors

Last week Modern Distribution Management MDM presented an interesting webcast on industrial eCommerce progress by distributors. The input was a survey and article by ‘Real Results Marketing’ and the results were presented then discussed by a panel in the webcast.

Industrial eCommerce in Distribution

We’re sharing 5 of MDM’s industrial eCommerce conclusions here on our blog because we thought they were very useful and because we wanted to add our take on these points.

Distributors continue to grow the percentage of their business via eCommerce

In 2015 nearly a tenth (8%) of distributors had more than 40 percent of their business via eCommerce, a third had more than 10 percent and almost half (49%) had more than 5%.

Our take is that once eCommerce is contributing at least 5% of revenue it has passed the ‘testing’ threshold and it’s time to focus on it as a sales channel for future growth potential – almost half of distributors have already reached that ‘turning point’. Their forecasts may be optimistic, but almost two thirds (65%) expect to exceed 5% and over two fifths (42%) expect to exceed 10% of revenue via eCommerce in 2016!

Distributors’ top 3 eCommerce priorities remain to ‘increase new customers and orders’, ‘ improve customer experience and promote their brand but as eCommerce matures for them the focus is building on the first two & We concur with that, the key purposes of CDS Catalog as a Service, CDS Configurators and CDS ModelServer (for product CAD model downloads) and supporting eCommerce are to attract and convert new customers and business. We also think that the focus on ‘improving customer experience’ is directly related to increased eCommerce competition as more and more distributors (and manufacturers) offer eCommerce. Assess for yourself where you competitors are today and where they are likely to be by the time your eCommerce initiative is ‘flying’ and fully anticipate eCommerce competition to increase in the coming years. We broadly agree with the product taxonomy discussion in the webcast but have a few extra suggestions particular to industrial suppliers.

It is much easier and less expensive to launch a B2B eCommerce initiative today than it was even 5 years ago. 5-10 years ago eCommerce initiatives were often $500,000-$1,000,000 projects, today entry is possible for $50,000-$200,000. We agree and have written about this trend before, see more detail here. The key point is that this lower cost of entry opens eCommerce to medium sized and even small distributors but that eCommerce is not a ‘get and forget’ capability – it will be an ever evolving and developing capability for distributors many years into the future!

What are the most effective ways to drive eCommerce up to a significant percentage of revenue faster? As the graph above shows many distributors have spent two, three or even four years getting to 5% of revenue from eCommerce. How do you avoid that and accelerate the contribution of your eCommerce much faster? Learning from the survey respondents the most important factor is the direct involvement, support and evangelizing of the distributor’s eCommerce by their sales and customer service reps. That’s followed by eMarketing (principally emailing marketing and SEO/organic search). In our view it seems obvious that obtaining team and channel alignment rather than conflict is essential for a fast ramp up, as is either recruiting or outsourcing eMarketing.

How to handle pricing online? The survey results show the various options and their adoption rates. It depends on your niche and what customers expect but the key is to ensure that the eCommerce platform you choose lets you apply different options over time. In our view most will end up with general pricing available without logging in, but customer specific pricing only available after logging in.

Industrial eCommerce – what do you conclude?

Read the article or watch the webcast recording for yourself and let us know what you think about these points or othes on industrial eCommerce by commenting below, then click either button below or simply call us for a discussion and our recommendations on your situation.

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