What will 2017 eCommerce Growth be for Industrial Suppliers?

2016 Predictions for US Manufacturing

As 2017 approaches we take a look at some predictions for US manufacturing through an 'augmented reality' lens of some leading industrial suppliers' 2016 online results. Then we share our conclusions based on the data and give actionable recommendations for all industrial suppliers - manufacturers and distributors.

This blog post is organized in three sections, the first sets out what some top industry leaders and influencers are saying about their recent eCommerce results, the second summarizes what some industry forecasters are predicting for 2017 and finally we share our recommendations and offer a useful tool to help your 2017 growth planning.

1. What are Some Leading Industrial Companies Reporting about 2016 eCommerce Results?

  • MSC Industrial Supply - MSC is gaining market share in part through its e-commerce operations. CEO Erik Gershwind recently said:
    • “Our e-commerce solutions are streamlining our customers’ procurement process,” and “our digital analytics are bringing new insights regarding customers’ purchasing patterns and their plants’ operations."
    • "eCommerce reached 59.1% of sales for the fourth quarter, up from 58.6% the previous quarter and 56.7% a year ago. That put total e-commerce sales—including sales through the company’s e-commerce site, MSCDirect.com, and internet-connected vending machines at customer locations—at $440.35 million for the quarter, up 6.8% from $412.44 million in the year-earlier quarter. By comparison, total sales increased 2.4%.”
  • Grainger - Grainger reported sales of $2.6 billion for Q3, an increase of 3 percent versus $2.5 billion in the third quarter of 2015. CEO DG Macpherson recently said:Grainger Product Page
    • "The third quarter results were within our expectations. I'm pleased with our ability to continue to effectively manage costs in this low growth environment while still investing in our future success."
    • "During the quarter, we continued to see strong revenue and earnings growth in our single channel online businesses ... 38 percent sales growth for the single channel online businesses."
    • In their Q2 results Grainger's eCommerce sales were reported to be 46% of total revenue in the first half of 2016, up from 40 percent a year earlier.
  • MDM (Modern Distribution Management) annual eCommerce survey - revealed many key trends, including:
    • The number of companies with at least 10 percent of their total revenue from eCommerce grew 8 percentage points year on year.
    • Distributors primary eCommerce objectives are acquiring new customers, enhancing company brands and improving the user experience.
    • A quarter of distributors receive 50 percent or more of their orders by email.
    • Most distributors require a customer to log in to see pricing and purchase products.

2. What are Some Eminent Forecasters Predicting for 2017 and Beyond?

  • NAM (National Association of Manufacturers) 2017 GDP Predictions for USnotes that we've seen a stream of good economic numbers in the past few weeks, led by an upward revision of 2016 Q3 GDP to 3.2 percent (from 2.9 percent) and the unemployment rate falling to 4.6 percent, its lowest level since August 2007. Here's a link to their latest Monday Economic Report and some bullet points from it:
    • The chart shows Q3 was the fastest quarterly growth rate in two years. In the first half of 2016 the US economy expanded by only 1.1 percent (annualized rate) but the stronger Q3 and predicted Q4 are anticipated to lift 2016 to 1.6 percent. More importantly 2017 is expected to be stronger than 2016 at 2.5 percent growth.
    • Consumer confidence, in November, soared to its highest level since July 2007. Personal incomes are up 3.9 percent over the past 12 months. Good news for retailers — and by extension, for manufacturers.
  • The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) climbed from 54.6 to 56.0 in November, its fastest expansion rate since July 2015.
  • Forrester - for Business-to-Business (B2B) eCommerce their 2016 To 2021 forecast says:
    • "B2B eCommerce continues to evolve and expand aggressively for certain industries and products. The US B2B eCommerce market is worth approximately $829 billion today, and we expect it to reach $1.2 trillion over the next five years."

3. Our Conclusions on Planning 2017 Business Growth including eCommerce:

  • Customer research and buying is rapidly increasing online and maturing.
  • If you don't already provide customers with online research and purchasing - catch up early in 2017 or you risk getting left behind and losing market share!
  • If you already provide customers with online research and purchasing keep up with these technologies and keep extending and improving your customers' experience ahead of your competition.
  • 2017 looks more promising than 2016 so plan for more growth, particularly including eCommerce, and to improve your customers' experience (such as CAD model downloads, configurators, better catalog local search, better SEO, etc.).
  • Growth Matrix for 2017 Planning by ManufacturersTo possibly help you here's a useful growth planning tool - invented by Igor Ansoff, a Russian/American mathematician, and used to organize ideas into four ways a business may grow along with the associated risks. This 2*2 matrix organizes ideas into ‘existing’ or ‘new' products, each in ‘existing’ or ‘new' markets. We recommend applying it to create, consider and prioritize your 2017 growth options.

We hope these ideas help you prepare for 2017, good luck with your planning and happy holidays. If you have any industrial CAD, Catalog, Configurator or eCommerce questions please use either button below or call us to discuss them or comment below. We look forward to helping you this year or next…

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