B2B Industrial eCommerce Update and Maturity Assessment

Industrial eCommerce Transformation - Source: PROS Inc., Hanover Direct, Digitalcommerce360.com Image credit - Digitalcommerce360.com

Industrial eCommerce - Now, Then, How...

For over 20 years eCommerce has been permanently changing the way consumers and businesses buy and sell. Its been a multi-generational process that is far from over! This post updates you on where the industry is now, extrapolates forward to where it may be going and provides an Industrial eCommerce generational tool to help you assess your progress.

Industrial Supplier Update

The graph above shows (according to an international survey of more than 700 executives at B2B companies conducted by Hanover Research for PROS Inc.) that more than 50% of companies in all these segments are already transforming their commerce operations to digital and most of the rest plan to do so in the year ahead. Industrial eCommerce is way beyond the tipping point as these results show:

  • W.W. Grainger Inc. just posted a 7.4% year-over-year increase in revenue for third quarter, but its online-only business led overall growth with an increase of 23% (including an 18% increase in sales at the U.S. operations of Zoro.com, Grainger’s e-commerce site for small businesses).
  • Fastenal eCommerce sales (excludes their EDI and internet vending machine sales) have reached $100M (annualized) and they expect to continue seeing “substantial growth” in web sales.
  • MSC Industrial Supply’s Q2 eCommerce sales grew by 11% and eCommerce sales accounted for 60.6% of total sales in the quarter.
  • In this 3rd party assessment of industrial suppliers' eCommerce by Apruve, the top 5 (in order) were Grainger, HD Supply, Global Industrial, MSC Industrial Supply and Motion Industries. They all ranked as "Superior - Companies provide B2B customers with an excellent website experience, multiple ways to purchase, and provides comprehensive product information to customers". But strangely they did not rank Amazon Business?

Amazon Business Update

Obviously Amazon Business is now an 'industrial supplier' too but their impact on the market and traditional industrial suppliers (like those mentioned above) deserves its own section. Why? In the last two years Amazon Business has gone from $1B to $10B ("Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organizations in eight countries," CEO, Jeff Bezos). If that hasn't got your attention, try guessing how fast they will 10X that to $100B* as Amazon Business Prime continues to add new value/benefits for customers. We've previously written about Amazon Business and shared our recommendations for industrial suppliers - see Amazon; Friend, Foe or Frenemy to Industrial Suppliers and 2 Industrial Suppliers eCommerce Experience with Amazon.

Latest Survey Results

  • eCommerce statistics drawn from Forbes.com and Ecommerceandb2b.com and the image is by ApruveThe statistics on the right are drawn from Forbes.com & Ecommerceandb2b.com, the image is by Apruve. The Apruve report, which is focused on electrical distributors, also says that 58% of companies surveyed do not have any form of eCommerce yet.
  • Echoing those findings with customer feedback, this digitalcommerce360.com report says, "B2B buyers still find many e-commerce sites lacking, and many sellers have yet to implement the advanced self-service & personalized tools buyers want."
  • Real Results Marketing just published their report on the impact of Amazon Business on Distributors. They say, "more than two-thirds of distributors surveyed view Amazon as a threat" and "more than a quarter of distributors polled said they sell, or are willing to sell, all the products they carry on Amazon".
  • According to Forrester, by 2019, manufacturers and wholesalers will account for a combined 30% of spending on e-commerce technology, and that these B2B companies will spend more on eCommerce than B2C retailers.

Industrial B2B eCommerce Maturity Model

The table below illustrates the multi-generational development of industrial B2B eCommerce across some of the key areas. Capabilities created in earlier generations are assumed to still be available in later generations. This is a general guide, whether particular capabilities fall in one or another generation is debatable and some of the generation 4.0 capabilities are educated guesses. What isn't debatable is that the more mature your eCommerce solution, the less competitive risk you face and the more likely you are to gain a larger share of the eCommerce pie. Generation 3.0 is highlighted because that's approximately where the leading industrial suppliers (manufacturers and distributors) are now or shortly will be.

Industrial B2B eCommerce Maturity Level

1.0

2.0

3.0

4.0

Strategy

Separate process & system - an online catalog

Separate system, partial integration (e.g. to CRM) - online catalog with some helpful features

You still run offline too, but this is now the fully integrated online 'heart' of the business and you can run it with this!

You do run the business or most of it with this,
It has become your 'growth engine' as it contributes most of the growth!

Customer/User experience (CX/UX)

Website,
Static product pages,
Contact page

Mobile friendly,
Online catalog with dynamic pages,
FAQ pages,
Product CAD viewing & downloads,
Configurators with CAD,
Blog posts

Mobile first,
Personalized after login,
Customer groups,
Online chat,
CAD with AR (Augmented Reality),
Customer reviews,
Resource center for SEO content

Unique experience for each customer,
Other self-service tools
Single Signon for everything,
Voice enabled,
CAD with VR (Virtual Reality),
CPQ configurators based on past preferences,
Other self-service tools (e.g. quote generators)

Search

by product names and codes,
site search by 'Google site:xxx' search

SEO focused,
Landing pages,
Local faceted search options,
By competitor product codes

Advanced search options,
memory of past searches and auto completion

Voice enabled,
Multiple languages,
Intelligent search with suggestions

Pricing

None - call sales rep

List pricing,
Call for by-account pricing

Personalized pricing,
Multiple currencies

Dynamic real-time pricing,
Bulk pricing,
Price negotiation

Payments

By credit card

By multiple methods (e.g. PayPal)

Credit accounts and limits

Financing options,
Account managers automatically notified

Orders

RFQs

Order history access,
Order Tracking

Purchase Orders,
Simplified reordering,
Quotes given and accepted online,
Ordering suggestions,
OMS (Order Management System)

Recurring order setup,
Purchasing approval loops,
Order prediction,
Automated reordering set up by users and/or based on IIoT feedback (e.g. consumables),
Sales team automatically notified

Availability

None

Current stock shown

Multi-warehouse alternative delivery dates and cost options offered

Optional faster drop ship dates and costs added,
Self-pickup dates and costs offered

Picking

Print and manual pick and pack

Integration with warehouse system but still manual

Partly automated pick and pack

Highly automated robotic pick and pack

Shipping

Manual freight orders and scheduling

Manual ERP entries,
Freight mngt. system or 3PL

Self-pickup dates and costs offered

Freight management and multi-warehouse pick, pack & ship synced for lowest cost,
Optional faster drop ship dates and costs added

Page speed

'whatever'

Measured and reported

Monitored and load adjusted

Adapted and automated

2 Implications and Recommendations

1. Are you a disruptor or the disrupted? It's every business's choice but we recommend the former rather than the latter! The industrial eCommerce results above show the switch to eCommerce continues to accelerate (Amazon Business is likely driving some of that acceleration) so we recommend accelerating your transition to eCommerce!

2. eCommerce continues to mature so staying up-to-date with customer expectations is essential. As the table above shows we all need to continue to invest and modernize our eCommerce. Laggards may actually get to jump a generation or two, perhaps even leap ahead of their competitors? Either way and with the ISM September 2018 report showing 25 months of expansion in the manufacturing sector is there a better time than now?

As always, if you have questions please ask them by leaving a comment below, click to ask a question or call for a discussion. In the meantime CDS will continue to keep developing its tools for online industrial marketing.

* On the Amazon Business question above - this may be a clue: sales volume for Amazon Business will exceed $25 billion by 2021, according to analysts at Robert W. Baird & Co. Inc.

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