How's Your Company's eCommerce Doing? Compare Here.
Industrial eCommerce - a 2019 Update
B2B eCommerce is big and growing faster than experts had figured - according to Forrester, U.S. B2B e-commerce sales surpassed $1 trillion last year, reaching that threshold a year earlier than a prior forecast, and will account for 17% of total U.S. B2B sales by 2023.
Last year we published a B2B Industrial eCommerce update and provided an Industrial eCommerce maturity assessment tool to help you monitor your progress. That tool still applies but of course there is more recent B2B industrial eCommerce news to share particularly about about new technologies, changing customer expectations and where industriak eCommerce leaders are focusing now.
Industrial Supplier Update
As the graph above shows, for about 32% of B2B sellers the top improvement priority is providing better and more detailed product content (ref: a B2BecNews survey of 63 B2B sellers). From our perspective on the industry we're not surprised by that and all we can say is, "if you sell manufactured components or engineered products that get designed-in to others products don't forget to offer 3D CAD models and 2D CAD drawings for viewing and download." Beyond that here's a quick eCommerce update on some of the leading Industrial players:
- W.W. Grainger grew sales 8% year over year in 2018, but realized much sharper growth in its online-only businesses of Zoro.com and Japan-based MonotaRO.com which grew 23% on a daily basis, compared with 7% on a daily basis for total sales.
- Fastenal grew overall revenue 13% last year to nearly $5 billion, but revenue from its internet-connected product-dispensing vending machines grew 20% (it has more than 81,000 vending machines at customer locations, up 14% over 2017). Fastenal doesn’t break out eCommerce sales, but points to the importance of online channels to the company’s growth including “healthy growth” through eCommerce channel Fastenal.com.
- MSC Industrial Supply - despite market pressures, including increased tariffs, the industrial products distributor saw it's Ql (ended Dec. 1) eCommerce sales increase 8.7% year over year.
Latest Survey Results
- Manufacturers and distributors are mostly behind in developing mobile sites and apps - less than 50% of manufacturers currently have a website optimized for mobile.
- 38% of U.S. manufacturers say they are ahead of their competitors in introducing new digital applications and tools that range from artificial intelligence and B2B eCommerce to the Internet of Things (IoT), according to an October 2018 survey of 700 companies by McKinsey & Co.
- Younger buyers will mean digital-first B2B commerce - millennials are already the largest segment in the workplace. Within the next two years, 50% of the U.S. workforce is expected to be made up of millennials. By 2030, it's expected to be 75% (according to the U.S. Bureau of Labor Statistics). Three-quarters of millennials are involved in, or even running, the decision-making process for B2B purchases. Their preference for digital channels is disrupting B2B commerce. Having a B2B estore isn’t enough - you've got to meet their expectations:
- 83% expect eCommerce to keep them more informed about product choices than ever before
- 60% would stop doing business with a B2B supplier based on a mobile experience that’s difficult to use
- 79% expect B2B sellers to use eCommerce technology and insights to create personalized buyer journeys
- According to a recent Unilog survey of 244 companies (211 distributors or wholesalers and 33 manufacturers), 72% of companies have an e-commerce site. For those with an e-commerce site, 80% of companies described their B2B web sales as growing, 25% described their online sales growth as “fast,” 54% as growing slowly, 16% as stagnant and 4% slowly decreasing. That survey also notes these suppliers concerns, the biggest of which is the competitive threat posed by Amazon Business so let's go there next.
Amazon Business Update
Obviously Amazon Business is now both an 'industrial supplier' and at $10B lasrt year, a very significant one too. We expect their rapid growth to continue - because upwards of 60% of product searches by consumers and business buyers start on Amazon. Amazon will continue to:
- Add new B2B features and create opportunities for manufacturers and brands to enter eCommerce in a capital efficient way
- Expand its industry specializations to challenge more B2B industries online.
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.
Implications and Recommendations
1. The industrial eCommerce results above show the switch to eCommerce continues to accelerate (Amazon Business is driving some of that acceleration) so we recommend accelerating your transition to eCommerce! If you don't yet have an eCommerce strategy ask yourself these questions:
- If you just shift some existing business to eCommerce what cost savings and efficiencies could you achieve?
- How much could ease of ordering online 24*7 from you add incremental revenue?
- How much could competing online and targeting online buyer add incremental revenue?
2. You need to decide if Amazon is a friend, foe or frenemy for you? We've written on this topic before - see links above for that guidance. Amazon's product portfolio is a mile wide, but your product expertise and value proposition are probably a mile deep. Whether you decide to sell on Amazon Business or not, make sure your eCommerce activity presents your differentiating expertise (for example, with educational how-to videos, product CAD models, etc.).
3. eCommerce continues to mature so staying up-to-date with customer expectations is essential. Use our eCommerce maturity tool to help plan your next move. Either way and with the ISM January report showing activity in the manufacturing sector expanded, and the overall economy grew for the 117th consecutive month, 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.