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The second annual MDM Distribution E-Commerce Survey conducted with Real Results Marketing revealed several key trends:
E-commerce revenue as a percent of overall revenue is rising relative to last year’s survey.
The primary objectives among distributors for e-commerce are acquiring new customers, growing wallet share with existing customers and improving website usability.
Respondents express mixed satisfaction with much of the functionality on their own e-commerce websites.
Nearly 30 percent of companies that responded have a mobile device-optimized e-commerce solution. An additional 20 percent are implementing such a solution in the next 12 months.
Grainger is still overwhelmingly considered to have the best website by its competitors.
Read MDM's companion article to this piece, Beyond Amazon: E-Commerce's Impact on Wholesale Distribution Markets.
Click here to download the graphics from this article in pdf format.
E-commerce revenue as a portion of total revenue has grown significantly in the past year through the growth of existing e-commerce sites, as well as new implementations, according to a joint MDM online survey with Real Results Marketing conducted at the end of 2012.
The number of distributors whose e-commerce revenue comprises 5 percent to 10 percent of total revenue has grown 50 percent from last year. The number of distributors with 10 percent to 20 percent of revenue or with 30 percent to 40 percent of revenue coming from e-commerce has doubled. (See Figure 1.)
This growth indicates that, in contrast to last year, e-commerce is really taking hold within distribution and has expanded far beyond the success of a few major distributors.
However, distributors still seem uncertain about the full potential of e-commerce for their businesses, as typified by the following comment: “Janitorial supply is the last industry to adopt technology. We’re old school. Our customer demographic is never on the cutting edge. No solution we come up with can match Amazon.”
On the other hand, one mid-market building materials distributor believes that e-commerce will be the largest portion of their business in a few years.
E-Commerce Priorities and Objectives
Not surprisingly, the top two priorities for distributor e-commerce initiatives are increasing new customers and increasing use of the website by existing customers. Respondents are expecting 5 percent to 20 percent improvement in each of these areas over the next 12 months.
Many distributors recognize that to increase customer satisfaction, their websites need to be easier to use. Areas commonly cited include search and website speed and performance.
Although only a small percentage of distributors consider increasing efficiency and operational cost savings the top priority for their e-commerce initiatives, a large percentage view it as a second or third highest priority. The efficiency is often gained by automating the processing of small orders that would be more costly if done by a person. (See Figure 2.)
As e-commerce matures within the distribution industry, more distributors will focus on growing transaction size through cross-selling as seen on B-to-C sites such as Amazon. However, a gating factor on cross-selling is the quality of product data, something many distributors are still struggling to improve.
Respondents in this year’s survey take a critical view of their companies’ websites. They have mixed satisfaction about advanced search, product information, links to manufacturers’ websites and quote capability.
Respondents are primarily dissatisfied with their online help and purchase suggestion capabilities. This dissatisfaction is well expressed by a mid-market tools distributor who said: “Just providing customers with ease of use, fast connectivity, best search engine capabilities and the right product information so they want continue using the website and increase their ordering frequency is a challenge for us.”
In this year’s survey, distributors indicated a move toward a hybrid approach to website design, using a mix of internal and third-party resources. This is a good move for an industry where many websites lack aesthetic appeal and usability. A marketing executive at one industrial product MRO distributor summed up its challenges with design and usability, saying: “The overall flow of the website, as well as the attractiveness/wow factor needs improvement. We are behind on taking advantage of the fresh, tech-savvy programs available that would take our website and capabilities to the next level.”
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