Commentary: The Ripple Effect of Grainger's E-Commerce Investments

Read the Full Feature Story: Grainger's E-Commerce Evolution

Grainger's investments into e-commerce 10 to 15 years ago don't look like large gambles today, but as our lead article by associate editor Jenel Stelton-Holtmeier illustrates, it was in fact a large dollar amount for what the adoption rate was at the time and also the company's culture. I was publicly skeptical at the time, questioning whether it was bleeding edge rather than leading edge. How smart was I?

As the timeline illustrates, Grainger's online sales took off with the dot-com era by 1999. It has continued to scale up along with the Internet.

Grainger's initial CD and online projects were not simply based on an approach of "if we build it, they will come."

That more accurately describes how the industry reacted to Grainger's green-fielding these new e-commerce frontiers.

Remember Automated Catalogue Services? It partnered with more than a dozen different distribution associations in the mid-1990s to create CD-ROM catalogs. But a lot of those CDs ended up as coffee coasters.

That first-generation catalog as produced by ACS was not exactly user-friendly, to put it kindly. There was pushback as many customers did not have PCs with CD-ROM readers. And many customers didn't want employees wasting time with computers! What's more, many distributors didn't know how to market the use of these electronic catalogs.

Then Industry.net created the first Web-based electronic mall for industrial products. But the company over-promised and under-delivered, ultimately going Chapter 11 in May 1997, effectively shutting the service down and costing many distributors thousands and in some cases tens of thousands of dollars. That soured many distributors on e-commerce attempts until the bright promises of the dot-com era a few years later.

The foundation of Grainger's investment in e-commerce was the integration of its catalog into large customer ERP systems as well as the end-user Computerized Maintenance Management Systems (CMMS). Grainger actually hedged its bets by investing in a range of e-commerce platforms. It was successful at locking in customer relationships by connecting platforms in the ways customers were asking for.

A 100,000-foot analysis indicates that Grainger's efforts paid off. Its early actions triggered some industry responses that were not particularly effective, thus widening that technological gap. And as Internet adoption has skyrocketed the past few years, Grainger has benefited from its strong platform.