Survey: 70% of Distributors Plan to Invest in E-Commerce in 2014

But most distributors still view traditional competitors as a bigger threat than online-only players.

Seventy percent of distributor respondents in the fourth-quarter 2013 MDM-Baird Distribution Survey plan to invest in e-commerce in 2014, highlighting that more distributors are recognizing the importance of the Web to the future of the channel.

But most distributors still view their traditional competitors to be a bigger competitive threat than online-only players, according to the survey. Just 21 percent said that online-only players were a bigger threat.

Nearly two-thirds of respondents said their distribution companies have e-commerce offerings. Fifty-two percent of those reported that e-commerce represents less than 5 percent of total revenue.

That’s comparable to MDM’s 2013 State of E-Commerce in Distribution research, conducted a year ago. But those reporting e-commerce sales comprised 5 percent to 10 percent of total sales is higher, at 22 percent.

(MDM with Real Results Marketing will be conducting its 2014 State of E-Commerce in Distribution survey in the next two months, with results planned to be released in March.)

About 12 percent in the MDM-Baird survey reported e-commerce makes up 10 percent to 15 percent of their total revenue; and 13 percent reported that e-commerce makes up more than 15 percent of their companies’ total revenue.

The survey also asked manufacturers whether they were looking to allocate future spending differently based on the rise of e-commerce in the channel. Eighteen percent said they would spend more with traditional distributors, 17 percent said online-only players would get greater share, and two-thirds reported no plans to change how they allocate their spending.

In the industrial supply segment of the survey, some distributors reported that customer demand is driving interest in e-commerce. “Customers have demanded that we keep pace with the Graingers and MSCs of the world,” one wrote.

A distributor in the facilities MRO segment wrote: “E-commerce is increasing in importance as customers become more comfortable with online distribution, especially for commodities.”

In some sectors, e-commerce adoption depends on the customer base. While an electrical distributor reported adoption from industrial customers, electrical contractors have been “very slow adopters.”

The full MDM-Baird survey results, with breakdowns by sector for sales growth and other metrics, will be featured in the Jan. 25, 2014, issue of MDM Premium.

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