Distributors are adopting technology at different rates. A few got out in front of the curve early on, others jumped in a little later but have seen positive results from their efforts, and the rest of the pack are lagging behind. This isn’t much different from the trends we’re seeing in other industries — just think about how one retail point-of-sale experience can vastly differ from the next—but the growing gap can become too wide to catch up for those who are not proactive in addressing it. Finding a solution starts with understanding the obstacles that are in the way.
About two-thirds of U.S. distributors and wholesalers have at least one e-commerce site, a log-in portal, or both, according to a new report from Digital Commerce 360. In total, those companies sold about $2.4 trillion in goods and services through electronic data interchange (EDI), e-commerce and e-procurement in 2018.
Even as these sales numbers continue to grow, the actual percentage of sales that flows through e-commerce remains low. The e-commerce struggle is real for distributors. For 78% of the companies listed on Digital Commerce 360’s B2B Distributor 300, for example, e-commerce accounted for just 10% to 25% of their total sales.
Address the Source of the Problem
Three major roadblocks are holding those numbers back:
- Traditional sales networks prevail. Many established distributors and wholesalers, especially in older industrial segments such as heating, ventilation and air-conditioning, plumbing, industrial safety, electrical and others, still rely mainly on a branch network, distribution centers, and an internal and external sales force to sell and distribute products.
- Inability to pivot quickly. Many older distributors also are small, privately owned companies that can take as long as 30 years to make any significant investment in new technology or may not have the money, time and resources it takes over several years to build and develop an e-commerce channel.
- Customers aren’t asking for it. Asked to reveal their biggest challenges in building B2B e-commerce businesses, 41% of distributors pointed to a lack of money as the biggest inhibitor. More than one-quarter of distributors cited resistance from customers to buy online as another roadblock, followed by difficulty in recruiting e-commerce personnel.
“For a lot of older distributors, the challenges of going online may be more internal than external,” Brilliance Business Solutions’ Lori McDonald told Digital Commerce 360. “Their company leadership is older, and they don’t have a huge level of expertise in e-commerce.”
To distributors that are struggling with this issue, Digital Commerce 360 says the best approach is to take a step back and rethink your B2B e-commerce strategy. Adopt a long-term mindset, invest in good technology, create a culture that supports and nurtures the effort and build a site with the end customer in mind.