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Preliminary MDM Research Shows 70% of Distributors Not Successful at E-commerce… Yet

Preliminary MDM Research Shows 70% of Distributors Not Successful at E-commerce… Yet

October 23, 2018

We’ve been surveying our readers about their experience with e-commerce and the results are a little scary. The first question is:

“Considering your current progress towards implementing an e-commerce site that allows customers to buy from you, which of these best describes the current status of your website?”

Here are the responses so far:

24% Customers cannot realistically use our website for their regular purchases. We have relatively few or no products available for purchase. 
46% We have a transaction-enabled website with a broad array of products. However, our results so far (e.g., sales, number of purchases, cost/ease of implementation) have underperformed our expectations.
30% We have a transaction-enabled website and we are happy with the results of our implementation so far.

This is a little scary, and some of the other answers look a little bleak as well. Fortunately, some of the distributors in the group making up the 30 percent that are successful are sharing key learnings that can help you. If you’d like to get a complimentary summary of the results, or if you just want to share your experiences, you can participate in the survey here: MDM Survey on Distributor Ecommerce. We will stop gathering results later this week, so please consider completing the survey soon. 

The Good News

I think the encouraging aspect to this survey is that only 24 percent of distributors don’t have transaction-enabled websites. I’d love to see more distributors happy with the results but having a website that can accept orders is an absolutely necessary step towards success. 

This means that distributors are going up the learning curve as they figure out how to succeed online. There’s a strong correlation between company size and likelihood of doing e-commerce, and I think that’s a holdover from the days when it took a small fortune to build a transaction-enabled website. Fortunately, a wide variety of tools available today have brought costs down dramatically. Competition is a good thing here, but I believe many distributors don’t really understand the alternatives.

The Bad News

In addition to the frustration around e-commerce success, there is a startling number and variety of non-ERP operating platforms in use, ranging from QuickBooks to green screen systems developed in-house. Distributors in this survey who do not have an e-commerce website point to a lack of the right systems as the number one problem. Strong IT systems and robust customer and product databases have always been a prerequisite to scaling up a distribution company. From what I see in the data, some distributors are struggling to find the capital, expertise or perhaps the organizational will to build the platforms they need for growth.

The issue here is one of fundamental competitiveness. Some respondents claim that their customers don’t care about e-commerce, for example. There are no doubt a handful of those markets left, but that won’t last; the world’s not going back to order pads and fax machines. My concern in reading the data is that many distribution companies not only don’t have websites, they also lack the fundamental technological architecture to build them. Perhaps that’s why more than 43% of the distributors without e-commerce sites have no current plan to replace their current website system with something better. 

What About the Successful Distributors?

Although we are still collecting responses, an interesting trend is developing when we ask the distributors who are satisfied with their e-commerce results what they think is most important in website software. On a five-point scale, these distributors have rated the following factors as follows (a higher number = more important):

Range of functionality for our customers 3.33
Speed to implementation 3.29
Easy for us to administer 3.13
Cost 2.89
Integration into Amazon Business and other marketplaces 2.18

This reveals to me that distributors who are succeeding at e-commerce have discovered that there is no single systems requirement that outweighs the others. They prize a website’s ability to meet customer requirements more than any other factor but they also value speed of implementation, ease of use and cost. 

How About You?

I hope you will offer your voice to this essential research before we close the survey. Leading distributors – both the traditional type and the digital disrupters – are constantly upgrading e-commerce functionality. No matter where you are on your e-commerce journey, we want to know about your experiences and send you the results when they are finalized. 

We’ll be presenting highlights of this research – along with a case study of a distributor that has succeeded with e-commerce – on an upcoming webcast on November 1st. You can register here for the webinar: Distributor E-commerce Lessons: Barriers & Best Practices

 

© 2019 Gale Media, Inc.

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