In 2013, Grainger surpassed $3 billion in sales from e-commerce channels, representing a third of total company sales. The company also transitioned to a new Web platform, launched a Spanish website and introduced more mobile solutions. Grainger announced in 2013 that it planned to add about 300 IT and e-commerce new hires in the next several years.
Paul Miller, vice president of global e-commerce for Grainger, spoke with Editor Lindsay Konzak at the 2014 Grainger Show, a trade show for Grainger’s employees, customers and suppliers. Miller provided insight into Grainger’s approach to e-commerce, his own experience in both B-to-C and B-to-B e-commerce environments and what’s next for the $9.4 billion MRO distributor.
Despite generally being considered a technology leader in the industrial distribution space, Grainger’s goal is much broader than that, according to Paul Miller, Grainger’s vice president of global e-commerce. Miller spoke with MDM at the recent 2014 Grainger Show, its annual event for employees, customers and suppliers.
“Grainger in general is not looking to be the cutting-edge company that is breaking new ground with every new piece of technology,” Miller says. “We want to understand what our customers’ needs are. How do they communicate with each other? How do they communicate with companies like us? And how can we put ourselves in the right position for that so that they can get the answers they need?”
E-commerce now accounts for a third of the MRO distributor’s $9.4 billion in annual sales.
Miller, who led e-commerce efforts at Sears and food and cooking accessories retailer Williams-Sonoma before coming to work for Grainger, said that B-to-C trends have seeped into B-to-B markets. The customer experience is just as important, if not more important, than having products available online in the first place, he says. “It’s not good enough to have a million products,” he says. “You have to make it easy for customers to find those.”
There are however some unique characteristics of B-to-B markets, Miller says. “These people are operating businesses,” he says. “They need to make sure that that right product was selected to keep them running, that they get it at the right time so they can achieve that, and that they have the right visibility to that afterwards because they have to track it, they have to pay you and do all that other stuff. That’s the juxtaposition between the two.”
While there are similarities between the consumer and business spaces, the wrong product decision in a B-to-B environment will probably have much bigger consequences, Miller says. Buying the wrong book or sauce may only result in having lost $20.
“The danger of being wrong with our products that we sell is that person’s facility may not be running because of the choice they made, they might not be able to produce what they want to produce …. That’s where the level of expertise that we bring to the table is important,” Miller says. “How do we bring that to bear whether on a mobile device, on the site, on the phone or any of the channels we come to our customers with?”
This approach has been front and center for Grainger as it looks to continue expansion in the U.S. and globally. In addition to e-commerce, the distributor is investing in sales force expansion, inventory management solutions including vending and distribution centers.
As part of its e-commerce investments, Grainger has also built mobile applications for tablets and phones.
Instead of “multiple channels,” the distributor thinks “multichannel” – a matter of semantics, perhaps, but critical to its goal of a more integrated customer experience, Miller says. He says the distributor wants to ensure that when a customer starts a transaction on one platform, such as the grainger.com website, and then moves to a mobile device or even goes to a store, they are able to pick up where they left off. And they can do that with the support
of a trained sales force and customer service team.
“That’s the area where we’re focusing and trying to innovate,” Miller says. “How do we do things where we’re linking up where our core abilities are?”
But while the distributor continues to launch new features, including its recent Live Chat with Photo application that allows customers to share product photos with customer service reps, “we’re not trying to push a customer in any particular direction.”
Grainger’s e-commerce team works out of an office in downtown Chicago, a deliberate move by Grainger to attract top technology talent, as well as dedicate resources to a fast-growing piece of the business. Grainger’s plans to add more than 300 people to that team, announced in mid-2013, is an indication that the distributor isn’t letting up.
“It represents the fact that our customers are doing business in different ways now,” Miller says.
Grainger sees e-commerce as a “ripe opportunity,” Miller says. “Our view was that there was going to be a long-term need to continue evolving these things,” Miller says. “It’s not like there’s a one-time episode that you’re going to launch a new site, and we’re going to have 60 people working on this.”
Grainger also plans to use its centralized e-commerce team to spread best practices throughout its global network. The central core will be supplemented by teams in Grainger’s different markets, adding local flavor, Miller says.
Miller believes that all sectors of distribution, no matter the product, will be affected by e-commerce. “I don’t think there’s a single one you can point to and say it will never be influenced or be touched or have relevance created through online or digital,” he says. “Some take a little longer than others. I don’t think it’s a question of if; I think it’s a question of when.”
The key, Miller says, is understanding what the customer needs to “pull the trigger” on a purchase. In some situations, for example, a customer may need more information to make a decision. If a customer is looking at an air conditioning unit online, Grainger knows that product typically requires more information and a higher level of engagement with the distributor than, for example, toilet paper.
Grainger’s multichannel approach recognizes that many people now start their searches for suppliers or products online, even if they don’t ultimately purchase there, and would then allow it to serve that customer beyond the online platform.
“It’s not about an on or off kind of mode. You have to peel away a little bit,” Miller says. “What are the things that people need to make that choice?”
Customer behavior has shifted, and Miller says that distributors need to be where their customers are. “… Anyone who is not investing at an accelerated rate right now in figuring it out, in being where their customers are – whether they are researching products, whether they are buying products, whether they are supporting products – if they’re not there, they are missing the opportunity.”