2D Sales Drawings
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Image credit and source: Digitalcommerce360.com.
Last month we wrote a mid-2019 update on industrial manufacturer eCommerce so this month we have an mid-2019 update on industrial distributor eCommerce by sharing key information from 3 recent reports.
Industrial distributors play a vital role in the global economy – in 2017 they generated ~$2.5 trillion in just US revenue. However, the trends that have disrupted industries around the world are now affecting industrial distributors too. Some distributors are moving quickly to create more value and deliver experiences that customers now demand, but many slower-moving ones will go the way of Blockbuster and Borders as fast-moving digital players go after the industry’s trillion-dollar revenue!
1. US Distribution – Revenue Up but # of Distributors Declining
According to Brian Beck, a B2B eCommerce specialist, a recent U.S. Department of Commerce study (on distributors in general, not only industrial distributors) found that the number of distributors in the United States declined by over 3,300 companies from 2015 to 2017 and a key contributing factor was their failure to provide eCommerce capabilities. His advice, “If you aren’t meeting your customer digital expectations, your competitors will be. My advice to B2B companies on the fence about investing in an eCommerce channel: don’t fall behind. Act now.“
2. Mckinsey Report on Industrial Distribution – ‘Shakeout’
This April 2019 report, The Coming Shakeout in Industrial Distribution is a hard, but must-read, report for industrial distributors. The bottom line is that McKinsey, “believe that industrial distributors who move quickly can create deeper customer relationships and sustainable competitive advantages to outperform consistently in the years ahead.” They conclude by outlining five main advantages that they believe will distinguish out-performers in the decade ahead – these are explained in detail in the report:
3. Amazon Pushing Distributors to be More Competitive
As the top image above shows ‘General Industrial’ distribution is likely a high priority target market for Amazon Business. This Digital Commerce 360 report is based on a thorough analysis of the sectors most likely to see competition from existing or new digital entrants, especially Amazon and eBay. It also includes buyer expectations and priorities. The McKinsey report covers this topic too so please review both reports.
Conclusions and Recommendations
1. Get serious about your online customer experience including your eCommerce – survival may depend on it. Last month’s mid-2019 industrial manufacturer eCommerce update, included suggestions on calculating industrial eCommerce ROI that apply to both manufacturers and distributors so please refer back to it for help with your calculations.
2. Move faster – transitioning to digital technologies has succeeded in the industrial space (e.g. look at Grainger and MSC Industrial). This has emboldened existing and new competitors with confidence. The time for tentative experiments is past – and could lead to ruin – so set a bold strategy to create a winning platform in your segment.
3. Think holistically and dispassionately – about your whole business to understand the full improvement potential, taking into account what leading players are doing. For example, what could self-help configurators or product selectors do to improve the use experience (UX) of dealing with your company? Devise a structured and transformative approach that separates where you are going from existing business as usual.
As always, if you have comments or suggestions please make them below, click to ask us a question or call for a discussion. For CAD questions see: Digital Marketing with CAD – Get the FAQs! In the meantime we’ll continue to keep you up-to-date on eCommerce and new technologies impacting industrial suppliers.