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Investing in E-Commerce in 2017, Part I

Investing in E-Commerce in 2017, Part I

By Bridget McCrea

Did you put enough into your distributorship’s e-commerce strategy when business was brisk? If not, it’s time to shift your thinking and get onboard with a robust online selling program.

In 6 Ways to Claim More Market Share in 2015, tED spoke with marketing expert Rodger Roeser of The Eisen Agency about how distributors can get their websites into the 21st Century and put more time and effort into the online selling channel. As a starting point, Roeser said most industrial companies should at least put some time and money into a website refresh that takes their online presences out of the Web 1.0 stage.

“Some of these sites that are attempting to lure in and/or serve customers look as if they were built in the 1990s,” Roeser pointed out, “and that’s if the companies even have a working website at all.” For best results, distributors should at the very least hire an experienced web designer and data expert to create a competent and professional website that looks like it was made for 2016 – not 1995.

“At the very least, set up a decent-looking website that’s optimized (for best search engine results) and relevant for your clients,” says Roeser. “Make sure customers can get through it quickly to find what they need – knowing that the next competitor is literally one mouse click away.”

Now, here’s some bad news for electrical distributors that ignored Roeser’s advice:  Even in the uncertain pre-election environment, where signs are pointing to a possible slowdown in 2017, your next competitor is still one mouse click away. And, since tED published that article in early-2015, competitors like Amazon Business have stepped up their games and gained even more market share in the industrial space.

“GE’s Jack Welch used to say that if the rate of change outside of your organization is greater than the inside of your organization, then you’re already dead,” says Justin King, senior partner with B2X Partners in Ashburn, Va., and founder of ecommerceandB2B.com. “It’s an interesting point that basically translates as, just because you don’t see something happening around you, that doesn’t mean it’s not happening.”

A Dangerous Gamble
During times of economic uncertainty, pulling back on the reins and tightening up the purse strings are natural reactions that companies of all sizes—and across all industries—tend to lean on. We saw this during the most recent recession, and the same pattern will likely repeat itself during future downturns. Unfortunately, distributors can’t afford to ignore (or, stop investing in) e-commerce.

“If the economy does start to slow down, realistically speaking we aren’t going to see distributors spending a whole lot of money on e-commerce,” says John Sonnhalter, founder of Sonnhalter, a business-to-business marketing firm in Cleveland. “However, if the company already has a solid e-commerce strategy in place, the cost associated with maintaining it, growing it, and promoting it can be fairly low.”

With technology advancing at the speed of light; consumers using mobile phones to buy groceries and apply for mortgages; and contractors looking up pricing, availability, and product specs at midnight from their tablets, getting out of the e-commerce game just because the economy is uncertain is a dangerous gamble.

So while the e-commerce return on investment may not be living up to expectations right now, that doesn’t mean you should give up on it. King points to MSC Industrial as a good example of a company that continues to funnel resources, time, and effort into an e-commerce strategy that was pretty good to begin with.

In E-commerce sales outpace total sales at MSC Industrial Supply, B2B E-Commerce’s Paul Demery says the company’s e-commerce sales increased to 58.6% of its total sales (up from 56% the prior year) for the most recent quarter. That 2.1% increased represented $426.3 million in sales for MSC, which saw its total sales decrease 2.4% during same period.

As part of its online strategy, MSC also continued to build out its e-commerce site, MSCDirect.com. For example, the company increased its volume of online inventory by 65,000 SKUs, bringing its online SKU count to nearly 1 million. King sees these moves as particularly strategic for the company, which doesn’t seem to be afraid to devote financial resources to honing and improving a website that’s already successful in an industry where many firms are scrambling to find the right formula.

“MSC has made some good e-commerce-related choices,” says King, “and continues to make its site more user-friendly and relevant for its customers.”

Amazon is Breathing Down Your Neck
Throughout 2015, tED magazine kept tabs on the moves that Amazon Business was making in the industrial space. We weren’t alone in this quest to cover the 300-pound online gorilla’s tactics. According to this recent Business Insider article, court documents show that Amazon considers its recently launched industrial and office supply business, Amazon Business, a “top priority,” and that it sees incumbents Grainger and Staples as its main competitors.

According to financial research firm RBC Capital, Amazon senior level management calls Amazon Business a “top priority” and “must win,” and the firm’s own internal documents identify only Grainger, the $13 billion industrial supplier, and office supply seller Staples as its main competitors. The article went on to say that Amazon Business plans to launch 80+ new features to make the selling and buying process easier, and that the company is using “custom pricing” as a key difference maker (versus Grainger’s more “opaque” pricing process).

King says this piece of news should make electrical distributors at least sit up and take notice, if not explore new and innovative ways to service their customers online. “I just spoke with an electrical contractor two weeks ago who told me that he bought from a competitor because it was 7pm, he’d been on the jobsite all day, and that was the only way he could place an order,” says King. “He knew that if he placed that order online that he’d have the part tomorrow to use on the jobsite. That was enough to push him over to another supplier.”

In part II of this article we’ll look at some of the smart ways electrical distributors can invest in their e-commerce strategies—both in good times and challenging economic environments.

McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.


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