E-Commerce: Why is the Independent Distributor Missing a Great Opportunity?

By John Sonnhalter, Rainmaker Journeyman, Sonnhalter

We’ve had conversations here before about independent industrial distributors missing sales opportunities by not keeping up with the latest technology available.

I see that Industrial Distribution magazine is doing a webinar on this very subject on May 18th; you may want to sign up for it or suggest some of your independent distributors who are still lagging behind get in the game. Jon Eames from NH Bragg and Jack Templin from Affiliated Distributors will be contributors. Here’s what they will be covering:

Industrial customers are asking suppliers of all sizes to offer a highly functional e-commerce-enabled website. So how do smaller, independent distributorships take the first steps:
  • Review ways independents can get in the game of e-commerce without breaking the bank.
  • Hold true to their business objectives while developing an e-commerce strategy.

According to Forrester Consulting, a 2014 study shows that 52% of business buyers expect at least 50% of their purchases to be made online in 3 years’ time. This should be an eye opener for distribution, but some are ignoring the facts. The big boys like Grainger (40% of their sales are from the internet) and MSC Industrial (over 50% of their sales come from online) are certainly taking advantage. Shouldn’t that set the tone for the independents? Forrester forecasts that B-to-B e-commerce will exceed $1.1 trillion and comprise 12% of all B-to-B sales by 2020.

I’ve said in the past that for smaller industrial distributors to survive, they need to use the internet. They can’t count on the business model of contractors coming in at 7 in the morning or around lunch time to pick up what they need. Time is money, especially for them.

Industrial Distribution magazine recently released some research on The state of B2B e-commerce in Industrial Distribution. Here are some highlights:

  • Independent distributors are slow-moving in implementing e-commerce programs.
  • Technical challenges are making sites user-friendly, making it aesthetically appealing and staying ahead of the competition.
  • Primary reasons of not engaging online was lack of demand, technical obstacles and lack of marketing/promotional resources.

Customer satisfaction and the customer experience are the key factors in developing an online presence. Ironically, that’s how the independent distributor built their business in the first place. Now they just need to transfer that to a different platform not only to keep existing business, but to grow additional revenue.

Figure 4

Source: Industrial Distribution

My worse fear is that the Amazons and the Alibabas of the world are going to make the independent extinct in a few years. I understand that the AD buying group has just instituted a new program to help members deal with some of these issues. It’s too early to tell if it’s making an impact, but at least they recognize the issue and are trying to help.

If you like this post, you may want to read:

What’s the future of small independent industrial distributors?

Are independent industrial distributors helping Amazon to succeed?

Distributor Strategy: What’s yours?

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