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2014 STATE OF E-COMMERCE IN
DISTRIBUTION
March 20, 2014
Download handouts (PDF) :
www.mdm.com/slides
Produced by:
1
Featuring: Jonathan Bein, Ranga Bodla and Tom Gale
Event Sponsor:
Speakers:
Download handouts (PDF) :
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Tom Gale
Publisher
Modern Distribution Management
Jonathan Bein
Senior Partner
Real Results Marketing
Event Sponsor:
Ranga Bodla
Director of Industry Marketing
Netsuite
Agenda:
Download handouts (PDF) :
www.mdm.com/slides
• Introduction – Tom Gale (10 Minutes)
• Presentation – Jonathan Bein (30 Minutes)
• Presentation – Ranga Bodla (10 Minutes)
• Q&A – Everyone (10 Minutes)
Event Sponsor:
The State of Distribution
E-Commerce 2014
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Summary
• Real Results Marketing conducted an electronic survey of 465 participants
to better understand trends in e-commerce.
• This survey was conducted with Modern Distribution Management in
February 2014.
• Key trends:
– E-commerce revenue as a percent of overall revenue is rising rapidly
– Key objectives are acquiring new customers, growing wallet share with
existing customers, and improving website usability
– Grainger is overwhelmingly considered the best website by other
distributors
– Respondents express mixed satisfaction with much of the functionality
on their own e-commerce sites
– Mobile technology for e-commerce is being deployed rapidly.
– Catalogs are considered to be highly effective for generating e-
commerce revenue.
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Best Competitor Website
• Overwhelmingly, Grainger is named by
competitors as having the best website.
• McMaster-Carr was a distant second.
• Nobody else was even close.
Best Competitor Website
• Overwhelmingly, Grainger is named by
competitors as having the best website.
• McMaster-Carr was a distant second.
• Nobody else was even close.
.....Grainger just added several hundred
people to its e-commerce initiative
Overview
• Revenue and growth
• Priorities
• Capabilities
• Marketing
• Data
• Operations
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REVENUE AND GROWTH
10
E-Commerce Revenue – 2012-2014
11
• 2013 - Increase of nascent and
growth stage companies
• 2014 (projected)
• More than 20% increase in
growth stage companies
• More than double number of
mature companies
Definition
• Nascent – less than 5% e-commerce revenue
• Growth – 5% to 10% e-commerce revenue
• Mature – 10% or more e-commerce revenue
E-Commerce Revenue – 2013-2014
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• A significant number expect to increase their e-
commerce revenue
• Only a small percentage expects their e-
commerce revenue to decline in 2014.
PRIORITIES
13
Top Priority
14
Top priorities are
• New customers
• Existing customers
• Ease of use
Priorities reflect the
nascent and growth
stage e-commerce in
where the first priority
is to get revenue
flowing with a usable
web site.
E-commerce Leadership
15
Among respondents with
nascent stage e-commerce
programs, only half have
dedicated leadership vs.
70% who in growth or
mature stage.
CAPABILITIES
16
E-Commerce Capabilities
17
Respondents are only satisfied
with the table-stakes
functionality (contact
information and basic search.)
For only slightly more complex
functionality (stock levels,
technical information, social
media), there is mixed
satisfaction.
For advanced capabilities
(quote, live chat, and purchase
suggestions), satisfaction is
low.
E-Commerce Capabilities
18
Respondents have high
satisfaction with login and
order placement.
They have mixed
satisfaction will all of the
other capabilities.
Mobile Capabilities
19
Support for mobile
technology has grown
nearly 25% from last year
including:
• Smart phones
• .mobi implementations
• Mobile apps
Still, more than 30%
intend to implement
support for mobile
technologies in the next
year and beyond.
Integration Capabilities
20
Smaller distributors are less likely
to rely on EDI or punch-out as
part of their e-commerce solution.
The emphasis on EDI and punch-
out has diminished from last year.
MARKETING
21
Driving E-Commerce Demand
22
• Email marketing, catalog and SEO are most effective and highest spend
• Paid search has low effectiveness
• Marketing automation is underutilized in distribution relative to other
industries
E-commerce and Catalog Synergy
• 85 percent of companies with a successful catalog believe that e-
commerce and catalog are synergistic or that their catalog helps
drive e-commerce sales.
• 73 percent of companies who have a mature e-commerce channel
believe that e-commerce and catalog are synergistic or that their
catalog helps drive e-commerce sales.
• The three distributors (Grainger, MSC Industrial Supply and
McMaster-Carr) who were considered by their peers in a previous
survey survey to have the best websites were also considered by
their peers to have the best catalogs.
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E-commerce and Catalog Synergy
• Product information management
• Brand
• Sales
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Simple Techniques for Driving E-commerce
Demand with Catalog
• Reference other product options available online - e.g.
“See our website for 100s more options”
25
Simple Techniques for Driving E-commerce
Demand with Catalog
• Reference other product options available online - e.g.
“See our website for 100s more options”
• Place e-commerce URL on all catalog pages
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Simple Techniques for Driving E-commerce
Demand with Catalog
• Reference other product options available online - e.g.
“See our website for 100s more options”
• Place e-commerce URL on all catalog pages
• Mention online tools
– Order tracking
– Shipping charges
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Simple Techniques for Driving E-commerce
Demand with Catalog
• Reference other product options available online - e.g.
“See our website for 100s more options”
• Place e-commerce URL on all catalog pages
• Mention online tools
– Order tracking
– Shipping charges
• Selectively reference videos, training,
configuration/sizing tools
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Simple Techniques for Driving E-commerce
Demand with Catalog
• Reference other product options available online - e.g.
“See our website for 100s more options”
• Place e-commerce URL on all catalog pages
• Mention online tools
– Order tracking
– Shipping charges
• Selectively reference videos, training,
configuration/sizing tools
• Promote mobile options, e.g. “On the road? – use our
convenient mobile ordering”
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Marketing Automation and Email
Marketing
30
Many distributors use email
marketing to promote products,
special and branch events.
There is limited awareness among
distributors about marketing
automation and how it differs
from email marketing.
Wait
3
Days
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Opens
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Marketing Automation Example
Email Service Provider vs.
Marketing Automation
Marketing Automation ROI
• Businesses that use marketing automation to nurture prospects experience
a 451% increase in qualified leads. In turn, nurtured leads make 47% larger
purchases than non-nurtured leads. (The Annuitas Group, Nov 2012)
33
Marketing Automation ROI
• Businesses that use marketing automation to nurture prospects experience
a 451% increase in qualified leads. In turn, nurtured leads make 47% larger
purchases than non-nurtured leads. (The Annuitas Group, Nov 2012)
• 79% of top-performing companies have been using marketing automation
for more than two years, with 79% of CMOs indicating “increasing revenue”
as the most compelling reason for adoption, followed by “higher quality
leads” at 76%. (Gleanster, Aug 2013)
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Marketing Automation ROI
• Businesses that use marketing automation to nurture prospects experience
a 451% increase in qualified leads. In turn, nurtured leads make 47% larger
purchases than non-nurtured leads. (The Annuitas Group, Nov 2012)
• 79% of top-performing companies have been using marketing automation
for more than two years, with 79% of CMOs indicating “increasing revenue”
as the most compelling reason for adoption, followed by “higher quality
leads” at 76%. (Gleanster, Aug 2013)
• 78% of successful marketers cite marketing automation as being most
responsible for improving revenue contribution. (The Lenskold and Pedowitz
Groups, Nov 2013)
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Marketing Automation ROI
• Businesses that use marketing automation to nurture prospects experience
a 451% increase in qualified leads. In turn, nurtured leads make 47% larger
purchases than non-nurtured leads. (The Annuitas Group, Nov 2012)
• 79% of top-performing companies have been using marketing automation
for more than two years, with 79% of CMOs indicating “increasing revenue”
as the most compelling reason for adoption, followed by “higher quality
leads” at 76%. (Gleanster, Aug 2013)
• 78% of successful marketers cite marketing automation as being most
responsible for improving revenue contribution. (The Lenskold and Pedowitz
Groups, Nov 2013)
• Companies that deploy marketing automation see (Aberdeen Group, June
2012) – 107% better lead conversion rates
– 40% greater average deal sizes
– 20% higher team attainment of quota
– 17% better forecast accuracy
36
Search Marketing
37
Many distributors start with
search marketing as the primary
or only means to drive traffic and
generate demand.
Yet, only half of respondents
consider search marketing
effective for customer acquisition.
Web Design
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0%
5%
10%
15%
20%
25%
Mostly done with a third party with some in house
Even balance between in house
and third party help
Almost all done in house
Mostly done in house with some third party help
Almost all done with a third party
Not applicable
Select the choice that best describes how your company developed its web design
Respondents in a 2013 survey
are less likely to do the design
all in house or all with a third
party than in 2012.
Companies with more than
$100M revenue are more likely
to do the design in house.
There is very low satisfaction
among distributors regarding
their web design.
Marketing Best Practices
• Integrated multi-channel and multi-vehicle
practices provide the best results for
driving e-commerce demand including:
– Search marketing – organic and paid
– Traditional direct response vehicles – catalog
and direct mail
– Marketing automation and email marketing
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DATA
40
Product Data
Product data accuracy and completeness are good for most distributors.
Photographs, substitutes and information about related products is weak.
Vast majority of data comes directly from the manufacturer. However, there is an
increasing role of pure third-party solutions or blended third-party solutions.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Almost entirely from
manufacturers
Mostly from the manufacturers
with some from
third party sources
Even blend from manufacturers and from third
party sources
Mostly from third party
sources with
some from manufacturers
Almost entirely from third party
sources
Not applicable Other (please specify)
Select the choice that best describes how your company gets product data.
Product Data Best Practices
• Analyze quality, time and cost of in-house and third-party
solutions.
• Normalize data from manufacturers including
manufacturer, part number, product category
• Enrich data by mapping the items to industry standard
templates and populating
• Cleanse and normalize long and short descriptions
• Get product images
• De-duplicate based on part numbers and attribute
descriptions
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OPERATIONS
43
Operations
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Fulfillment – slightly lower
satisfaction with warehouse
and inventory levels.
Quotation handling – big
concern with nearly 20%
unsatisfied.
Order handling – Good except
chat is underutilized.
Operations Best Practices
• If showing inventory, have accurate and as up-to-date counts as possible.
• Service level for web orders should be the same as any other channel.
• Lead times should be displayed and must be as accurate as possible. If
using expected delivery dates, the same applies.
• Provide chat services with the same support level as the inbound calls.
• There should always be an order acknowledgement email and a shipment
email. The shipment email should include tracking information.
• Develop a coherent inventory and fulfillment plan. Test the plan before
rollout.
• Always provide easy to locate contact information for web support,
registration support, and quotation requests.
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CONCLUSION
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Conclusion
• E-commerce as part of a multi-channel offering
is here to stay
• Absence of viable e-commerce channel will
result in lost business, not just e-commerce
business
• Companies of all sizes need to make the
investment to be in market in 12 to 18 months
• The key is balancing build-buy
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Jonathan Bein, Ph.D.
Managing Partner
www.realresultsmarketing.com
Thank you!
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Powers Distribution
Founded 1998
Publicly traded on NYSE: “N”
Offices in 10 countries
2,300+ employees
2013 revenue: $415M
Background Performance
Who is NetSuite
#1 Cloud ERP Suite
Used by 20,000+ global organizations
World’s most deployed cloud ERP
Top 10 highest growth ERP solution
according to Gartner and IDC
NetSuite runs NetSuite
2014 STATE OF E-COMMERCE IN
DISTRIBUTION
Questions?
Download handouts (PDF) : www.mdm.com/slides or contact [email protected]
53
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