E-commerce: An Important Channel for Industrial Sales

I am seeing more and more manufacturers and industrial distributors using e-commerce as a sales channel for growth. The adoption rate has been much slower as compared to the online retail industry but B2B marketers are catching on fast.

According to a survey conducted in 2011 by BtoB and Rainmarker Systems, while only 35% of B2B marketers are involved with selling directly online, 58% of those companies have an increasing commitment to the channel.

Manufacturers have used e-commerce to sell components, spare parts and off the shelf industrial products for a long time. However, I have noticed a growing trend among industrial companies using e-commerce as their primary sales channel.

Industrial sales are different from online consumer retailing and so the e-commerce experience has to be different too. Manufacturers and industrial companies need to be mindful of differences such as:

  • Ability to show different pricing levels depending on the type of visitor
  • Build-to-order features and the ability to custom configure products with different options, trims, materials and operating conditions
  • Live Chat and instant access to engineers for help with application and configuration
  • Ability to save and print complete orders before purchase is important since multiple decision-makers may be involved and the sales cycle may be weeks and not instant
  • Online cart should also support RFQs and not just transactions
  • Accept purchase orders and bill to existing corporate accounts

Let’s look at some examples and let me start with a few 800-pound gorillas in their respective industries.

  • MRO distributor W.W. Grainger – E-commerce business currently accounts for about $1.5 billion or more than 25% of the company’s overall revenue and is expected to account for more than half of its revenue in the next three to five years.
  • Volvo Construction Equipment – Online sales and rentals of their entire range of products from Articulated Trucks to Waste Handlers. Using their online Build & Price application, I got an instant price for their MT2000 milling equipment that costs $726,075 along with financing and leasing options and a monthly payment calculator.
  • Digi-Key – Electronic components distributor. Their Web site, launched in 1995, offers complete online commerce capabilities along with 24/7 instant access to a broad-based, multimillion dollar product inventory. Digi-Key can process orders – from order entry to shipping – in as little as 15 minutes (From their website). Annual Sales: $1.5+ billion with no outside sales force.

Here are two examples of two mid-sized industrial companies that use e-commerce.

  1. igus® Inc. – Developers of industry-leading Energy Chain cable carriers, Chainflex® continuous-flex cables, iglide plastic bushings, igubal spherical bearings, and DryLin linear bearings and linear guides. They’ve done a terrific job of creating an industrial website that is a valuable “go-to resource” with detailed but intuitive product selectors and configurators that integrate well with their online store. Nikki Groom (@IndustMarketer) and Courtney Toomey (@courtney_toomey) are two people over there that deserve a lot of credit for their online and social media marketing.
  2.  Manncorp Inc. – Sells state-of-the-art machines that cover the entire surface mount production process, from prototyping to mid-volume assembly. The company’s products range from $50,000 to $200,000 and are all sold online.

Some manufacturers have reservations about adopting e-commerce in their sales process. My social media friend Tom Lee, Jr., Principal at Great Northern Products (www.gnpinc.com) that distributes specialty, industrial products for Process Safety Management and Mechanical Infrastructure Integrity protection, advises manufacturers to understand that:

  • E-Commerce is not about replacing existing channels of distribution, but rather augmenting them for the global, networked economy.
  • Industrial OEMs need to understand that today business needs to be conducted on both fronts, physical and digital.

Let me wrap up this post with another example:

Is e-commerce a part of your industrial sales? If not, what is stopping you or your company?

9 replies
  1. Vince Giorgi
    Vince Giorgi says:

    Nice post, Achinta. Always helpful to see a bunch of examples to set the topic in context.

    Most of these are companies controlling their own branded e-commerce channels. I’d be curious to hear your perspective on AmazonSupply, and whether you believe “BezosB2B” is going to have a big, long-term, disruptive or transformative impact on e-commerce in the world where you, I and our B2B clients are focused.

    Reply
    • Achinta Mitra
      Achinta Mitra says:

      Vince,

      Thanks for your kind words and sharing your insights on the industrial world.

      It is amazing that you mentioned AmazonSupply, I just happened to read an article on it this morning after I published my post. We must have an ESP connection or something.

      Amazon has already brought some of their consumer experiences to bear on this venture. For example, free two-day shipping on orders of $50 or more. To that they’ve added some twists that are unique to B2B such as a full free 365-day returns policy, corporate lines of credit and a dedicated customer service center.

      Lisa Reisman, Managing Director of MetalMiner, said, “Amazon Supply will be very disruptive, particularly for distributors in the MRO world such as Grainger, Wesco, Graybar and DSSI.” She also mentioned that the challenge for AmazonSupply will be how effectively they can ship LTL and commodities in bulk like those other well-known competitors.

      I agree with her but can’t discount the value of a branded e-commerce site. Only time will tell how disruptive AmazonSupply will be in this space.

      Reply
  2. Doug Brock
    Doug Brock says:

    I think we are going to see a renewed interest in e-commerce capabilites as Amazon puts resources into their B2B venture AmazonSupply and as Grainger and others continue to grow. A number of distributors are still licking wounds accumulated during the dot com frenzy. SourceAlliance.com was the failed venture backed by Rockwell Automation and a number of A-B distributors. Bad investments such as it make a number of independents and regionals hesitant to jump in or to make new investments. Sunk costs and bad investments are sometimes hard to get past.

    Reply
    • Achinta Mitra
      Achinta Mitra says:

      Doug,

      Thanks for adding your perspective, particularly about SourceAlliance. I agree, rushing into e-commerce and making bad investments just because the competition is doing it, won’t help.

      Reply
  3. Poonam Takte
    Poonam Takte says:

    Hi All,

    Really agree with you on your blogging strategy for B2B.

    I have my account at Infozshop.com, Online B2b,B2C,C2B and C2C Platform with Ecommerce, Social networking and classified marketplace.I am really happy with the functionality and vast feature list they have provided.
    The most important part of this platform they have provided everything free.I would like to recommend this eCommerce platform for any supplier.

    Regards,
    Poonam Takte

    Reply
  4. Aruna
    Aruna says:

    This is good information but the companies mentioned are international. Its great to see that e commece is being seen as a medium through which Industrial products can be sold.
    Are there any Indian companies doing the same? Tatas, L and T and so on?

    Thanks and Regards

    Reply
  5. sita ram dhaniwal
    sita ram dhaniwal says:

    Almost every large industrial machinery manufacturer do sell their products by engaging to whole seller/distributor by paying hefty commission.Why not they adopt to e-commerce B2B model,which will save a huge towards infrastructure cost/rentals for offices at important market centers,salary/wages,conveyance,tour and travel,boarding &lodging expenses,communication expenses and last on advertisement and re-printing of cat loges,leaflets,technical literature to explain about their products.Manufacturer has to bother about financing of equipment,insurance and logistic support.E-commerce in industrial machinery marketing of new and old duly re-conditioned machine have a bright future in new age of digital revolution in India.I invite suggestion on this topic please at e.mail:sdhaniwal2@gmail.com

    Reply

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