It's no secret that distributors, as a whole, have been slow to when it comes to e-commerce development. Despite e-commerce's rapid rise — Forrester Research expects the B2B e-commerce market to hit $1.18 trillion by 2021 with an annual growth rate of 7.4 percent — distributors have lagged behind. Industrial Distribution’s 2017 Survey of Distributor Operations found that 37 percent of respondents don’t offer e-commerce, even as industrial products’ buyers preferences have undeniably shifted towards a digital purchasing preference over the past decade.
Well-known workplace essentials distributor Essendant — formerly United Stationers — just released their own study that furthers this sentiment. Essendant, which saw industrial products sales jump 11 percent in its 2017 fourth quarter, released in late February "The Future of Janitorial and Sanitation Distribution" a summary report of a October 2017 survey of 114 Jan/San resellers aimed to learn more about the Jan/San resale and distribution industry as it relates to digital marketing and commerce trends.
The results were sobering. Essendant found that only 53 percent of JanSan resellers surveyed have an e-commerce presence. That's even less than the 63 percent in ID's survey. On an optimistic note, 43 percent of those Essendant respondents who don't have e-commerce indicated they plan to make the investment for it within the next three years. Almost shockingly, 11 percent of respondents said they don't have a website at all.
There are various reasons distributors cite for not getting involved with e-commerce, ranging from cost, to lack of tech-savvy staff, to lack of demand for it. Essendant's study asked what the biggest barrier preventing JanSan resellers from investing in e-commerce, and to no surprise, the most popular answer was cost at 23 percent. Technical Infrastructure, Online Order Fulfillment Capabilities, Marketing Strategy and Other each tied at 14 percent, while Personnel was the sixth-most popular choice at 9 percent.
Other key findings from Essendant's report highlight the impact Amazon/Amazon Business is having on the B2B distribution space:
- The top reason JanSan respondents report losing business is lower prices at 54 percent; followed by wider product selection at 38 percent — both hallmarks of Amazon
- 73 percent of respondents who do have e-commerce in place said less than half their revenue comes from it
- The majority of respondents — 58 percent — said their biggest competitors are retailers, followed by Amazon Business at 46 percent
- 76 percent of respondents said they foster customer loyalty by building relationships — essentially the bread-and-butter of distributors forever
- JanSan resellers' biggest priorities include customer acquisition initiatives (59 percent) and marketing to improve brand awareness (37 percent)
Essendant's survey asked specific questions about the impact of Amazon, and respondents indicated several changes the e-tail giant is driving in their industry. Respondents indicated Amazon has increased expectations for Fast and Free Shipping (39 percent); Lower Prices (35 percent); and Improved Customer Service (30 percent).
Hurting the bottom line even further, 30 percent of respondents said Amazon has had a direct impact on a decline in customers/buyers; and 21 percent said Amazon has had a direct impact on their company's revenue loss. Beyond that, 20 percent said Amazon has resulted in many of their competitors going out of business.
Overall, Essendant's report seems to paint a picture of a tipping point in the JanSan reseller and distribution market, where resellers/distributors need to either go all-in with e-commerce or get left behind.
Industrial Distribution's 2018 Survey of Distributor Operations will examine these issues further. Our survey will be deployed in early April, with the resulting report published in our June print issue and as a three-part online article shortly after. ID newsletter subscribers will be emailed the survey link. If you aren't a subscriber, become one here for free.