In 2010, what was to become 3BG Supply – a Fort Wayne, Indiana-based distributor of bearings, electric motors, sprockets, chain and other industrial products – was little more than an idea. At the time, co-founders Alex Smith and Shane Araujo believed there was an industry-wide problem that was proving to be a significant barrier when it came to MRO purchasing: decentralized data.
Smith believed that distribution was at a crossroads, and that there was a need for smaller distributors to supplement the model. Rather than be a regional and highly specialized distribution company, they needed to excel at multi-channel operations, as well.
But moving to address this need would require more than just an objective: what needed to follow was a framework that addressed the needs of the MRO buyer.
From a Website Forward
For 3BG, it started with a website — but one with a dedicated tactic. The company hoped to bring the distributor business model of customized, high touch service to an online platform that was as easy to use as an Amazon.
Co-founders Alex Smith (left) and Shane Araujo.
After a 2015 re-brand that brought in the name “3BG Supply,” and an influx of capital the following year, the team focused on extracting, transforming and loading their vendors’ product data, taking over 130,000 products online by 2019. The years since have brought a smarter, more focused scale of the business, with 3BG centered on offering “a simpler, faster and cheaper purchasing experience via a smarter, nimbler and more efficient drop shipping distribution model.”
Smith sees 3BG’s passion for solving issues around decentralized data as a support mechanism for its overall, customer-centric business model: “Broadly speaking, we aim to make it easier for customers to find and purchase products they need.”
The How
So how does 3BGsupply.com bring its value to the table? From Smith’s perspective, there often exists a disconnect between sellers and their customers. Generally, he says, “what distributors think customers want are the last things the customers want.”
Instead, 3BG tries to put itself in the customer’s shoes. The evidence of this strategy’s effectiveness shows in the company’s Google rating, which is pushing 5 stars. Part comes with 3BG’s perspective: it has to compete by serving customers in a way that’s on par not just with other industrial companies, but with B2C portals, as well.
“Fast and reliable shipping is huge,” says Smith, but the basics matter just as much: “We talk to our customers. Something that people overlook is responsive customer service. Most of our (Google) ratings are about the proactive communication level. I’d say our high ranking is probably just a testament to the commitment to customer experience and our ability to deliver on promises.”
And while labeling itself as a “tech-enabled distributor” might sound loaded, 3BG simply sees it as a way of solving age-old customer problems — enabling time savings by offering a one-stop-shop outlet with quick order processing and billing. Meanwhile, the e-commerce platform serves as a tool for organic growth, allowing 3BG to capture new customers. Letting your website do your marketing only works when the product data is clean, and Smith and his colleagues believe that customer relationships can be damaged – and sales undermined – without this foundation. 3BG also sees the value in bringing a lighthearted culture to the industry and incorporating “weirdness” and fun into its core value of professionalism — in a nod to its founders, “3BG” does stand for “three bald guys,” after all. Smith feels the company is “an outlier” in its youthful approach to an old industry — “a good start in terms of aligning with various generations.”
Beyond this, the company helps support its staff with a vision of empowerment.
“We think distributors should equip their sales staff to act as business partners with customers,” says Smith.
In practice, this results in employees who “can identify customer pain points and co-create business solutions rather than just offer products.”
The added benefit to this approach reaches beyond the customer and back to 3BG. The company hasn’t been hit with rampant turnover like many of its peers, and this empowerment approach comes together through a comprehensive training program called 3BG University, where the company is able to produce consultative experts in a short amount of time.
Meeting the Market in the Middle
There are many challenges facing distributors, and tech can’t solve everything — but it can come close. If there is a shortcoming, it might be the perception that comes along with being a company that was born online and eschews inventory in favor of drop shipping.
Despite this, Smith bristles at the characterization that 3BG exists on one half of a binary: the “traditional” distributor versus the “platform” or “digital” distributor — the latter category an oversimplification of 3BG’s business model.
Despite the digital nature of the 3BG approach, the customer stays happy because the business continues to incorporate the things that customers really want. With a model that’s been built to scale, they plan to continue that way even as they grow.
“We’ve also focused on creating tools that give us an edge,” says Smith, “such as deep product knowledge and service capabilities.”
“So we love being in that pocket in between, and often get confused with just being a pure platform distributor until you call us up and realize what type of service we provide,” he says.
Moving forward, 3BG will continue to carve its own unique path, seeking out potential acquisition targets and harnessing greater spend from existing customers. The biggest constant will be a continued desire and ability to explore disruptive technologies where they make sense.
“The plan is – and we’re pretty open about it – there’ll be a mix of growing both organically and inorganically to serve our customers and be their go-to source for industrial supplies,” explains Smith.
And while the external pressures facing businesses are perhaps more pronounced than ever, Smith seems confident in 3BG’s ability to weather any kind of storm.
“We’re well-put to do it,” he says. “We’re constantly looking for ways to innovate and stay ahead of the competition. We’ve had the luxury of not being a 100-year-old distributor that’s had to make changes. We started this way.”
