B2B eCommerce

Distributor B2B ecommerce is underway, slowly

Ecommerce sales among wholesale distributors with an ecommerce channel represented 15.4% of revenues in 2022, up from 14.2% of revenues a year earlier, an 8.5% increase, according to the Distribution Strategy Group’s annual State of eCommerce in Distribution survey.

That growth is projected to accelerate even more in 2023, as ecommerce revenues are forecast to account for 18.3% of revenue in 2023 for distributors with an ecommerce channel, the survey says.

The Distribution Strategy Group defines ecommerce adoption as a distributor that can accept a transaction from a digital shopping cart. Despite the growing adoption of ecommerce among distributors, adoption is not a measure of a distributor’s ecommerce success or maturity, according to the Boulder Colo.-based research firm and consultancy.

One point highlighted in the report is that adoption of ecommerce varies widely among distributors based on their size and the market served. Some 37% of distributors with revenues of $50 to $100 million currently offer ecommerce. In comparison, 27% of distributors with revenues of $10 to $50 million have an ecommerce channel and less than 25% of distributors with revenue of less than $10 million offer ecommerce. Adoption of ecommerce is highest among distributors with more than $1 billion in annual revenues, with 51% offering an ecommerce channel.

While ecommerce adoption rates are lower among smaller distributors than larger ones, distributors with revenues of less than $10 million posted a 33% growth rate in 2022, the highest of any distributor segment based on revenue surveyed. In addition, distributors with revenues of $500 million to $1 billion saw ecommerce adoption grow 10%—the only other segment to post double digital growth.

Distributors with revenues between $10 and $50 million saw the next largest spike in adoption with a 6% year-over-year increase. While distributors with more than $1 billion in revenues have the highest percentage of companies offering ecommerce, adoption grew just 2% in 2022, according to the report.

Three reasons why smaller distributors are rapidly adopting ecommerce are that the technology is becoming more affordable, they have access to better product data, and their digital and online expertise is increasing.

In addition to ecommerce adoption varying by a distributor’s size, adoption rates vary by the industry served. Distributors of janitorial and sanitation supplies (JanSan), for example, continue be among the largest adopters of ecommerce technology, with a 58% adoption rate. The reason: “Many, if not most, of the products offered in JanSan may be easily sold through ecommerce, so it is logical this segment has high adoption,” the report says.

In contrast, just 18% of building materials/construction distributors offer ecommerce. The low adoption rate is attributable more to products in this category being complex and customized, than building materials and construction distributors lagging behind when it comes to implementation of ecommerce technology. Hence, building and construction materials tend not to be something
B2B buyers purchase online.

“We also have to consider how the customer wants to buy. If you are an electrical distributor selling to an industrial customer, you’re going to have a tough time getting [buyers] to put their complex order in your shopping cart,” the report says. “There are many electrical distributors between $200 million and $3 billion in sales that have very little going through their shopping carts. But that does not mean that their ecommerce platforms are a failure.”

Distributors that do not make an ongoing investment in ecommerce are the ones that will fall behind when it comes to measuring ecommerce maturity levels. These distributors will remain in the Nascent stage, which the report defines as ecommerce representing less than 5% of total sales when it comes to measuring ecommerce maturity compared to their peers.

Distributors with ecommerce sales of more than 10% to 20% of total sales are considered to have a mature ecommerce channel, according to the report. Distributors with ecommerce sales that equal more than 20% of total sales are considered ecommerce leaders.

The good news, according to the report, is that the percentage of distributors in the nascent stage are declining, totaling 50% in 2022, down from 57% a year earlier. The decline is expected to accelerate in 2023, falling to 40%. At the same time, the number of distributors considered ecommerce leaders will increase to 25% in 2023.

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The B2B eCommerce Association is a global network and resource hub for B2B practitioners, offering invaluable opportunities to connect and learn. Our mission is to empower manufacturers and distributors in their eCommerce and digital transformation journeys through useful tools, practical resources and exceptional networking opportunities. Join us to thrive in our dynamic industry

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