The 2015 State of E-Commerce in Distribution
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1 in partnership with The 2015 State of E-Commerce in Distribution A Survey of E-Commerce Objectives and Challenges Facing Wholesale Distribution Companies 2015 hybris software The 2015 State of E-Commerce in Distribution 1
2 Executive Summary Distributors didn t meet their e-commerce expectations in 2014, as the online sales and marketing channel saw relatively little growth from the previous year. Just 15 percent of respondents in the 2015 State of E-Commerce in Distribution survey reported 5-10 percent of their total sales derived from e-commerce, only a percentage point higher than 2013 and well short of the 20 percent expectation they had for last year. The 2015 State of E-Commerce in Distribution survey was sponsored by hybris software in partnership with Modern Distribution Management and Real Results Marketing. For the last two years, 42 percent of respondents reported e-commerce comprised less than 5 percent of their companies total sales, and 20 percent reported they had zero e- commerce presence in 2014, despite the continued migration of B2B sales in the online channel. A recent study conducted by Google and Millward Brown Digital revealed that 70 percent of all B2B buyers are doing research online before purchasing. But distributors have been slow to adapt, and they don t expect much growth with their e-commerce presence in 2015, with 42 percent of respondents expecting e-commerce sales to comprise none or less than 5 percent of their total sales, and 26 percent expecting it to comprise 5-10 percent of total sales. Wholesaler-distributors remain underwhelmed by the effectiveness of search marketing, with just 24 of respondents saying it is effective and 23 percent saying it is somewhat ineffective. They also view e-commerce as a way to promote their brand as much as they view it as a way to increase new customers and orders, with 20 percent of respondents listing each of those as their highest e-commerce priorities in This report provides an overview of the objectives and challenges distribution companies say they face around e-commerce today hybris software The 2015 State of E-Commerce in Distribution 2
3 Methodology The survey results presented in this whitepaper are the result of an online survey of readers from Modern Distribution Management ( and hybris software in January and February As a leader in digital transformation, hybris delivers state-of-the-art customer data management, context driven marketing tools and unified commerce processes for all channels. Modern Distribution Management is the premier source of research on the wholesale distribution industry and offers news, blogs and premium newsletters to executives in wholesale distribution businesses or that sell through or to wholesale distribution businesses. Data collected for this whitepaper was analyzed by Real Results Marketing. More than 400 respondents in wholesale distribution and manufacturing responded to the survey, with most identifying as wholesaler-distributors. More than 70 percent identified as a manager or above in their companies, with nearly 60 percent being the owner or the executive of their companies. Size distribution of respondents was diverse with 19 percent of respondents with less than $10 million in annual revenues; 22 percent with $10 million to $50 million; 15 percent with $50 million to $100 million; 15 percent from $100 million to $500 million; 7 percent with $500 million to $1 billion; and 13 percent over $1 billion. Sector representation was also diverse, with Industrial coming in as the largest with 66 percent of respondents. Respondents could name more than one sector, so totals will not equal 100 percent. Other sectors represented by respondents include Safety Products (37 percent); Electrical (37 percent); Building Materials & Construction Products (29 percent); HVACR/Plumbing Products (25 percent); and Hardware (25 percent). Others included Plumbing, Oil and Gas Products, Power Transmission/Bearing, JanSan, Chemicals and Plastics, Electronics, and Pulp and Paper hybris software The 2015 State of E-Commerce in Distribution 3
4 E-Commerce Conditions and Expectations 2014 E-Commerce, as Percentage of Total Sales Fifteen percent of respondents reported 5-10 percent of their total sales in 2014 were from e-commerce. Forty-two percent of respondents reported that e-commerce sales currently comprised less than 5 percent of their total sales. More than 40% 20% to 30% 30% to 40% Not applicable 10% to 20% Less than 5% 5% to 10% None 2015 E-Commerce Growth Expectations Respondents don t overwhelmingly expect their sales to move online in 2015, with 42 percent of respondents expecting e-commerce sales to comprise none or less than 5 percent of total sales in 2015 and 26 percent expecting it to comprise 5-10 percent of total sales. Not applicable 30% to 40% More than 40% 20% to 30% Less than 5% None 10% to 20% 5% to 10% 2015 hybris software The 2015 State of E-Commerce in Distribution 4
5 Top Priorities in E-Commerce For respondents, the top priorities for their e-commerce business are: Increased transaction size from additional items on orders 4% Increase the size/quality of product content available to partners, customers Productivity improvements for sales, marketing, support personnel 8% 9% More frequent use of website, e-commerce transactions by customers Increased efficiency and operational cost savings Ease of use, increased customer satisfaction 12% 12% 14% Increase new customers/orders acquired through website, search-engine marketing Promote brand 20% 21% Second and Third Priorities Respondents were more or less evenly split on what their second and third most important e-commerce priorities were; productivity improvements, increasing new customers/orders, ease of use/increased customer satisfaction, more frequent use of website/e-commerce transactions and increased efficiency were all comparably ranked second or third hybris software The 2015 State of E-Commerce in Distribution 5
6 Effectiveness of Search Marketing Respondents were divided about the effectiveness of search marketing; 24 percent said it was effective and 23 percent said it was somewhat ineffective. Ten percent found search marketing to be very effective, while another 10 percent found it to be very ineffective. Twenty-two percent of respondents weren t sure how effective their search marketing is. Not applicable 10% Very ineffective, 10% Effective, 24% Very effective, 10% I don t know, 22% Somewhat ineffective, 23% 2015 hybris software The 2015 State of E-Commerce in Distribution 6
7 Importance of Marketing Automation and Marketing for E-Commerce Business Regarding the importance of marketing automation and marketing, 29 percent of respondents declared website visitor tracking to be very important. Nineteen percent of respondents marked lead scoring as unimportant, with 15 percent marking shopping cart abandonment alerts as unimportant. Very important Important Unimportant Don t know or not applicable s triggered by action from a Web visitor Lead scoring Shopping cart abandonment alerts Website visitor tracking Drip marketing/lead nurturing 0% 20% 40% 60% 80% 100% Satisfaction with Mobile Web Technologies Respondents were most satisfied with laptop computers with regard to their company s website support for mobile technologies, with tablet and smartphone capabilities in second and third, respectively. Respondents were least satisfied with their QR codes, mobile device apps and mobile device-optimized websites. How Satisfied Are You With Your Mobile Technology Capabilities? Very Somewhat Dissatisfied W/n 12 mos. After 12 mos. No current plans QR codes Mobile device apps Mobile device optimized website Smart phones Tablet computers Laptop computers 0% 20% 40% 60% 80% 100% 2015 hybris software The 2015 State of E-Commerce in Distribution 7
8 Importance of E-Commerce Integration Respondents were mostly unanimous in their assessment of the top three integration capabilities for their e-commerce solutions. Data import was selected the most important capability with 60 percent, followed closely by data export (57 percent) and electronic data interchange, or EDI (56 percent). Very important Somewhat important Unimportant Do not know 100% 80% 60% 40% 20% 0% Data export Data import Electronic data interchange (EDI) E-procurement Extensible markup language (XML) 2015 hybris software The 2015 State of E-Commerce in Distribution 8
9 Effectiveness of Marketing Vehicles Respondents cited sales reps as the most effective marketing vehicle for driving demand to e-commerce channels. SEO/organic search ranked second, followed by and customer service rep as a marketing vehicle. Mass marketing/advertising, marketing automation, direct mail and webinars were considered the least effective marketing vehicles. 100% 80% 60% 40% Fifth Fourth Third 20% 0% Catalog Customer service rep Direct mail marketing Marketing automation Mass marketing/advertsing Mobile apps Paid search Sales rep SEO/organic search Social media Videos Webinars Second Most effective Marketing Vehicle Spending Respondents cited catalogs as their biggest spend for marketing vehicles related to e- commerce, with marketing and SEO/organic search closely tied for second. Social media had the lowest spend, with videos ranked second-to-last. 100% 80% 60% 40% Fifth Fourth Third 20% 0% Paid search SEO/organic search marketing Marketing automation Direct mail Mass marketing/advertsing Videos Mobile apps Webinars Catalog Social media Second Biggest spend 2015 hybris software The 2015 State of E-Commerce in Distribution 9
10 Website Support Respondents were least satisfied with their Web chat support. Respondents were most satisfied with their order entry support and inventory levels for Web orders. How Satisfied Are You With Your Website Support Functions? Very satisfied Satisfied Unsatisfied Not applicable Webchat support Accurate invoice history Quotation handling Registration support After order customer service support Order entry support Warehouse preparation for order volume Inventory level for Web orders 0% 20% 40% 60% 80% 100% Importance of Website Integration Capabilities Respondents cited data import, data export and electronic data interchange as the most important website integration capabilities. Extensible markup language and punch-out integration with a suppliers Web catalog were considered relatively unimportant. Very important Important Unimportant Do not know Extensible markup language E-procurement Electronic data interchange Data import Data export 0% 20% 40% 60% 80% 100% 2015 hybris software The 2015 State of E-Commerce in Distribution 10
11 Website Capabilities Respondents were most satisfied with their websites company contact information/locations capabilities, with login/registration and basic search functionality coming in second and third, respectively. Respondents were most dissatisfied with their multisite enablement and product comparison features. How Satisfied Are You With Your Website Capabilities? Very Somewhat Dissatisfied W/n 12 mos. After 12 mos. No current plans Purchase suggestions Online help options Quote capability Links to business/social media Advanced account management Advanced search Link to manufacturer s website Tax and shipping cost estimates Link to business management software/erp Customized online product catalog Current stock levels Personal product list Product information Basic search Basic account management Online payment capability Search results: customer-specific pricing Order placement capability Login/user registration Company contact info/locations 0% 20% 40% 60% 80% 100% 2015 hybris software The 2015 State of E-Commerce in Distribution 11
12 About hybris, an SAP Company hybris helps businesses around the globe sell more goods, services and digital content through every touchpoint, channel and device. hybris delivers OmniCommerce : state-of-the-art master data management for commerce and unified commerce processes that give a business a single view of its customers, products and orders, and its customers a single view of the business. hybris omnichannel software is built on a single platform, based on open standards, that is agile to support limitless innovation, efficient to drive the best TCO, and scalable and extensible to be the last commerce platform companies will ever need. Both principal industry analyst firms rank hybris as a leader and list its commerce platform among the top two or three in the market. The same software is available on-premise, on-demand and managed hosted, giving merchants of all sizes maximum flexibility. Over 500 companies have chosen hybris, including global B2B sites W.W.Grainger, Rexel, General Electric, Thomson Reuters and 3M, as well as consumer brands Toys R Us, Metro, Bridgestone, Levi s, Nikon, Galeries Lafayette, Migros, Nespresso and Lufthansa. hybris is the future of commerce sales@hybris.com This survey was conducted in partnership with Real Results Marketing. Learn more information at hybris software The 2015 State of E-Commerce in Distribution 12
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