Download handouts (PDF) : www.mdm.com/slides or [email protected]

2014 STATE OF E-COMMERCE IN DISTRIBUTION Featuring: Jonathan Bein, Ranga Bodla and Tom Gale March 20, 2014 Produced by:

Event Sponsor:

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Download handouts (PDF) : www.mdm.com/slides or [email protected]

Speakers: Jonathan Bein Senior Partner Real Results Marketing

Ranga Bodla Director of Industry Marketing Netsuite

Tom Gale Publisher Modern Distribution Management

Event Sponsor:

Download handouts (PDF) : www.mdm.com/slides or [email protected]

Agenda: •

Introduction – Tom Gale (10 Minutes)

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Presentation – Jonathan Bein (30 Minutes)

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Presentation – Ranga Bodla (10 Minutes)

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Q&A – Everyone (10 Minutes)

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The State of Distribution E-Commerce 2014

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Summary • • •

Real Results Marketing conducted an electronic survey of 465 participants to better understand trends in e-commerce. This survey was conducted with Modern Distribution Management in February 2014. Key trends: – E-commerce revenue as a percent of overall revenue is rising rapidly – Key objectives are acquiring new customers, growing wallet share with existing customers, and improving website usability – Grainger is overwhelmingly considered the best website by other distributors – Respondents express mixed satisfaction with much of the functionality on their own e-commerce sites – Mobile technology for e-commerce is being deployed rapidly. – Catalogs are considered to be highly effective for generating ecommerce revenue. 6

Best Competitor Website • Overwhelmingly, Grainger is named by competitors as having the best website. • McMaster-Carr was a distant second. • Nobody else was even close.

Best Competitor Website • Overwhelmingly, Grainger is named by competitors as having the best website. • McMaster-Carr was a distant second. • Nobody else was even close. .....Grainger just added several hundred people to its e-commerce initiative

Overview • • • • • •

Revenue and growth Priorities Capabilities Marketing Data Operations

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REVENUE AND GROWTH

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E-Commerce Revenue – 2012-2014 • 2013 - Increase of nascent and growth stage companies • 2014 (projected) • More than 20% increase in growth stage companies • More than double number of mature companies

Definition • Nascent – less than 5% e-commerce revenue • Growth – 5% to 10% e-commerce revenue • Mature – 10% or more e-commerce revenue

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E-Commerce Revenue – 2013-2014

• A significant number expect to increase their ecommerce revenue • Only a small percentage expects their ecommerce revenue to decline in 2014.

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PRIORITIES

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Top Priority Top priorities are • New customers • Existing customers • Ease of use

Priorities reflect the nascent and growth stage e-commerce in where the first priority is to get revenue flowing with a usable web site.

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E-commerce Leadership Among respondents with nascent stage e-commerce programs, only half have dedicated leadership vs. 70% who in growth or mature stage.

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CAPABILITIES

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E-Commerce Capabilities Respondents are only satisfied with the table-stakes functionality (contact information and basic search.) For only slightly more complex functionality (stock levels, technical information, social media), there is mixed satisfaction.

For advanced capabilities (quote, live chat, and purchase suggestions), satisfaction is low.

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E-Commerce Capabilities Respondents have high satisfaction with login and order placement. They have mixed satisfaction will all of the other capabilities.

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Mobile Capabilities Support for mobile technology has grown nearly 25% from last year including: • Smart phones • .mobi implementations • Mobile apps Still, more than 30% intend to implement support for mobile technologies in the next year and beyond.

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Integration Capabilities Smaller distributors are less likely to rely on EDI or punch-out as part of their e-commerce solution. The emphasis on EDI and punchout has diminished from last year.

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MARKETING

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Driving E-Commerce Demand

• Email marketing, catalog and SEO are most effective and highest spend • Paid search has low effectiveness • Marketing automation is underutilized in distribution relative to other industries

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E-commerce and Catalog Synergy • 85 percent of companies with a successful catalog believe that ecommerce and catalog are synergistic or that their catalog helps drive e-commerce sales. • 73 percent of companies who have a mature e-commerce channel believe that e-commerce and catalog are synergistic or that their catalog helps drive e-commerce sales. • The three distributors (Grainger, MSC Industrial Supply and McMaster-Carr) who were considered by their peers in a previous survey survey to have the best websites were also considered by their peers to have the best catalogs.

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E-commerce and Catalog Synergy • Product information management • Brand • Sales

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Simple Techniques for Driving E-commerce Demand with Catalog • Reference other product options available online - e.g. “See our website for 100s more options”

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Simple Techniques for Driving E-commerce Demand with Catalog • Reference other product options available online - e.g. “See our website for 100s more options” • Place e-commerce URL on all catalog pages

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Simple Techniques for Driving E-commerce Demand with Catalog • Reference other product options available online - e.g. “See our website for 100s more options” • Place e-commerce URL on all catalog pages • Mention online tools – Order tracking – Shipping charges

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Simple Techniques for Driving E-commerce Demand with Catalog • Reference other product options available online - e.g. “See our website for 100s more options” • Place e-commerce URL on all catalog pages • Mention online tools – Order tracking – Shipping charges

• Selectively reference videos, training, configuration/sizing tools

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Simple Techniques for Driving E-commerce Demand with Catalog • Reference other product options available online - e.g. “See our website for 100s more options” • Place e-commerce URL on all catalog pages • Mention online tools – Order tracking – Shipping charges

• Selectively reference videos, training, configuration/sizing tools • Promote mobile options, e.g. “On the road? – use our convenient mobile ordering” 29

Marketing Automation and Email Marketing Many distributors use email marketing to promote products, special and branch events. There is limited awareness among distributors about marketing automation and how it differs from email marketing.

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Marketing Automation Example No response?

Wait 3 Days

Clicks Link

Send Newsletter

Newsletter Invite Email

Opens Email

Invite to Private Demo

Send Exclusive Webinar Invite

Send Whitepaper Message

Email Service Provider vs. Marketing Automation

Marketing Automation ROI •

Businesses that use marketing automation to nurture prospects experience a 451% increase in qualified leads. In turn, nurtured leads make 47% larger purchases than non-nurtured leads. (The Annuitas Group, Nov 2012)

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Marketing Automation ROI •

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Businesses that use marketing automation to nurture prospects experience a 451% increase in qualified leads. In turn, nurtured leads make 47% larger purchases than non-nurtured leads. (The Annuitas Group, Nov 2012) 79% of top-performing companies have been using marketing automation for more than two years, with 79% of CMOs indicating “increasing revenue” as the most compelling reason for adoption, followed by “higher quality leads” at 76%. (Gleanster, Aug 2013)

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Marketing Automation ROI •

•

•

Businesses that use marketing automation to nurture prospects experience a 451% increase in qualified leads. In turn, nurtured leads make 47% larger purchases than non-nurtured leads. (The Annuitas Group, Nov 2012) 79% of top-performing companies have been using marketing automation for more than two years, with 79% of CMOs indicating “increasing revenue” as the most compelling reason for adoption, followed by “higher quality leads” at 76%. (Gleanster, Aug 2013) 78% of successful marketers cite marketing automation as being most responsible for improving revenue contribution. (The Lenskold and Pedowitz Groups, Nov 2013)

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Marketing Automation ROI •

•

•

•

Businesses that use marketing automation to nurture prospects experience a 451% increase in qualified leads. In turn, nurtured leads make 47% larger purchases than non-nurtured leads. (The Annuitas Group, Nov 2012) 79% of top-performing companies have been using marketing automation for more than two years, with 79% of CMOs indicating “increasing revenue” as the most compelling reason for adoption, followed by “higher quality leads” at 76%. (Gleanster, Aug 2013) 78% of successful marketers cite marketing automation as being most responsible for improving revenue contribution. (The Lenskold and Pedowitz Groups, Nov 2013) Companies that deploy marketing automation see (Aberdeen Group, June 2012) – – – –

107% better lead conversion rates 40% greater average deal sizes 20% higher team attainment of quota 17% better forecast accuracy 36

Search Marketing Many distributors start with search marketing as the primary or only means to drive traffic and generate demand. Yet, only half of respondents consider search marketing effective for customer acquisition.

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Web Design Select the choice that best describes how your company developed its web design 25%

20%

Respondents in a 2013 survey are less likely to do the design all in house or all with a third party than in 2012. Companies with more than $100M revenue are more likely to do the design in house.

15%

There is very low satisfaction among distributors regarding their web design.

10%

5%

0% Mostly done with a Even balance Almost all done in third party with between in house house some in house and third party help

Mostly done in house with some third party help

Almost all done with a third party

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Not applicable

Marketing Best Practices • Integrated multi-channel and multi-vehicle practices provide the best results for driving e-commerce demand including: – Search marketing – organic and paid – Traditional direct response vehicles – catalog and direct mail – Marketing automation and email marketing

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DATA

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Product Data Select the choice that best describes how your company gets product data. 50%

45% 40% 35% 30% 25% 20%

15% 10% 5% 0% Almost entirely Mostly from the from manufacturers manufacturers with some from third party sources

Even blend from manufacturers and from third party sources

Mostly from Almost entirely Not applicable third party from third party sources with sources some from manufacturers

Product data accuracy and completeness are good for most distributors. Photographs, substitutes and information about related products is weak. Vast majority of data comes directly from the manufacturer. However, there is an increasing role of pure third-party solutions or blended third-party solutions.

Other (please specify)

Product Data Best Practices • Analyze quality, time and cost of in-house and third-party solutions. • Normalize data from manufacturers including manufacturer, part number, product category • Enrich data by mapping the items to industry standard templates and populating • Cleanse and normalize long and short descriptions • Get product images • De-duplicate based on part numbers and attribute descriptions 42

OPERATIONS

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Operations Fulfillment – slightly lower satisfaction with warehouse and inventory levels. Quotation handling – big concern with nearly 20% unsatisfied. Order handling – Good except chat is underutilized.

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Operations Best Practices • • • • • • •

If showing inventory, have accurate and as up-to-date counts as possible. Service level for web orders should be the same as any other channel. Lead times should be displayed and must be as accurate as possible. If using expected delivery dates, the same applies. Provide chat services with the same support level as the inbound calls. There should always be an order acknowledgement email and a shipment email. The shipment email should include tracking information. Develop a coherent inventory and fulfillment plan. Test the plan before rollout. Always provide easy to locate contact information for web support, registration support, and quotation requests.

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CONCLUSION

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Conclusion • E-commerce as part of a multi-channel offering is here to stay • Absence of viable e-commerce channel will result in lost business, not just e-commerce business • Companies of all sizes need to make the investment to be in market in 12 to 18 months • The key is balancing build-buy

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Thank you!

Jonathan Bein, Ph.D. Managing Partner [email protected] www.realresultsmarketing.com

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Who is NetSuite Background

Performance

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Offices in 10 countries

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2014 STATE OF E-COMMERCE IN DISTRIBUTION Questions? Download handouts (PDF) : www.mdm.com/slides or contact [email protected]

Produced by:

Event Sponsor:

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