A Survey of E-Commerce Objectives and Challenges Facing ...

© 2015 hybris software The 2015 State of E-Commerce in Distribution 1

The 2015State of E-Commercein DistributionA Survey of E-Commerce Objectives and ChallengesFacing Wholesale Distribution Companies

in partnership with


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Executive SummaryDistributors 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 per-cent 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 inef-fective. 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 2015.

This report provides an overview of the objectives and challenges distribution companies say they face around e-commerce today.



Methodology

The survey results presented in this whitepaper are the result of an online survey of read-ers from Modern Distribution Management (www.mdm.com) and hybris software in Janu-ary and February 2015.

As a leader in digital transformation, hybris delivers state-of-the-art customer data man-agement, context driven marketing tools and unified commerce processes for all chan-nels.

Modern Distribution Management is the premier source of research on the wholesale dis-tribution industry and offers news, blogs and premium newsletters to executives in whole-sale 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.



E-Commerce Conditions and Expectations

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.

2015 E-Commerce Growth ExpectationsRespondents don’t overwhelmingly expect their sales to move online in 2015, with 42 per-cent 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.

2014 E-Commerce, as Percentage of Total Sales

Less than 5%

None

5% to 10%

10% to 20%

Not applicable

20% to 30%More than 40% 30% to 40%

Less than 5%

5% to 10%

10% to 20%

None

20% to 30%

Not applicable30% to 40%

More than 40%



25%

17%

17%

10%

11%

9%

2%

Increase new customers/orders acquiredthrough website, search-engine marketing

Ease of use, increased customer satisfaction

More frequent use of website,e-commerce transactions by customers

Increased efficiency andoperational cost savings

Productivity improvements for sales, marketing, support personnel

Increase the size/quality of productcontent available to partners, customers

Increased transaction size from additional items on orders

Top Priorities in E-Commerce

For respondents, the top priorities for their e-commerce business are:

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.

Increase new customers/orders acquired through website, search-engine marketing

Promote brand

Ease of use, increasedcustomer satisfaction

Increased efficiency andoperational cost savings

More frequent use of website,e-commerce transactions by customers

Productivity improvements for sales, marketing, support personnel

Increase the size/quality of product content available to partners, customers

Increased transaction size fromadditional items on orders

4%

8%

12%

9%

12%

14%

20%

21%



Effectiveness of Search MarketingRespondents 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.

Somewhatineffective,

23%I don’t know, 22%

Very effective,10%

Effective, 24%

Very ineffective,10%

Not applicable10%



Regarding the importance of marketing automation and e-mail 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.

Importance of Marketing Automation and Email Marketing for E-Commerce Business

Satisfaction with Mobile Web TechnologiesRespondents 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 important Important Unimportant Don’t know or not applicable

Lead scoring

0% 20% 40% 60% 80% 100%

Drip marketing/lead nurturing

Shopping cart abandonment alerts

Website visitor tracking

Emails triggered by actionfrom a Web visitor

0% 20% 40% 60% 80% 100%

0% 20% 40% 60% 80% 100%

Very Somewhat Dissatisfied W/n 12 mos. After 12 mos. No current plans

QR codes

“Smart” phones

Mobile device apps

Mobile device optimizedwebsite

Laptop computers

Tablet computers

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Laptop computers

Tablet computers

"Smart" phones

Mobile device optimized website (.mobi)

Mobile device applications ("apps")

Quick response ("QR") codes



Importance of E-Commerce IntegrationRespondents 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).

0%10%20%30%40%50%60%70%80%90%

100%

Data export Data import EDI (Electronic DataInterchange)

E-Procurement (such aspunch-out integration

with a supplier webcatalog, or other onlinesupplier marketplace)

XML (Extensible MarkupLanguage)

Importance of Company's E-commerce Integration100%

80%

60%

40%

20%

0% 0%

20%

40%

60%

80%

100%

Fifth

Fourth

Third

Second

Biggest spend

Data export Data import Electronicdata

interchange (EDI)

E-procurement Extensiblemarkup

language (XML)

Very important Somewhat important

Unimportant Do not know



Effectiveness of Marketing VehiclesRespondents cited sales reps as the most effective marketing vehicle for driving demand to e-commerce channels. SEO/organic search ranked second, followed by email and cus-tomer service rep as a marketing vehicle. Mass marketing/advertising, marketing automa-tion, direct mail and webinars were considered the least effective marketing vehicles.

Marketing Vehicle SpendingRespondents cited catalogs as their biggest spend for marketing vehicles related to e-commerce, with email marketing and SEO/organic search closely tied for second. Social media had the lowest spend, with videos ranked second-to-last.

FifthFourthThirdSecondMost effective

0%

20%

40%

60%

80%

100%

Catalog Customerservice rep

Direct mail Emailmarketing(ConstantContact,Vertical

Response,etc)

Marketingautomation(Marketo,

Act-On,Eloqua, etc)

Massmarketing

andadvertising(billboards,

tradejournals)

Mobile apps Paid search Sales rep SEO/organicsearch

Social media Videos Webinars

Catalog

Direct

mail

Paid se

arch

Mobile

apps

Videos

Web

inars

C

ustom

er se

rvice

rep

Email

mark

eting

M

arketi

ng au

tomati

on

Mass m

arketi

ng/ad

verts

ing

100%

80%

60%

40%

20%

0% 0%

20%

40%

60%

80%

100%

Fifth

Fourth

Third

Second

Biggest spend

SEO/or

ganic

searc

hSoc

ial m

edia

Sales r

ep

FifthFourthThirdSecondBiggest spend

100%

80%

60%

40%

20%

0% 0%

20%

40%

60%

80%

100%

Fifth

Fourth

Third

Second

Biggest spend

Catalog

Direct

mail

Paid se

arch

Mobile

apps

Videos

Web

inars

E

mail m

arketi

ng

M

arketi

ng au

tomati

on

Mass m

arketi

ng/ad

verts

ing

SEO/or

ganic

searc

h

Social

med

iaPaid search SEO/organicsearch

Emailmarketing(ConstantContact,Vertical

Response, etc)

Marketingautomation

(Marketo, Act-On, Eloqua, etc)

Direct mail Mass marketingand advertising

(billboards,trade journals)

Videos Mobile apps Webinars Catalog Social media



Website SupportRespondents 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?

Importance of Website Integration CapabilitiesRespondents 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 satisfied Satisfied Unsatisfied Not applicable

Webchat support

0% 20% 40% 60% 80% 100%

Accurate invoice history

Quotation handling

Registration support

After order customer service support

Order entry support

Warehouse preparationfor order volume

Inventory level for Web orders

0% 20% 40% 60% 80% 100%

Inventory levels for web orders

Warehouse preparation for order volume

Order entry support



Quotation handling


Web chat support

Very important Important Unimportant Do not know

0% 20% 40% 60% 80% 100%

Extensible markup language

E-procurement

Electronic data interchange

Data import

Data export

0% 20% 40% 60% 80% 100%

Inventory levels for web orders

Warehouse preparation for order volume

Order entry support



Quotation handling


Web chat support



Website CapabilitiesRespondents were most satisfied with their websites’ company contact information/loca-tions 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

0% 20% 40% 60% 80% 100%

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 managementsoftware/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

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0%

Company contact information and locations

Login and user registration

Order placement capability

Search results provide customer-specific pricing across the website if customer islogged In

Online payment capability

Basic account management (order tracking, transaction history, etc.)

Basic search (search by product category, manufacturer/brand name)

Product information (technical information, pictures, etc.)

Personal products list

Current stock Levels (or delivery times)

Customized online product catalog search results

Link to business management software/ERP

Tax and shipping cost estimates

Link to manufacturer's website

Advanced search (search by product descriptions, customer's part numbers)

Advanced account management (multiple login ID's, account purchase history, invoicemanagement, data export, etc.)

Links to business/social media

Quote capability

Online help options (FAQs, live chat)

Purchase suggestions similar to Amazon.com



About hybris, an SAP Companyhybris 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™

www.hybris.com | [email protected]

This survey was conducted in partnership with Real Results Marketing. Learn more information at www.realresultsmarketing.com.

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