Supply Chain

Weathering the 'Perfect Storm': Major E-Commerce Competitors in Industrial Distribution Market Just Ahead

March 13, 2013

Industrial distribution is at its biggest crossroads in history, and they need to be prepared for the storm that is brewing.

Jim Tompkins

How do you prepare for a storm? When I know a winter storm is coming, I bulk up on food essentials, put on my warmest clothes and heat up some tea to fight off the chill.

Right now, industrial distributors need to know about and prepare for a new storm brewing.

Industrial distribution is at its biggest crossroads in history, and the “perfect storm” for transformation is looming. Maintenance, repair, and operations (MRO) customer expectations are at the center, with demands for increased customization, sophisticated e-commerce platforms, an “endless shopping aisle,” and faster delivery speeds.

Adding to this storm, the need for better online purchasing capabilities for MRO distributors are also higher than ever—just look at W. W. Grainger as an example. Since 2011, the company’s web traffic has grown from 3,000 to almost 11,000 hits per month. Due to gross margins that produce a hefty profit, plus the growing expectation for online sales, companies like Amazon are diving into the B2B MRO market with their own e-commerce sites, like AmazonSupply.

Recently, Google followed suit with its own MRO e-commerce space called Google Shopping for Suppliers. Google’s site connects buyers with global suppliers, while Amazon sells products directly to buyers. Which makes the most sense? So far, Amazon’s been the leader to watch, but we’ll see how quickly Google’s new capability captures the attention of suppliers. Take a look at Gaebler.com’s article on Google Shopping for Suppliers to learn more.

And to gain deeper insight into how to adapt and weather this storm, check out Tompkins’ latest paper, Industrial Distribution at a Crossroads.

Ask yourself what you can do to move with change and serve customers under their own terms. This is the key to what I call Multichannel Operations Excellence (MOE). MOE means reaching out to customers in new engaging ways, studying how to broaden your selection and availability, and integrating online/branch events with social media. It demands every aspect of the customer experience to be interactive, educational, engaging, and personalized—all through a variety of channels.

Don’t be a casualty to change by thinking that the Amazon Effect does not apply in industrial distribution. Be aware of your customers’ preferences, stay proactive, and be ready to expand what you offer and how you deliver it to make sure you’re not left out in the cold of this storm.

Jim

About the Author

Jim Tompkins | CEO

Dr. James A. Tompkins is an international authority on leadership, logistics, material handling, outsourcing, and supply chain best practices. As the founder and CEO of Tompkins International, he provides leadership for Tompkins globally.

His 30-plus years as CEO of a consulting / integration firm and his focus on helping companies achieve profitable growth give him an insider’s view into what makes great companies even better. Listen to an interview of Jim Tompkins on the Business Leader Radio show.

As a high-level business advisor, his unique perspective prepares corporations and executives for the future.

To share his knowledge and provide up-to-date information on supply chain and business trends, he developed the GoGoGo! Blogand Global Supply Chain Podcast.

He has written or contributed to more than 30 books and eBooks, including Caught Between the Tiger and the Dragon, Bold Leadership, Logistics and Manufacturing Outsourcing, The Supply Chain Handbook, andNo Boundaries. Jim has been quoted in hundreds of business and industry magazines such as The Journal of Commerce, Supply & Demand Chain Executive, and FORTUNE, and he has spoken at more than 4,000 international engagements.

Jim has served as President of the Institute of Industrial Engineers, the Materials Management Society, and the College-Industry Council on Material Handling Education, and Purdue has named him a Distinguished Engineering Alum. He has also received more than 50 awards for his service to his profession.