Digital, E-commerce Drive Distributors’ Revenue: Study

Drive Distributors

Bengaluru: As more and more millennials comprise management and executive positions at industrial distribution companies, those firms are steadily becoming more tech savvy and incorporating more technology into their operations.

The other side of this area is e-commerce — a topic that drives endless conversations among our audience. Though the B2B world was slow to adapt to e-commerce implementation compared to B2C, distributors continue to get better at it, according to a study by ID’s 70th Annual Survey of Distributor operations.
This year’s survey shows that 63 percent of respondents consider e-commerce a priority at their business, up more than three percentage points from last year.

Likewise, the amount of respondents who say they are currently generating web-based revenues ticked up by more than a point to 57 percent. While these figures show increased e-commerce utilization, they also show there’s plenty of untapped potential in this space, especially given that more than 91 percent of respondents say they buy products online.

The study highlights that the relationship between distributors and suppliers is always an interesting dynamic to track, especially with our respondents’ growing concern of manufacturers selling direct. When it comes to relations, here is what distributor respondents value most.

• Eighty percent of them say quality is their No. 1 criteria — down more than six points from our 2016 survey ago to a four-year low
• On-time delivery was second at 66 percent — up 7.5 points from last year’s survey
• Price — which has seemingly become less of a priority in industry conversations compared to service level — jumped nearly seven points from last year’s survey to 60 percent
• Service/support remained flat at 56 percent
• Reputation was fifth at 29 percent, while terms rounded out the criteria at eight percent

According to the respondents, supplier relations dipped over the past year. More than 14 percent say their relationship with suppliers has gotten worse — up more than four points from last year’s survey; 29 percent say relations have gotten better — down four points; while most respondents — 56 percent — say relations have stayed the same.

Likewise, the amount of respondents who say the level of support they have received from suppliers has gotten worse — 22.5 percent — increased more than two points from last year’s survey, while 55.5 percent say support has stayed the same.

84 percent of respondents say their suppliers have increased prices in the past year — up more than two points from our 2016 survey. That figure has stayed within two percent of that over the past three years since topping out at 89 percent in 2014.

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