MSC Industrial is a prominent metalworking and maintenance, repair and operations (MRO) products distributor. It said yesterday that ecommerce sales grew 1.8% year over year to $603.7 million for the fiscal first quarter ended Dec. 2. That increase compares to slack total Q1 sales, which slipped 0.4% to $957.7 million.

MSC Industrial said its ecommerce sales helped to partially offset offline sales declines tied to soft demand caused by striking auto industry workers and other factors.

Two principle ways to unlock growth

On an earnings call with stock analysts this week, Gershwind noted that MSC has prodded ecommerce sales with “two foundational priorities for unlocking growth — realigning our public-facing pricing and implementing a new product discovery functionality on our website.”

“With respect to pricing, our goal is to provide market competitive prices to smaller customers, while remaining roughly gross-margin neutral to better discounting,” he said. “We are currently 30% of the way through the realignment, and we’re on track to achieve that goal.”

“We’re seeing encouraging early indicators, such as improved web conversion rates and more favorable levels of growth,” Gershwind said. He added, “The goal is to create a market competitive price for any customer that wants to come to us.”

Gershwind also said MSC expects to complete the deployment of its new product discovery platform before the end of the current fiscal quarter in March.

“We will more aggressively market the pricing and the web improvements in the back half of our fiscal year,” he said, adding, “These efforts will allow us to significantly expand our share of wallet across our customers.”

In other developments, Gershwind said MSC was moving ahead with multiple environmental, social and governance improvements, including:

• Recycling over 20,000 pounds of carbide since 2021 through its regrinding services.
• In fiscal 2023, recycling 1,500 tons of corrugated packaging and enabling MSC’s customers to reduce electricity consumption by 32 million kilowatt hours.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s MSC Industrial report.

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The metalworking and industrial supplies distributor said sales increased 8.6% year over year to $4.009 billion. And that happened even though MSC Industrial ecommerce sales, which account for more than 60% of total sales, slid by 3% year over year in the fiscal fourth quarter. Gershwind attributed the drop in digital sales mainly to public sector sales occurring in non-ecommerce channels.

Kirsten Actis-Grande, executive vice president and chief financial officer, MSC Industrial Supply Co.

MSC Industrial ecommerce sales

Full-year MSC Industrial ecommerce sales, however, rose 9.1% to $2.45 billion. Gershwind and Kirsten Actis-Grande, executive vice president and chief financial officer, said they expect to see improved ecommerce sales, especially as MSC rolls out upgrades to the company’s flagship ecommerce site, MSCDirect.com.

“Looking forward, we expect improvement in our ecommerce sales, particularly through MSCDirect.com, as we start rolling out enhanced capabilities, including improved search and navigation functions,” Actis-Grande said on a Q4 earnings call with investment analysts today.

Gershwind added that the “heavy-lifting” on ecommerce improvements have already been completed and that the ecommerce upgrades will occur “over the next quarter or so. … That’s when customers will begin seeing an impact.”

Still, he cautioned that the impact of better ecommerce technology will not be like turning on a light switch.

“This will build over time,” said, adding: “It is one of the things, though, that gives us confidence beyond this year.”

MSC Industrial defines ecommerce sales as those through digital channels including its ecommerce platforms, internet-connected vending machines, EDI, XML-based ordering systems and other electronic portals. MSC’s formal corporate name is MSC Industrial Direct Co. Inc., but it generally goes by the name of its main business unit, MSC Industrial Supply Co.

MSC Industrial earnings

For the fourth quarter ended Sept. 2, MSC Industrial reported:

• Total net sales rose 1.3% year over year to of $1.035 billion.
• MSC Industrial ecommerce sales fell about 3% to $627.1 million, accounting for 60.5% of total sales.
• Gross profit margin of 40.5%, down from 41.9%.
• Net income fell 15.9% to $87.623 million.

For the fiscal year, MSC Industrial reported:

• Gross profit margin of 41.0%, down from 42.2%
• Net income inched up 1% to $343.23 million.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s MSC Industrial report.

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Cox spoke to attendees last week in a keynote address at the 2023 EnvisionB2B Conference & Exhibition in Chicago. Konica Minolta is a 150-year-old global manufacturer and marketer of imaging products. The COVID-19 pandemic accelerated ecommerce at the company, with Cox spearheading the effort.

Velinda Cox, senior vice president of ecommerce, Konica Minolta

The unfortunate events of the pandemic accelerated Konica Minolta’s ecommerce business, she said. Cox set to work to gather information from the customer. Through a series of focus groups, surveys and customer interviews, Cox’s team identified where to begin.

“We needed to go across what priorities, capabilities, and which portfolio items to start with,” she said. “What were customers wanting to buy online that they couldn’t find with our sales reps today?”

A customer-guided shopping experience

Cox said her team realized that customers don’t necessarily want salespeople contacting them while they research and discover products online.

Just as important was deciding which products to make available online. Konica Minolta has an expansive portfolio of products, she said.

“We carry a lot of things. We needed to competitively price products in the market. The competitive market changes very quickly in digital worlds,” Cox said.

The ecommerce team planned a roadmap. Cox had to identify what B2B-specific difficulties the company might encounter, she said.

“We [planned] where we would encounter the logistics of fulfillment,” she said, and addressed such questions as, “Would we want to drop ship products? “What about longer lead times [during the pandemic] and exposing unavailable inventory?”

Konica Minolta sets a timeline

Cox encountered multiple hurdles while setting up Konica Minolta’s ecommerce business, she said. In 2021, there was a micro-chip supply shortage and the Suez Canal blockage, which bottlenecked the shipping industry, leaving many businesses and retailers short of goods. Then, the COVID-19 lockdown in Shanghai in 2022 delayed shipments.

“Lead times for our core products went from days to weeks to months within the 30-45 day window we were building our technology infrastructure for,” Cox said. “I said to our CEOs across multiple countries that we can’t do a live ecommerce site without product we can fulfill quickly.

“That would be a horrible way to start and a bad customer experience,” she continued. “So, we had to pivot our portfolio.”

Pivoting included offering third-party products on its website, she said.

“That pivot was what we started with last fall,” Cox said. “I’m very excited because we’re getting ready right after the Fourth of July to bring our core products on.”

Konica Minolta began using software vendor Elastic Path in November 2022 to launch a product experience manager (PXM) system and payments capabilities to create an easy online checkout experience for its B2B customers. (The PXM system combines product information management, product merchandising and a catalog composer for displaying products to customers.)

Disrupting the digital eco-system

Long-term, Cox looked at Konica Minolta’s distribution partners and the challenges that lay ahead selling through and competing with dealers in the industry, she said.

Selling online was met with some resistance. Cox referred to one meeting with one of the company’s dealers who was concerned Konica Minolta was “going to disrupt the entire industry.”

“That would be great if we disrupted the entire industry,” Cox said. “Unfortunately, not everyone is going to go along — but I’d rather be the disrupter than the one left behind.”

Cox said it was necessary to keep dealers happy while helping them understand the necessary direction needed in order to grow the business, she said. This also included convincing various executives that changing how it sells its products would also lead to new opportunities, new leads, she said.

Other ways Cox introduced technology to the customer buying experience included further digitizing how it followed up with customers.

“We need to be there for customers and create new value through experiences,” Cox said. “There was no post conversion via [online] chat. There was no instant SMS text.”

“These are [tools] to layer in better connection with your customer,” she continued. Which leads to better retention and new opportunities to learn about what customers want going forward, she said.

“We never had a digital [communication channel] where customers could give us instant feedback,” she said. “This is a big opportunity, and we’re continuing to [plan our] roadmap around that.”

Bring the organization together

Market alignment is another challenge — which products to offer, and, just as important, convincing corporate leadership that investment is needed, she said. That requires bringing different parts of the organization together, she said.

In autumn 2022, Cox met with about 45 leaders within its organization. That included becoming Scrum certified and earning other certifications to understand how to deploy technology to boost ecommerce, she said. Scrum is a software framework that helps companies structure and manage their work through different parts of the business, including software development, research, sales, and marketing.

“We got certified and taught people about design thinking and how we could change,” she said. “It’s about failing fast and experimenting.”

“We came from a culture where failure really wasn’t an option,” she continued. “But we needed to help everyone start to understand that failing gives you the ability to learn fast and to take those learnings and not repeat mistakes across other areas of your organization.”

Sharing and celebrating failure is important, Cox said.

B2B personalization

Cox is revamping the company’s digital marketing efforts.

“It’s all about unlocking the data,” she said. “The quality of your data can be an interruption in your objectives. There’s so much you can do when you start to aggregate the views from all your different functional areas.”

It’s important to use company data to understand customer behavior as well as how the sales organization works.

“I have vendor meetings every day of the week,” she said. “I’m reviewing current vendors, what their roadmap is, while also exploring with other vendors and new technologies that don’t exist in our portfolio or infrastructure.”

Doing so helps Cox keep abreast of what might differentiate Konica Minolta from competitors.

“Personalization can change the behavior and outcomes we’re trying to get with our customers,” Cox said. “You’re going to increase your customer acquisition, increase revenues and return on investment is going to improve.”

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Brent Steffen, director of ecommerce, Cat Digital, Caterpillar Inc.

Speaking in a keynote fireside chat with Digital Commerce 360 editors Mark Brohan and Gretchen Salois at the 2023 EnvisionB2B Conference & Exhibition in Chicago, Steffen explained that the first step was understanding the different types of buyers of Caterpillar’s earthmoving and other equipment, and how best to serve them online.

Research enabled Caterpillar to segment customers into three groups:

• Retail buyers who may own a few pieces of equipment and only need repair parts occasionally.
• Professional buyers with large fleets of equipment who buy parts constantly.
• Integrated buyers, the manufacturer’s largest customers, who want to make purchases directly from their procurement and enterprise resource planning (ERP) accounting systems.

With that understanding, Caterpillar designed its parts-sales ecommerce site, Parts.Cat.Com, so that each type of buyer sees the kind of information they need about the 1.5 million parts the site offers.

For retail buyers, the website provides a lot of information, imagery, specifications and two-dimensional designs. Professional buyers need the website to be tailored to each member of frequently extensive teams — from machine operators to technicians to procurement managers — and the website caters to each person’s needs.

Integrated buyers get direct access through their ERP and procurement software to the 130 out of Caterpillar’s 156 worldwide dealers that participate in its ecommerce program.

“We worked to understand the different types of customers in an ecommerce portfolio that addresses their needs and makes customers more productive,” Steffen said.

Caterpillar sets digital standards for its dealers

As Caterpillar worked through this process, Steffen said, it identified two important groups that were critical to its digital success: its dealers and the employees who sell parts over the counter at those dealers’ 2,800 physical locations around the world.

While dealers are all independent businesses who do things their own ways, Steffen said, Caterpillar wants every online customer worldwide to have a premium and personalized experience. To do that, Caterpillar set digital standards that it works with its dealers to achieve.

That includes ensuring that every dealer ecommerce site shows real-time pricing and availability of parts. Retail customers must be offered a range of payment types, not just credit terms but also credit cards and local payment options. And, when orders are placed, the website must enable customers to see the status of their order. Customers also must be able to initiate a return online, he said.

As for the over-the-counter salespeople, many felt that ecommerce would cannibalize their sales and reduce their commissions, Steffen said. Caterpillar embarked on what Steffen called a “change management” campaign to convince dealers and their employees “that we’re not trying to channel shift customers from over the counter to digital.

“We’re convincing them that when we give customers choice, when they can come in to buy or buy online, our customers are more happy.”

Caterpillar’s new mobile app

As part of the ecommerce acceleration initiative, Caterpillar this year introduced a new mobile app, Cat Central. A customer can use the app to scan the QR code on a Caterpillar machine and get information directly related to that piece of equipment, which the app identifies through the serial number embedded in the QR code.

That provides the customer with direct access to parts that fit that machine. While that makes it easier for customers to buy replacement parts, that’s not the app’s only function, Steffen said.

He said the app also provides each day personalized informational content and tips related to each customer’s equipment. The idea, he said, is to encourage customers — especially smaller customers who only buy parts occasionally — to use the app every day.

“That retail segment, they’re harder to bring in,” Steffen said. “The premise of Cat Central is we give retail customer compelling, useful content, delivered every day about how to own and operate equipment and do maintenance and repair, and seamlessly buy repair parts when there is a need.”

He said if they use the app regularly, they’ll know it’s available when they’re ready to make a purchase.

And because the app is as much informational as a sales tool, Steffen said, Caterpillar measures success not by conversion rate, but by how many customers use it.

Caterpillar sets digital goals in 14 areas

Steffen emphasized that a huge campaign such as Caterpillar’s ecommerce acceleration program must be broken down into its component parts. He said the manufacturer has identified 14 critical areas of work, such as site search, mobile and quality, and defined key performance indicators (KPIs) to measure success in each area.

Key to success has been commitment to the initiative from top management, he said.

“Our entire company is focused on driving services growth,” Steffen said, “and using ecommerce to do so.”

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Joe Cicman, senior analyst, Forrester Research

Buyers want helpful online product content and purchasing features, demands that have many of them preferring manufacturers’ websites, new research from Digital Commerce 360 and Forrester Research Inc. finds.

“Brand manufacturers win buyers with great content,” says Forrester senior analyst Joe Cicman. “Our joint research indicates the top choice for business buying in 2023 is the brand manufacturer’s own site (57%), beating-out Amazon Business at 43%. Why? Both a surprise and a delight: 85% of buyers tell us that the best source for product information is the brand manufacturer’s own site.”

The joint research project also found that 70% of B2B buyers will increase their online purchasing of goods and services in 2023.

Cicman — who will discuss at the EnvisionB2B Conference & Exhibition this month the results of the joint DC360/Forrester suryey and the intersection of online buyer demands and sellers’ ecommerce technology strategies — asserts that sellers must review the functions that address the challenges they face in serving customers, then identify the ecommerce technology platform that covers those w.

McKesson discusses B2B commerce trends

Val DuVernet, senior director of digital strategy and optimization, McKesson

Cicman will speak at EnvisionB2B in a June 21 session to analyze with DC360 the results of the joint research project and discuss digital commerce technology trends with Val DuVernet, senior director of digital strategy and optimization at medical products distributor McKesson.

B2B companies “should examine potential ecommerce solutions to identify which ones cover the specific common functions they most value,” Forrester says in the March 2023 report, “Demystifying the Technical Functions of B2B Commerce Solutions,” written by Cicman with input from other Forrester analysts.

Some of those functions, for example, can include how ecommerce technology manages customer account hierarchies, contract terms and personalized product catalogs for each customer.

Gartner’s Gene Alvarez on technology choices

Gene Alvarez, distinguished vice president and analyst covering digital commerce technology at research and advisory firm Gartner Inc., says B2B companies today have plenty options for deploying ecommerce technology based on their resources and their customers’ demands regarding the online buying experience.

Gene Alvarez, distinguished vice president and analyst, Gartner Inc.

Companies with limited IT resources can opt for software-as-a-service platforms that support customized customer-facing front ends. But businesses with more substantial resources can move up to even more customizable modular and composable MACH platforms with extensive use of microservices, APIs, cloud and headless infrastructure configurations, Alvarez says.

As competition increases in B2B ecommerce, and companies develop new and innovative ways to interact with buyers and make their customers’ jobs easier, it will be crucial for online sellers to operate commerce technology they can modify to keep up with new standards.

“As new innovation comes along, you need to” be able to bring about that new innovation because it will be table stakes within a year,” Alvarez says. “That’s where MACH brings advantages.”

Alvarez will speak on digital technology trends and strategies at EnvisionB2B. He will lead a June 20 panel and workshop on building customer loyalty.

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Scott Dushane, director of IT, Fairmount Tire & Rubber

“One of our biggest differentiations is when we answer the phone, it’s on the first couple of rings, every single time,” says Scott Dushane, director of IT.

But while that helps build personal relationships with customers, it’s not a scalable-enough business strategy to meet Fairmount’s goals. And those goals are ambitious — like providing an Uber Eats level of a transparent order and delivery service.

“Just like you can now go to Uber Eats, order a burrito, then know the driver’s name that’s going to pick up that burrito and then hand it to you in exactly 23 minutes, we want that same experience to happen for wholesale tires,” Dushane says.

“It’s a much less sexy industry, but the genie’s out of the bottle — we need to provide the same level of service and supply chain transparency that Uber is providing.”

Making strides in service and sustainability

Fairmount Tire & Rubber primarily serves the four-state region of Arizona, California, Nevada and Utah. It uses its home-grown self-service ecommerce site integrated with an online delivery management system to improve and expand its business. At the same time, it is drastically cutting out paper documents, increasing its sustainability and operating efficiency, Dushane says.

He says Fairmount is making significant strides in upgrading how it engages B2B customers online, matching buyers with the particular tire SKUs they need from a long list of options — such as the many tire brands, sizes, and applications like tread patterns for different types of weather — and providing transparency in deliveries, including same-day service.

Fairmount uses an online delivery management system that has streamlined and expedited the distributor’s delivery system and lets customers know through a GPS-based mobile app what tires are coming and when.

The delivery management system, from Descartes Systems Group, integrates through Google Cloud with Fairmount’s digital commerce platform and other technology systems and applications, including enterprise resource planning, product information management, customer relationship management and warehouse management.

Dushane says that, until recently, the most common call Fairmount’s agents received was “Where’s my tires?” But with the new system, Fairmount can replace those inbound customer service calls with outbound sales “rainmaker” calls often made by the same agent.

“This is real money,” he says.

No more shuffling paper for invoices

The old system had relied heavily on paper documents about customer orders and available delivery trucks, resulting in a difficult process for planning order fulfillment and delivery.

“For many years, it was a stack of papers on someone’s desk. And you would do the old shuffle and figure out how to route and how to build trucks,” Dushane says.

Fairmount now uses its integrated ERP, order management and delivery management systems to automatically coordinate how orders are delivered with the most efficient use of trucks and routes, he adds.

“It is an unbelievably difficult problem to route trucks throughout a city, like mathematically,” he says, adding, “Descartes comes up with sort of magical solutions that [we] never came up with for the last 30 years of running the same routes.”

As customer orders come into Fairmount’s B2B ecommerce login customer portal, at b2b.fairmounttire.com, the tire distributor’s financial software generates electronic invoices that the delivery management system allocates to delivery trucks based on their availability and capacity.

One advantage of the new system is replacing a system that used to require three sheets of paper for each invoice. When drivers make deliveries, they use mobile devices stored with order details and e-invoices to receive customers’ digital signatures and generate delivery confirmation notes.

“We totally eliminated paper,” Dushane says.

Reworking delivery routes for more service and sales

In addition, Fairmount speeds up deliveries by using its software to arrange multiple orders on the same truck in a way that makes them faster to unload at each customer’s destination.

And that has opened the door to more sales opportunities as well as greater efficiency, Dushane says.

“We have been able to start to run second and third routes because of Descartes … because we know when the drivers will be coming back and what the trucks can be filled up to — there’s no obfuscation,” he says.

“We have fixed costs,” he adds. “So let’s use those fixed costs to the best of our ability.”

This article is included in a special report covering B2B digital technology trends and a preview of the 2023 EnvisionB2B Conference & Exhibition.

Scott Dushane will speak during a panel and workshop on order management, fulfillment and delivery operations at the 2023 EnvisionB2B Conference & Exhibition.

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The report, B2B Ecommerce Technology Trends + EnvisionB2B 2023 Preview, includes several reviews of B2B companies and a preview of the full EnvisionB2B agenda, which features more than 50 speakers and 25 sessions. EnvisionB2B is scheduled for June 20 – 22 at the Hilton Chicago.

Joe Cicman, senior analyst, Forrester Research Inc.

Joe Cicman, senior analyst for B2B digital commerce at Forrester Research, asserts that B2B sellers must review the functions that address the challenges they face in serving customers, then identify the ecommerce technology platform that covers those functions.

At EnvisionB2B 2023 next month, Cicman will refer to findings of a recent joint Forrester and Digital Commerce 360 B2B Digital Buyer study and discuss with Val DuVernet, senior director of digital strategy at pharmaceutical distributor McKesson Corp., the intersection of online B2B buyer demands and ecommerce technology strategies.

Among the survey’s findings: 70% of B2B buyers will increase their online purchasing of good and services this year, and buyers’ prefer purchasing on manufacturers’ ecommerce sites because of the quality of their product information. Those findings show that B2B sellers must find the right ecommerce technology to offer customers the best buying experience, Cicman says.

B2B companies “should examine potential ecommerce solutions to identify which ones cover the specific common functions they most value,” Forrester says in the March 2023 report, “Demystifying the Technical Functions of B2B Commerce Solutions,” written by Cicman with input from other Forrester analysts.

Some critical functions, for example, can include how ecommerce technology manages customer account hierarchies, contract terms and personalized product catalogs for each customer.

Gene Alvarez, distinguished vice president and analyst, Gartner Inc.

Gene Alvarez, distinguished vice president and analyst covering digital commerce technology at research and advisory firm Gartner Inc., says B2B companies today have plenty options for deploying ecommerce technology based on their resources and their customers’ demands regarding the online buying experience. Alvarez will lead an EnvisionB2B panel discussion and workshop on customer loyalty strategies.

He asserts that, as competition increases in B2B ecommerce and companies develop new and innovative ways to interact with buyers and make their customers’ jobs easier, it will be crucial for online sellers to operate commerce technology they can modify to keep up with new standards.

“As new innovation comes along, you need to” be able to bring about that new innovation because it will be table stakes within a year,” Alvarez says.

Manufacturers and distributors push ahead with ecommerce

Brent Steffen, director of ecommerce, Caterpillar Inc.

“Everything we are doing with digital is about creating integrated and seamless experiences for our customers that help them be more efficient,” says Brent Steffen,  Caterpillar Inc.’s director of ecommerce, who will give a June 21 keynote address about innovation in B2B ecommerce at EnvisionB2B 2023.

With corporate roots going back to 1873 and annual sales of more than $6 billion, Konica Minolta Inc. is well known as a global manufacturer and marketer of digital imaging products used in corporate and institutional facilities worldwide.

But the company is ready to reach and engage more customers more often, which is why it’s forging into B2B ecommerce.

Velinda Cox, vice president of ecommerce, Konica Minolta

“We are in a position of transition, change and transformation,” says Velinda Cox, senior vice president of ecommerce at Konica Minolta Business Solutions U.S.A. Inc., in Ramsey, New Jersey, where she is spearheading the global company’s ecommerce strategy. Cox will give a June 22 EnvisionB2B keynote address on developing a new strategy for digital ecommerce and a supportive technology ecosystem.

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MSC Industrial ecommerce sales

Total ecommerce sales increased 0.05% year over year to $595.8 million for the fiscal second quarter ended March 4. MSC Industrial ecommerce sales amount to 62% of total sales. In comparison, total sales increased 0.04% to $961.6 million.

“We think we can be doing better,” Gershwind said on a second-quarter earnings call. He added that improvements were already well under way with digital technology under the leadership of MSC’s first chief digital officer.

John Hill, chief digital and information officer, MSC Industrial Supply Co.

“It’s been nearly a year since John Hill joined us as MSC’s first chief digital and information officer, and progress with our technology function is encouraging,” Gershwind said, according to a Seeking Alpha transcript of the earnings call. “We are enhancing our ecommerce functionality and expect to see incremental benefits in the coming quarters.”

Increasingly digital

Kristen Actis-Grande, chief financial officer, also noted that one of MSC’s priorities “is digital, which includes all aspects of MSC’s digital engagement with customers, suppliers and associates.”

When asked on the earnings call how MSC was growing sales among smaller companies and government agencies as well as larger companies, Gerswhind again cited ecommerce as critical to its strategy.

“Ecommerce has application across the board, all customer sizes,” Gershwind said. “But certainly for smaller customers, the enhancements we’re putting in place, we’re already doing pretty well in ecommerce.”

He added, “We are improving our product information and customer data, making for a better customer service experience and a more efficient business.”

Ecommerce sales were also helped by MSC’s growth of internet-connected vending machines.

“Vending machine net sales grew mid-teens year over year and reached $89.4 million, representing 15% of total net sales,” MSC said.

MSC also continues to drive growth through acquisition. In January, it completed the acquisition of two Ohio-based distributors:

• Buckeye Industrial Supply Co., a metalworking products distributor that caters to manufacturers
• True-Edge Grinding, which brings MSC “new capabilities in customer tool manufacturing and grinding,” Gershwind said.

Speaking at EnvisionB2B 2023

John Hill, MSC’s chief digital and information officer, will give a keynote address at Digital Commerce 360’s EnvisionB2B 2023 Conference & Exhibition in June in Chicago.

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Bob Howland, chief digital officer, Dawn Foods

Bob Howland, chief digital officer at bakery ingredients manufacturer Dawn Foods, explains the critical importance of focusing on customer needs as B2B companies deploy the latest ecommerce technology.

Howland is a speaker for the June 21 “Why We Chose Headless” session at the EnvisionB2B 2023 Conference & Exhibition in Chicago.

DC 360: What is driving B2B companies like Dawn Foods to expand online?

Howland: Two things. First — the customer. Our customers are already online and routinely order supplies from Amazon, Walmart, Costco, and more to help run their businesses. They have been asking for online ordering from us for years, and we are the first bakery ingredient manufacturer and distributor to launch an ecommerce platform. Second — our competition. We feel that building an online product catalog enables our customers to see the full scope of products available to them. We are now moving from online ordering toward full end-to-end digital experiences. All of these new tools and services give us a clear competitive advantage.

DC 360: What are your biggest internal and/or external barriers?

Howland: At the highest level, this is a digital transformation project across all of our main functions. The lift to get the organization’s business processes documented and our systems readied so that we could build the ecommerce platform was Herculean. We are now focused on breaking down silos and helping key functions build their ecommerce muscle so that we can collectively operate as an ecommerce business. It’s a tall order, yet the benefits of automated business processes, building modern infrastructure, and creating remarkable customer experiences are clear.

DC 360: What are the chief gains you’re realizing?

Howland: This may be a less traditional answer, but a clear gain is organizational pride. Launching an ecommerce platform from scratch touched every part of the company. We launched on time, on budget, and on strategy. This achievement drove a huge sense of accomplishment and a renewed sense that, together, we can move mountains. Of course, you are looking for business and financial gains. We have seen gains in customer retention, increased basket size, and overall engagement. All measured through our robust Voice of the Customer program.

DC 360: What is the most valuable piece of advice you have on how to launch online B2B sales or increase them?

Howland: Two things. First, it’s critical to really understand the customer perspective. We launched a beta platform in two markets to get direct customer input, which was invaluable. And we ran the beta for close to a year so that we had a real-time pipeline for customer feedback as we created the user stories which served as the backbone for the build.

Second, it’s important to realize that launching online B2B sales for the first time is a huge transformation exercise. This requires executive alignment and a company-wide effort. I’d suggest an organization hires someone that has done this before and can articulate a plan across people, processes, and potential technologies to own the initiative in partnership with the broader change-management work.

DC 360: Looking back over the past few years, is there anything you wish you had done differently in ecommerce?

Howland: We are a 100-plus-year-old company. I’m proud of the business for how well we’ve adopted ecommerce and appreciative for all of the top-down support. While we launched our first ecommerce platform in 2020, we are very much still in the early stages of our digital journey. Much of my time is still focused on the massive change-management effort. The pace of change is slower than I’d like yet some of this simply needs to happen organically.

DC 360: What excites you the most in new digital commerce technology?

Howland: Where do I start! This is an exciting time to be in digital and technology in general. The shift away from monoliths to a more modern, composable architecture really liberates ecommerce leaders and allows us to create ecommerce platforms which we can control, and which can really be nimble in responding to customer and market dynamics. We’ve been early advocates for MACH (for Microservices-based, API-first, Cloud-native SaaS, and Headless), and have been involved with the MACH Alliance from its inception to be an agent of change across the board.

DC 360: Going forward, what do you see as the most significant commerce challenges and opportunities?

Howland: There has never been a better time to be a digital leader. The opportunities ahead are virtually limitless. The caution in all of this is to constantly sift through the noise and shiny objects to ensure that you have both the simplest solution possible and maintain a laser focus on customer utility. Ultimately our customers come to our sites with a job they need to do. This is especially true within the context of B2B organizations. Most sites ignore this fundamental dynamic and overwhelm the customer. Respect the customer — each individual customer — and work hard to keep things simple.

Jim Daly is a DC360 contributing editor covering digital business technology and strategy.

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The post EnvisionB2B Speaker Spotlight: Bob Howland of Dawn Foods on building ecommerce muscle appeared first on Digital Commerce 360.

DG Macpherson, chairman and CEO, W.W. Grainger Inc.

Sales at W.W. Grainger Inc.’s full-service and web-only businesses drove the industrial products distributor’s total 2022 sales up 16.9% year over year to $15.2 billion, chairman and CEO DG Macpherson said today.

For the fourth quarter, total sales increased 13.2% year over year to $3.8 billion. Grainger, a prominent distributor of maintenance, repair and operations (MRO) products, didn’t break out total ecommerce sales for the full year or Q4. But it has said in in prior financial reporting that more than 75% of orders originate through Grainger’s digital channels.

Zoro surpasses $1 billion in annual sales

But Macpherson said in an earnings call that web-only sales in its Endless Assortment segment, including Zoro.com in the United States and Japan-based MonotaRo.com, increased 0.9% year over year to $670 million; adjusting for depreciation of the Japanese yen, Endless Assortment sales rose 16.8% in constant currency.

In addition, Deidra Merriwether, chief financial officer, noted that Zoro’s 2022 sales surpassed $1 billion for the first time in a 12-month period. Grainger says Zoro and MonotaRo cater to smaller companies with less complex needs compared with the larger customers served by Grainger’s High-Touch Solutions segment, which includes the flagship Grainger.com and Grainger’s sales team.

Grainger also said Zoro ended the year with 4.57 million registered users. That’s up 17% from 3.92 million a year earlier. At the same time, Zoro increased its number of SKUs 28% to 11.1 million. Zoro is on course to add about 2 million SKUs annually over the next several years, Grainger said.

Deidra “Dee” Merriwether, chief financial officer, W.W. Grainger Inc.

Grainger said Q4 High-Touch Solutions sales increased 16.8% to $3.07 billion, as the segment’s operating earnings rose 32.9% to $477 million.

In 2023, Merriwether said, Grainger expects ongoing revenue growth to more than $16 billion will support significant investments in technology and services. The company expects to generate 2023 cash flow from $1.45 billion to $1.65 billion. That’s an increase of over $215 million by mid-year compared with 2022. It plans 2023 capital spending within range of $450-$525 million, investing in its distribution center network, customer experience, and product information technology.

In addition, Grainger will invest this year in “our environmental, social and governance objectives internally and supporting our customers to help them achieve their own ESG goals,” Merriwether said.

Zoro executive to speak at EnvisionB2B 2023

Zoro chief merchandising officer Sandy Mattinson will be a featured keynote speaker at EnvisionB2B 2023 June 20-22 at the Chicago Hilton in downtown Chicago.

She will deliver a fireside on Wednesday, June 21, 2023, from 9:30 a.m to 10 a.m.

Mattinson will discuss how the distributor anticipates dynamic change in digital commerce, executes a flexible and winning ecommerce strategy, and how other organizations can do the same.

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Sign up for a complimentary subscription to Digital Commerce 360 B2B News, published 4x/week. It covers technology and business trends in the growing B2B ecommerce industry. Contact editor Paul Demery at paul@digitalcommerce360.com and follow him on Twitter @pdemery.

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