That pressure stems from ARG’s role as a light custom-manufacturer as well as a distributor of more than 25,000 SKUs for  industrial hoses, fittings and related products for such industrial uses as oil rigs and fuel-delivery trucks. Most of its business involves replacing broken industrial hoses, and ARG’s sales and product teams often work with customers to assemble customized hose products and systems.

Mike Powers, director, ecommerce and digital, ARG Industrial

“You have to make sure that you’re getting the right data from your suppliers, and also that you’re presenting the right data on these assemblies to your customers,” says Mike Powers, ARG’s director of ecommerce and digital. Ship a hose assembly with the wrong specifications, and the customer could experience severe problems, he adds.

ARG B2B digital commerce sales

ARG is working with the the Industrial Distributor Cooperative (IDCO) buying group and product information management (PIM) and other software from digital commerce technology vendor Unilog to expedite how it receives product data from Midland and other critical suppliers.

Ross Baker, director of product strategy, Midland Industries

“It’s the way of the future,” says Ross Baker, Midland’s director of product strategy. “The more distributors that are pulling this data we’re putting into the PIM, the more chances there are for sales to increase on both sides.”

Powers asserts that companies involved in ecommerce face challenges in pulling data from legacy enterprise resource planning systems and integrating that data with a customer-facing ecommerce site.

“They’re realizing that the complexity of integrating legacy ERP and B2B ecommerce is very, very tough,” Powers says. He adds that companies then often find it difficult to find the people with the necessary expertise to work with legacy ERP systems.”

Working with Unilog and IDCO, ARG receives more consistent and helpful product information from Midland and other suppliers.

Midland is now pushing new product updates quickly to ARG, “instead of us waiting 12 months to get a new catalog,” Powers says. “All we need to do is log in.”

Data collaboration results

He says the much-improved product data flow is producing several results, including:

• Increased web traffic through improved keywords and search engine optimization.
• A more useful site search tool and increased sales of newly released products.
• ARG’s enhanced ability to develop a new configurator that lets customers who want to build their own hose assemblies to order an accurate product set.
• ARG’s enhanced ability to provide punchout catalogs that let buyers punch out from their procurement software to an ARG product catalog.

Baker adds that Midland expects to extend the level of product data-sharing it does with ARG to more companies to foster increased revenue for both Midland and its channel partners.

The Cashing in with Digital Channel Partners report is available for a free download.

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

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Ann Fandozzi, CEO, Ritchie Bros. Auctioneers

In addition to record gross transaction volume on their online B2B marketplace, Ritchie Bros Auctioneers Inc. also made a key acquisition. For the year ended Dec. 31, gross transaction value (GTV) for its online auction and “buy-now” marketplace sites grew to $6.025 billion. That’s up 9% from $5.533 billion in 2021. In comparison, total revenue, which includes inventory sales and services, increased 22% to $1.7 billion. Net income for the year increased 110% to $319.8 million.

“We delivered record financial results and made significant progress in continuing to build our marketplace technology and advancing our growth initiative, despite operating in a challenging environment of continued tight supply, inflationary headwinds, aggressive competition, and foreign exchange volatility,” says CEO Ann Fandozzi.

Ritchie Bros. Auctioneers is also rethinking how it will expand it its B2B marketplace and digital footprint, Fandozzi says.

“We are transforming Ritchie Brothers from a traditional auction business to a trusted global marketplace for insight services and transaction solutions. And we continued our journey by taking several important steps in 2022,” she says. “Ritchie Brothers 2.0, our marketplace technology platform, is in the process of piloting an all new digital check-out experience with self-serve invoices and settlements.”

Acquiring IAA to accelerate growth

Vancouver, Canada-based Ritchie Bros. said in November that it would acquire Westchester, Illinois-based IAA, which facilitates the marketing and sale of total-loss, damaged and low-value vehicles, in a $7.3 billion cash-and-stock deal.

“We identified IAA as a potential combination for Ritchie Brothers back in 2020, and together with our board of directors have evaluated a possible acquisition of IAA for more than a year,” Fandozzi says. “The strategic logic of this combination is clear. With IAA, we believe we can accelerate growth for Ritchie Brothers, drive margin expansion and expand our reach into an attractive adjacent vertical.”

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The large distributor of maintenance, repair and operations (MRO) products also will continue to expand its digital technology and product mix for both its Zoro brand, which operates internationally with dedicated ecommerce sites in the United Kingdom, Germany and in the United States, and Japan-based MonotaRO.com, the company says. Zoro focuses on sales to small businesses and individuals. The company’s flagship ecommerce site, Grainger.com, caters to larger companies and national accounts.

D.G. Macpherson, CEO, W.W. Grainger

“We provide relevant products and services to customers to drive efficiencies and to save their money—and through our endless assortment model, we provide value through an expansive assortment that is easily accessed to streamline search experience,” Grainger CEO D.G. Macpherson told Wall Street analysts Wednesday on a third-quarter earnings call, according to a transcript from SeekingAlpha.com. “In these challenging times, we continue to focus on what matters. We are investing for growth in both business models.”

Grainger doesn’t break out specific ecommerce sales, but about 60% of all sales in 2019 are electronic compared with about 57% in the prior year, the company says. Grainger includes ecommerce site sales and sales from its internet-enabled vending machines in its electronic sales totals.

Ecommerce sales grow faster than total sales

Based on 60% and 57%, respectively, Digital Commerce 360: B2B estimates electronic sales for Grainger grew 11.2% in the third quarter ended Sept. 30 to $1.768 billion from $1.590 billion in the prior year. In comparison, total sales increased year over year 4.1% to $2.947 billion from $2.831 billion.

For the first nine months of 2019, total electronic sales increased 7.5% to $5.183 billion from $4.841 billion in the first nine months of 2018, estimates Digital Commerce 360: B2B. Total sales for the nine months grew 2.1% to $8.639 billion from $8.458 billion in the first three quarters of 2018.

Net earnings for the third-quarter 2019 were $244 million vs. $115 million in the prior year.

Growth in total revenue was modest, based on conditions Grainger calls “softening.”

“We are seeing softness across most end markets including heavy manufacturing, natural resources, and contractors and in pockets like manufacturing,” Macpherson told analysts. “We have seen some of our customers, particularly with heavy manufacturing and natural resources, slow production. Healthcare market remains quite strong and we are seeing flat to modest growth in government and retail end markets.”

But the company will also continue to invest in digital and ecommerce technology and in adding even more products to its online inventory, he told analysts.

“At Zoro U.S., you’ve heard us talk about expanding the product assortment of Zoro,” Macpherson said. “Our goal is to add 10 million items over the next three to five years. In the third-quarter we added about 350,000 SKUs, which brings us to 800,000 SKUs for the year.”

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But many other product makers aren’t.

The 300 manufacturers listed and compared in the 2019 B2B Manufacturer 300 are all at various stages of developing B2B ecommerce, but there are several significant takeaways that demonstrate how far—and how successfully—U.S. manufacturers as a group are doing at selling online.

Relatively small but growing fast

Today, even though it’s the fastest-growing electronic sales channel, B2B ecommerce—defined as web sales that are processed on ecommerce sites or online marketplaces, and including log-in ecommerce portals—is still the smallest electronic channel for many manufacturers.

In 2018 ecommerce sales for manufacturers totaled $356.4 billion and increased 22.5% from $291.0 billion, based on estimates from B2BecNews.

Manufacturers’ B2B ecommerce sales grew nearly three times faster than the growth of all U.S. manufacturing sales, which totaled $6.028 trillion in 2018, up 7.6% from sales of $5.604 trillion in 2017, according to the U.S. Department of Commerce.

Last year B2B ecommerce sales accounted for about 5.9% of all sales from manufacturers, up from 5.2% in 2017.

For most manufacturers compared and listed in the 2019 B2B Manufacturer 300, ecommerce as a percentage of all sales remains relatively small.

Buyers’ demand for ecommerce

But the pace of how quickly manufacturers will roll out or expand B2B ecommerce will accelerate. That’s because more business buyers are demanding more ways to purchase business products and services online, and they are placing more orders on the ecommerce sites and through the web portals of manufacturers that are making the digital purchasing process easier, more convenient and personal.

The 92-page 2019 B2B Manufacturer 300 shows clearly the chasm that exists between the ecommerce leaders and followers. Only five of the manufacturers in the study are well on their way to becoming digital-first companies, with web-based sales making up more than 25% of total revenue. Conversely, for 57% of the 300 B2B manufacturers studied, ecommerce sales ranged between just 1% and 2% of total revenue. The remainder are scattered in-between2% and 25%.

The 2019 B2B Manufacturer Report contains the most comprehensive data and analysis to date on ecommerce performance of American B2B manufacturers, including:

• The online percentage of total sales of each of 300 representative B2B manufacturers.
• The B2B ecommerce leaders and followers in six markets—automotive, computers and office supplies, consumer goods, hardware/home furnishings, healthcare and industrial equipment.
• A detailed overview of B2B ecommerce development in U.S. manufacturing, including a dozen charts detailing key trends.
• How the B2B Manufacturer 300 companies compare on ecommerce in 16 primary product categories.
• Case studies showing best practices of top ecommerce performers in manufacturing, including Bosch Tool, Daimler Truck, GE Healthcare, Goodyear, Protolabs, and Stanley Black & Decker.

For more information on “2019 B2B Manufacturer 300 Report,” including how to purchase it, click here.

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In a key part of that strategy, Caterpillar, based in Peoria, Ill., is expanding e-commerce, especially for mobile commerce, says Bob De Lange, group president of services, distribution & digital.

Bob De Lange, group president of services, distribution and digital, Caterpillar Inc.

Speaking late last month at an investor conference in New York, DeLange told attendees that Caterpillar, which generated 2017 total sales of about $45.5 billion, sees investment in more digital technology—including e-commerce—as a strategic investment.

“You might have seen the recent Cat App,” De Lange told attendees at the Credit Suisse 6th Annual Industrials Conference in New York, referring to the company’s new fleet management mobile app that customers can use for such things as monitoring equipment performance and ordering spare parts. “We are investing in e-commerce.”

Caterpillar didn’t break out many specifics about how much money it will further invest in e-commerce and mobile commerce or the return on investments. But the manufacturer is launching a series of new initiatives.

Last month Caterpillar released an updated version of its fleet management Cat App, which allows users w to remotely monitor their equipment, request parts and service, and connect with a Caterpillar dealer. The app tracks and shows the location of equipment and displays a machine’s number of operating hours, health and utilization data, the manufacturer says.

The Apple and Google versions of the app are available in 35 languages and include such features as push notifications that alert users of a machine’s operating condition. The Cat App also lets customers view upcoming planned service indicators based on a machine’s operating hours and receive warnings of critical service issues they need to address to avoid downtime.

“There is still a tremendous opportunity for competitive differentiation in years to come [by] just bringing new digital capabilities that you’re seeing in many other industries … to our construction and mining and energy and transportation businesses, and then make sure we use them to develop our business,” De Lange told attendees.

Caterpillar offers more than a dozen specialty apps for customers, including one designed just for ordering spare parts, Cat PartsToGo, which complements the e-commerce site Parts.cat.com. It also is planning other mobile commerce initiatives for early 2019. Next month Caterpillar plans to release a newly redesigned CatUsed.com, a 17-year old website for finding and making offers on used equipment available through the manufacturer’s network of dealers. The site features more than 22,000 used pieces of available construction equipment, power systems, attachments and agricultural equipment.

Updated features will include a responsive design that renders content to any device and quicker access to account information, request a quote, or a service request.

“Digital holds the promise of being able to allow us to create a lot of competitive differentiation in the future,” De Lange said.

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But success in e-commerce wasn’t always the case for Ergodyne, a St. Paul, Minnesota, manufacturer that for 35 years has been making workplace safety products ranging from lanyards for securing tools to bright fluorescent vests worn by road repair crews.

The company likes to invent—and invest—in new things. Since its founding in 1983, Ergodyne—which in September was acquired for an undisclosed price by KleinsTool Inc., a maker of handheld tools based in Lincolnshire, Ill.—has developed 124 global patents and 104 trademarks for product lines ranging from hand protection, kneepads and back supports to cooling and warming products and head and eye protection gear. That strategy has paid off with a strong company brand.

But when it came to e-commerce, Ergodyne’s early investment in online technology didn’t pay off, says Ergodyne senior digital marketing manager Theresa Kuske. The company launched e-commerce in 2009 and accepted orders through two of  three websites, but Ergodyne’s e-commerce system was basic, hard to work with but did easily integrate with the manufacturer’s Microsoft Dynamics enterprise resource planning system for managing inventory, financial records and other operations.

As a result users had to navigate between three different B2B websites to research and place orders for Ergodyne’s online product inventory. “We were dealing with the inefficiencies of managing and synchronizing data between all three sites,” she says. “We launched a simple e-commerce site in 2009 that was a low cost barrier to entry and already had integrations set up with our ERP.”

In 2016, Ergodyne relaunched e-commerce on a new platform from Magento, now a part of Adobe Systems Inc. The redesign made it easier to check inventory levels, speeding up order processing, and included a  quick-order tool where buyers could enter SKU numbers or upload a product file to complete an order online, Ergodyne says.

Theresa Kuske

Customers also wanted a request-a-quote tool. Another goal was relaunching e-commerce with a website and features that appealed to a wide range of users—some sophisticated and others not so much. “Some distributors were not tech savvy and just knew what they wanted and like to order from their desktops,” Kuske says. “Others wanted to learn about products on a mobile-friendly site, but everyone wanted easy checkout.”

Rebuilding and relaunching e-commerce was about a year-long process that involved the use of multiple vendors to implement the Magento platform and integrate with the back-end ERP system. “There was lots of customer integration,” Kuske says.

Ergodyne worked with Echidna, a digital systems agency based in Minneapolis, to conduct customer interviews and conduct usability testing and analysis. Ergodyne next used services from nChannel Inc., a systems integration company based in Columbus, Ohio, to manage databases and integrate order, item and customer information between the Magento e-commerce platform and the ERP system.

The final piece to complete the transition to a new e-commerce system was to implement faster payment processing using Nodus Technologies Inc., a credit processor and payment systems services company based in Anaheim, Calif.

Ergodyne’s new e-commerce platform went live in April 2016, but it’s only been lately that the manufacturer is beginning to see a real uptick in a range of performance and business metrics, including e-commerce sales.

Web sales are on track to grow about 11% from 2017. Other key metrics also are trending better. A new e-commerce platform fully implemented and integrated with Ergodyne’s back-end software systems, now gives the manufacturer the ability to better segment customers, develop more personalized promotions and make quicker merchandising and product page changes, the company says.

As a result, it says, the conversion rate on some B2B product pages has improved by more than 50%. Conversion rates range from 6% to 8% on B2B online transactions and from 3% to 5% on business-to-consumer transactions.

Ergodyne’s also been able to significantly improve what used to be a vexing problem—slowly loading pages. Even with a new platform, page load speed didn’t really improve until the company reviewed and updated some coding. “We had lots of product data and images to integrate and that took a lot of heavy lifting,” Kuske says.

Today page-load speed has dropped from a range of six to seven seconds to about one second, she adds. Customers now have faster access to the company’s inventory of 2,100 SKUs.

But perhaps the biggest gain for Ergodyne’s e-commerce technology overhaul is the manufacturer’s ability to make website changes faster in order to capitalize on new opportunities based on B2B buyer behavior. “We have a lot more flexibility, and now it’s all on one site,” Kuske says.

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About 40% of manufacturers already have an e-commerce site, according to a recent survey of more than 140 manufacturers by B2BecNews. And of those that don’t, 69% expect to launch one within two years, including 55% that plan to go live within one year and 34% within six months, the survey found.

Increasing sales is the top reason why manufacturers begin to sell online, as cited by 71% of the executives surveyed. But many manufacturers, reacting in many cases to declining sales of their products in retail stores, are also entering e-commerce as a way to sell directly to consumers—a strategic priority named by 54% of the manufacturers surveyed by B2BecNews. The survey results appear in the latest B2BecNews executive report: Best Practices in Manufacturing B2B E-Commerce.

Building, operating and growing a B2B e-commerce business is a complicated and challenging process. A B2B website must be able to handle complex transactions that can include detailed quotes, custom pricing and product specifications.

Best Practices in Manufacturing B2B Ecommerce

Data, analysis and best practices from successful manufacturers winning at B2B ecommerce.

View Details

A robust B2B manufacturing e-commerce site may need to direct visitors to sales channel partners, whether they are wholesalers, distributors, value-added resellers or retailers, and that raises both technical and business issues. A website must be able to exchange data with other systems, such as enterprise resource planning and customer relationship management software, yet still be easy for customers to use and staffers to maintain.

Proto Labs Inc., based in suburban Minneapolis, bills itself as the world’s fastest manufacturer of custom prototypes and on-demand production parts. Proto Labs provides several types of custom manufacturing that customers can order online.

Two years ago Proto Labs developed an e-commerce site where customers could place orders for all of these manufacturing services, replacing a former set-up that operated separate websites for each service. Proto Labs builds, buys and acquires both e-commerce technologies and other manufacturers that further its mission to be a manufacturer that uses e-commerce for faster product design and development, faster product prototyping and on-demand custom manufacturing, CEO Vicki Holt says

As part of its ongoing focus on digital manufacturing and e-commerce, Proto Labs has a new company tagline: “Manufacturing. Accelerated.” The company’s top priority for 2018 is to “continue to evolve our sales approach and engagement with our customers to drive revenue growth,” Holt says.

Proto Labs sees itself as well out front among U.S. manufacturers in the race to become more digital and commerce-enabled. “Manufacturing is just getting started,” Holt says.

B2B e-commerce best practices are still evolving for many manufacturers. But manufacturers that already have a successful e-commerce site say they built their website and designed their e-commerce strategy by following the basic rules of benchmarking the competition, developing clear and concise strategic goals and objectives, thinking through the technology and channel integration details, and tailoring the website to the needs of their customers.

The 48-page Best Practices in Manufacturing B2B E-Commerce research report is filled with best-practice data, analysis and case studies that explain how manufacturers such as Boeing Co., Paper Enterprises, Proto Labs and others are expanding their online sales. It is filled with lessons that can help other manufacturers as they map out their path to e-commerce success.

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The company, which is generally known as Zhaoyou, says the first part of this funding effort, which it calls C1, is complete, with the C2 round underway. It did not say how much was raised in the C1 round.

Zhaoyou, which means “find oil” in Chinese, previously has raised $58 million from investors including Susquehanna International Group, which is headquartered in Philadelphia, and GGV Capital, a venture capital firm based in Silicon Valley and China.

The company sells through its e-commerce site Zhaoyou Mall at 51zhaoyou.com and its “I need diesel” mobile app. Sales  surpassed 5 billion yuan ($786 million) in 2017, and the company projected 2018 sales of 20 billion yuan ($3.15 billion) in 2018.

“For business users, there are many more consuming scenarios for diesel than gasoline,” says Lu Jian, Zhaoyou’s founder, regarding selling diesel fuel gasoline to businesses. “Trucks, construction machines and power equipments all need diesel to work. It is a more than 1 trillion yuan ($160 billion) market.”

Zhaoyou Mall is designed for larger customers that are buying to fill their own fuel tanks. The company says the average ticket value of Zhaoyou Mall is 100,000 yuan ($15,728).

The “I need diesel” app targets small companies that are seeking the lowest-cost fuel for their trucks on the road. The average order through the app is about 2,000 yuan ($315) per order, and Zhaoyou says it typically saves customers 15% per order. The app also helps customers find the nearest Zhaoyou service station. The company operates 600 fueling stations in 45 cities in China.

Zhaoyou says it has 12 fuel suppliers, including Royal Dutch Shell plc, ExxonMobile Corp. and China Petroleum & Chemical Corporation.

Founded in 2015, Zhaoyou says it has been profitable since 2016.

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