March 2, 2012, 3:05 PM

W.W. Grainger budgets $40 million for online growth

Investments include a new e-commerce platform and site navigation technology.

Lead Photo

Paul Miller, vice president of e-commerce, W.W. Grainger Inc.

With up to 25% of its 1.2 million customers already buying from it online, W.W. Grainger Inc. is preparing for a day not long off when it that percentage could rise to 40%, vice president of e-commerce Paul Miller says.

To help it better serve those customers, Grainger—which sells a broad range of products that retailers and just about every other type of business use to maintain and operate their facilities, including stores, distribution centers, factories and offices—is in the first year of an approximately four-year period during which it will spend $40 million to build out its e-commerce presence, Miller said in an interview this week at the company’s annual Grainger Show, which was attended by thousands of its customers and several hundred exhibitors.

As steady growth in recent years pushed it past $8 billion in sales for the first time last year, to $8.1 billion, up 12% from $7.2 billion in 2010, the online channel has provided its strongest engine for growth, CEO Jim Ryan said at the conference.

Grainger’s online growth has outpaced its offline growth for years—with e-commerce growing at a steady clip of 20-25%—and e-commerce sales reached $2.1 billion in 2011. “Multichannel helps us differentiate from our competitors,” Ryan said in a meeting with reporters at the conference.

The path to a stronger e-commerce operation actually began last year, when Miller, a former e-commerce executive at retailers Sears Holdings Corp. and Williams-Sonoma Inc., joined Grainger as vice president of e-commerce. Grainger subsequently completed its move to a new e-commerce platform from Germany-based hybris and deployed site search and navigation technology from Oracle Corp.’s Endeca. The combination of hybris and Endeca provides Grainger the flexibility it needs to offer features important in b2b e-commerce, such as authorized site access by different buyers within the same organization, and a product recommendation engine that can suggest products that comply with a customer’s warranty and maintenance schedules, Miller says.

Grainger has also been building stronger integrations between its e-commerce site and the 370 stores (or sales and service branches, in company lingo) it operates in the United States. On both its e-commerce site and a new mobile-optimized web site, for example, customers can view real-time updates of inventory available in distribution centers or in local stores.

Grainger offers more than 400,000 products, ranging from mop buckets and power drills to water pumps and power generators, up from 80,000 products five years ago, Ryan said. In addition, it will source more than a million more products on request from customers, using the Internet as a sourcing tool.

Grainger is No. 15 in the Internet Retailer Top 500 Guide.

 

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