In its second-largest acquisition, Amazon buys the company for $970 million.
Jim Ryan, CEO of industrial supplies retailer W.W. Grainger, says e-commerce will help it reach more small businesses in North America. Already, more than one-third of its business comes from the web, and more than 10% of web traffic comes from mobile devices.
With one-third of total annual sales—more than $3 billion—coming from the web, W. W. Grainger Inc. is just beginning to harness the potential of e-commerce and m-commerce, CEO Jim Ryan said today at the Grainger Show 2014 in Orlando. “The opportunities are almost endless,” he said.
For one thing, e-commerce will be critical in growing Grainger’s customer base among North American small businesses, Ryan said. The self-service nature of a web site makes it easy for a customer to begin browsing and buying without first discussing contract terms with a field salesperson, for example. Although most businesses are small in size, more than 75% of Grainger’s North American customers are large corporations or government entities, Ryan said, “So that’s an untapped area.”
Grainger has been wooing small businesses through e-commerce rather than more traditional channels with its subsidiary Zoro Tools Inc., which launched in 2011, Ryan said. The retailer created the tools site ZoroTools.com by combining e-commerce elements from Grainger.com and MonotaRO Co. Ltd., a web-only Japanese industrial supplies retailer focused on small to mid-sized businesses in which Grainger owns a 52% stake. “That business is small, but it has been extraordinarily successful,” far exceeding Grainger’s expectations, Ryan said.
In November, Grainger unveiled a new e-commerce site with a complementary iPad app designed to better help B2B customers manage their inventory and supplies orders. Grainger also offers an iPhone app. Today, Ryan said more than 10% of web traffic comes from mobile devices, though the retailer has been offering mobile apps for just 18 months.
Customers use the apps differently than they do the web site. While 95% of web orders are shipped directly to a customer, far more mobile shoppers choose to pick up the their app purchases at a physical store, or branch as Grainger calls them, he said, without providing exact figures. “I would expect a lot of the branch pickup is from contractors and maintenance people out on the road who used to have items shipped somewhere,” he said. Instead, with the app, a worker can order an item from the closest location and pick it up at his convenience.
Grainger can ship for next-day delivery to 99% of customers in the country, Ryan added. He speculates that the app might be more popular for more urgent cases, when workers need an item like a replacement part right away, but Grainger will need more data to be certain.
Ryan has previously said that e-commerce is Grainger’s fastest-growing sales avenue. It accounted for 33% of the retailer’s total sales in 2013, up from 30% in 2012. Grainger sells both directly to business and to consumers, but the “vast majority” of its customers are businesses, Ryan has said. It is No. 15 in the Internet Retailer 2013 Top 500 Guide and No. 92 in the 2014 Mobile 500.
E-commerce will be a bigger part of Grainger’s business, Ryan said. The only two reasons a company today would not yet be selling online is that it is either slow to adopt the Internet—a generational barrier that will soon fade away—or the company can’t find the functionality it wants to sell online as it would like, he said. For example, a large Grainger client with more than 400 store locations told him it would be able to ramp up e-commerce from accounting for 40% of its sales to nearly 100%, but only if it had a particular search filtering functionality that doesn’t yet exist, he said, declining to reveal specifics. Grainger is working on that project now.