In its second-largest acquisition, Amazon buys the company for $970 million.
In the forefront of B2B e-commerce for many years, W.W. Grainger knows what it takes to score big online.
More than a decade ago, when the early Internet investment cycle was still on the upward slope of its now infamous boom and bust cycle, I had the honor of introducing Jim Ryan, one of the leading B2B e-commerce experts and visionaries of the time to an audience gathered for a B2B industry conference.
Ryan, who talked about the opportunities e-commerce sites offered to companies looking to better engage their customers, was at the time the head of e-commerce initiatives at W.W. Grainger Inc. In 2008, he became Grainger’s president and CEO, a position he still holds today. Clearly, this is a company that values e-commerce experience.
The company, meanwhile, has not rested on its laurels as an e-commerce company with the early vision and drive to capture value and build its business by engaging its customers with a useful online shopping experience. In late 2010, it brought in Paul Miller, a former e-commerce executive at Sears Holdings Corp. and Williams-Sonoma Inc., to head up its global e-commerce operations and make its online business more user-friendly for its customers.
In its fiscal year ended Dec. 31, 2013, Grainger reported for the first time in its history e-commerce revenue of more than $3 billion—$3.11 billion to be more precise, or 33% of total revenue of $9.44 billion.
As companies like Grainger and executives like Ryan know, however, it takes an ongoing commitment to invest in and improve the e-commerce experience, a particularly challenging area that involves showing many B2B customers personalized content and pricing based on their contracts. But it also involves ongoing investments in complementary technology and operations.
Grainger’s capital expenditures last year totaled $272 million, up 8.8% from $250 million in 2012, with much of that going toward new distribution facilities in North America as well as investments in e-commerce technology and, for the two-thirds of sales still conducted offline, an expansion of its staff of sales representatives.
For Grainger.com, the company added more than 300,000 products, increasing the total to more than 1.2 million products that customers can now purchase online. The company also expanded its number of products available to its customers in Canada through its AcklandsGrainger.com.
In addition to expanding its number of products, Grainger also introduced last year a new e-commerce platform and mobile app that its customers can use in self-service mode or with the assistance of sales reps. Client companies can set up their online accounts so that when one of their employees places an order, it can be routed to a superior’s mobile device for approval. Customers using Grainger’s mobile app approve orders 40% faster than customers who don’t use the app, Grainger says.
Few companies are as advanced as Grainger in B2B e-commerce, and catching up to it in e-commerce technology and operations wouldn’t be easy. As Forrester Research Inc. analyst Andy Hoar notes, B2B companies that have been investing in e-commerce in recent years have spent about 4% or more of their online revenue on e-commerce technology.
The good news is that the technology for building and upgrading B2B e-commerce sites today offers more options and price levels than ever before. And the payoff will be worthwhile, analysts say. Gene Alvarez, vice president and e-commerce technology analyst at Gartner Inc. projects that, by 2018, B2B companies with effective personalization technology on their e-commerce sites will outsell by 30% competitors who haven’t done the same.
Companies like Grainger that get the value of B2B e-commerce will be in a position to reap the rewards for years to come.
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