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HomeTechnologyIn a roller coaster of a year, distributors spiral high with ecommerce

In a roller coaster of a year, distributors spiral high with ecommerce

The business environment for United States distribution and wholesale companies in 2022 has been a true roller coaster ride. And the ride, especially for digital commerce and transformation, will continue to spiral up and onward.

In 2022, ecommerce continued to grow for business-to-business distributors and wholesalers. All in, there are about 630 distribution companies operating in the U.S., according to the Department of Commerce and Bureau of Labor Statistics. Collectively, those companies are on track to grow their combined sales to $8.000 trillion in 2002, based on a projection from Digital Commerce 360. That’s an increase of 20.4% from $6.644 trillion in 2021.

Digital commerce dominants for distributors

More important, digital commerce, once only a minor sales, branding and customer service channel for many distributors, is now mainstream. And, in a growing number of organizations, it is the dominant channel.

This year, distributors are on track to grow digital commerce in its multiple forms, including ecommerce and apps, electronic data interchange (EDI), e-procurement and B2B marketplaces, to $3.811 trillion. That’s up 25% from $3.050 trillion in 2021, Digital Commerce 360 projects.

B2B ecommerce also is on track to grow 25% to $1.400 trillion from $1.120 trillion in 2021, based on a Digital Commerce 360 projection.

A growing number of distributors are zeroing in on ecommerce and digital transformation to cope with a rapidly changing and increasingly volatile business climate. And because purchasing managers want less traditional sales and customer service channels and increasingly more ecommerce, distribution companies are catering to bigger numbers of digital-first buyers.

Fastenal is one of the distributors leading the way

A case in point is Fastenal Co., a major public distributor of industrial and construction products. It posted digital sales in all forms of $835.7 million in the first half of 2022. That’s an increase of 32% from total digital sales of $632.9 million in the first half of 2021.

For the first half of 2022, Fastenal’s ecommerce site and app sales accounted for 17% of all sales and grew 53% year over year. Based on those metrics, Digital Commerce 360 projects that ecommerce sales totaled $302.62 million for the first six of 2022. That compares with $198.0 million in the previous year.

“COVID period pushed everybody to abruptly change what they are doing, and I think that the strength you see in our ecommerce sales growing north of 50% is a testament to the marketplace,” Fastenal CEO Dan Florness said on a recent earnings call. “I don’t know if the marketplace is reacting to what we’re doing or we’re reacting to what the marketplace is doing. I think it’s more of the latter. Buying habits have changed. And you see it in your personal life. What you do today is different than what it would have been five years ago.”

The business market across all sectors of the U.S. economy is undergoing a digital transformation. And that transformation by organizations of all sizes is being driven by digital commerce. The events of the last three years, including a global pandemic, supply chain disruption and other major changes, has caused business organizations to perform better, faster, and more efficiently to serve to increasingly larger numbers of digital-first customers.

The distributors and wholesalers that are learning and living that lesson now will turn first-time digital buyers into loyal return customers and take ecommerce sales — and market share — away from competitors that aren’t changing with digital times.

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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 Mark Brohan, senior vice president of B2B and Market Research, at [email protected]. Follow him on Twitter @markbrohan.

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