Strategic Advantage of Early eCommerce Adoption in Distribution
Grainger launched its first website in 1996. I was in the marketing department at the time and watched as a group of senior executives passionately advocated to the Board of Directors that the internet was going to change everything and that if the company wanted to be a leading digital player, we had to act immediately.
Today, Grainger is still one of the leading digital players among distributors. Not only is Grainger.com one of the busiest, highest-volume B2B websites in the world, but the company launched its own marketplace in 2011 called Zoro, which recently surpassed a billion dollars in sales.
Getting a head start in a technology revolution can lead to a long-term, sustainable competitive advantage. Certain Grainger executives knew that back in the mid-1990s, and today, more than 75% of the company’s orders originate through digital channels. The company’s financial performance confirms the wisdom of those digital pioneers: Grainger’s stock has grown at a CAGR more than 65% greater than the S&P 500 since 1996.
AI and Digital: Tech Revolutions with 2 Big Differences
A growing chorus of thought leaders are stressing the importance of understanding and implementing AI as soon as possible.
- McKinsey said: “CEOs should consider exploration of generative AI a must, not a maybe … the downside of inaction could be quickly falling behind competitors.”
- Deloitte recently reported that 94% of respondents to a survey of global business leaders said that “AI is critical to success over the next five years.”
- An Accenture survey reported that “3 out of 4 C-suite executives believe if they don’t scale AI in the next five years, they risk going out of business entirely.”
- Jensen Huang, the CEO and co-founder of NVIDIA, which makes chips that power AI systems, said: “Agile companies will take advantage of AI and boost their position. Companies less so will perish.”
- In a Forbes survey of 600 business leaders completed two months ago, more than half of the respondents said they are already using AI in customer service (56%) and cybersecurity/fraud management (51%). They reported extensive use of AI across a wide variety of areas.1 How is your company doing by comparison?
This sounds familiar to those of us over 50 because we used to hear similar statements about ecommerce. But there are two big differences that make learning about and implementing AI much more urgent and important:
- Applications for AI are much broader and even more profound than ecommerce. There is no area of business that won’t be dramatically affected by AI.
- AI is the first technology that “learns” and improves on its own. That means the rate of capability improvement will be much steeper than previous technologies.
The bottom line: AI will evolve much faster and is more sweeping than any technology we’ve seen so far.
Where Will Distributors Apply AI?
Although we’re in the early days of AI, some applications for distributors are obvious, many of which will vastly improve employee and customer experience. These include:
- Inventory management
- Customer segmentation
- Warehouse / DC operations
- Product recommendations
- Producing content
- Customer relationship management
- Business intelligence / analytics
- Safety and physical security
- Automated order entry
- Online marketing
- Training customers and employees
- Talent recruiting and management
- Software development
- Delivery routing and automation
- Services like tool crib management
- Technical support
- Customer account self-management
- IT security
Given the breadth of potential applications, and how fast this is all evolving, every leader needs to embrace and understand AI as soon as possible. Executives who let their companies fall behind in this race will find it extremely difficult or even impossible to catch up.
Some leaders understand this. We just announced a new conference in Chicago in October: “Applied AI for Distributors.” The first two people who bought tickets to the event were senior executives at Grainger in 1996 and were essential to making the company the digital powerhouse it is today. They’re both working in private equity today and active on boards; I expect the companies they influence to be AI leaders.
AI brings a host of opportunities to companies with leaders who understand its potential and quickly learn to leverage it in their operations. AI brings equal risks to companies that fall behind.
Join us Oct. 3-5 in Chicago. Our first announced keynote speaker is Zack Kass, Head of Go-to-Market at OpenAI, makers of ChatGPT. You’ll have the chance to listen to technical representatives from new and established technology companies serving the distribution industry; they’ll share their current and upcoming AI-enabled capabilities.
This is the first event of its kind for the distribution industry. Don’t fall behind. Sign up soon; this conference will be a sell-out.
Ian Heller is the Founder and Chief Strategist for Distribution Strategy Group. He has more than 30 years of experience executing marketing and e-business strategy in the wholesale distribution industry, starting as a truck unloader at a Grainger branch while in college. He’s since held executive roles at GE Capital, Corporate Express, Newark Electronics and HD Supply. Ian has written and spoken extensively on the impact of digital disruption on distributors, and would love to start that conversation with you, your team or group. Reach out today at email@example.com.