Although nearly all janitorial and sanitation distributors either have an e-commerce site or plan to launch one within three years, many still lack a strategy to compete against Amazon, top-tier distributor Essendant finds in a new study.

Digital commerce is getting serious attention from distributors of janitorial and sanitation products, but they still have a ways to go to clean up with online sales.

Most of these so-called JanSan distributors and resellers of products that businesses uses to maintain their facilities either already have an e-commerce site or plan to launch one. But they still lack a resources-backed strategy to win in an online world dominated by Amazon.com Inc. and large multichannel retailers like Office Depot Inc., top-tier distributor Essendant Inc., which sells to thousands of smaller distributors and resellers in JanSan and other categories, says in a study it released this week.

Many JanSan resellers are still committed to the status quo—relying mostly on phone or in-person sales with little digital in the mix.

“In the past year alone, the Janitorial and Sanitation (JanSan) resale and distribution industry has undergone a significant shift towards digital, and shows no signs of slowing down,” Essendant says in the report, “The Future of Janitorial and Sanitation Distribution,” for which it surveyed 114 JanSan distributors in October 2017. “More than ever before,” Essendant adds, JanSan distributors and resellers “are using mobile-based applications and e-commerce sites to offer more intuitive buying journeys for a larger number of customers.”

But “many JanSan resellers are still committed to the status quo—relying mostly on phone or in-person sales with little digital in the mix,” Essendant says. “Some feel that their customers do not need or want digital, while others are not sure where to start.”

Essendant’s sales to JanSan distributors account for about 29% of its sales, or about $1.45 billion out of the $5.04 billion in its 2017 revenue. Essendant also provides e-commerce technology and services to JanSan and other types of distributors to help them sell online to their own customers.

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Among the study’s findings:

  • 53% of JanSan distributors have an e-commerce site, but among these companies, 73% get less than half of their revenue from e-commerce;
  • Of the 47% that don’t have an e-commerce site, nearly half—or 20% all distributors surveyed—plan to launch one within three years;
  • 54% of respondents said the top pressure they face is offering low prices, while 38% said it’s offering a larger selection of products;
  • When asked to name their biggest competitors (multiple answers were allowed), 58% named Office Depot and other large retailers; 46% cited Amazon Business.

When Essendant asked survey respondents to name their single biggest barrier to investing in e-commerce, the largest percentage, 23%, cited cost and limited budget. The next most-common barriers—each cited by 14% of respondents—were technical infrastructure, online order fulfillment capability and marketing strategy. Respondents also cited such barriers as lack of personnel or other resources, technical skills and support from sales staffs.

Essendant sells several categories of business and industrial products—including office supplies, construction and oilfield equipment, and automotive products—to thousands of other distributors and resellers. It also operates an internet platform its customers can use to place orders.

In its recent financial report for the year ended Dec. 31, Essendant said revenue fell 6.2% year over year to $5.04 billion, including an 8.9% drop in JanSan sales to $1.45 billion. It didn’t break out JanSan e-commerce sales, but said its overall online sales inched upward despite declines in office products and other categories. Its online sales include sales of power tools and related products to tradesmen and consumers through CPOOutlets.com.

Ric Phillips, president and CEO, said in a conference call last week that Essendant’s expertise in digital commerce along with corporate cost-cutting underscored Essendant’s “long-term potential” for growth.

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In the JanSan study, Essendant noted: “Most customers are close to making a final purchase decision before ever reaching out to a sales representative, and they’ve usually reached these decisions based on online research. So, no matter how talented JanSan sales teams are, companies cannot afford to skip digital branding and marketing efforts.”

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