Selling online for nearly two decades, MSC Industrial Supply Co. has long been a leading player in B2B e-commerce. The distributor of business and industrial products, ranging from metal-cutting tools to electronics equipment and janitorial supplies, has learned how to effectively engage customers with personalized content on its e-commerce site, MSCDirect.com. As a testament to its online expertise, it conducts about 60% of its total sales electronically, and in 2016 won the B2B E-Commerce Player of the Year award issued by B2BecNews publisher Vertical Web Media.
MSC has also learned to blend the strengths of its e-commerce site, its thousands of sales reps and customer care employees to serve customers how and where they choose. As a result, it not only provides the products and related services like metal-cutting advice its customers need; it also helps them better run their operations. Mike Roth, senior director of e-commerce, provides an inside look at how MSC excels online in coordination with traditional offline methods of serving customers.
Q: Please describe the types, sizes and geographic locations of companies that make up the base of commercial customers at MSC.
Roth: Our customer base mostly comprises manufacturers from small job shops all the way up to large manufacturing facilities. Our customers span the domestic United States but largely align with the manufacturing hub locations.
Q: MSC has committed to growing online revenue in recent years. What has been the biggest challenge to online expansion?
Roth: B2B purchasing has not changed rapidly through the years. The process tends to be very manual, with phone calls, trading of paper requests, stamped approvals and a mix of technology/purchasing systems thrown in to help control costs. At MSC, we’ve tried to reinvent that process by providing digital solutions (i.e., vending, order approval, purchase order control, and cost allocation) that we can customize to our customers’ needs and systems. These digital solutions provide a way to enhance the buying process and improve our customers’ operations.
Q: What has been the biggest gain from online expansion?
Roth: By expanding our capabilities online, it has helped our customers deploy our technology and services whenever, wherever and however they choose. This has enabled our sales team to better utilize their technical expertise to provide advice in helping our customers address their mission-critical challenges on the plant floor.
Q: Offering more than 1 million products on your e-commerce site helps MSC stand out as a distributor. To make the online find-and-buy process easier for customers on MSCDirect.com, MSC has deployed new personalization software that recommends products to online visitors based on their known interests and profiles. What are the latest metrics on how the new software is performing, in terms of conversion, average order value and number of units sold per transaction?
Roth: We are seeing improved metrics and we continually tweak and test things throughout the online experience. This is a great example of how MSC is using technology to personalize the customer experience using behavior and history to make the B2B shopping experience more intuitive.
Q: One of the latest buzz phrases in terms of B2B e-commerce is customer engagement. Assuming that’s important to MSC, what are some examples of how MSC has increased customer engagement?
Roth: We engage customers with our metalworking and MRO technical expertise and knowledge, both digitally and personally. Our ability to answer their most important questions around productivity, tooling and finding efficiencies in the supply chain helps us engage with customers wherever they are in their purchasing journey. We leverage many tools, from digital landing pages, to direct mail, to on-site assessments, to connect with customers.
Q: How has MSC been able to get buy-in from sales managers and reps for using e-commerce in their sales tactics, and how have you persuaded more customers to place more orders online?
Roth: Our associates have embraced technology to handle the repetitive nature of transactions. They prefer spending time advising our customers on the plant floor with the right solutions to support their needs. Although, we don’t go out of our way to persuade customers to place online orders, we deliver digital solutions (i.e., web technology, vending, etc.) to improve the B2B buying process.
Q: How do small and mid-sized businesses figure into MSC’s growth plans and what are some examples of initiatives to reach them online, and some results?
Roth: Manufacturer customers—small / medium / large—are all important to MSC’s growth. One of the major areas we’ve invested in that highlights our commitment to small and mid-sized businesses is BetterMRO—a thought leadership website and online community dedicated to manufacturing customers and solving their issues through interactive content and information. We’re also engaging small customers, in particular, online through a robust loyalty program that is proving highly successful.
Q: On MSC’s April quarterly earnings call, Erik Gershwind noted that e-commerce accounted for approximately 60% of sales, up slightly from the same quarter last year and the previous quarter, and that product sales from your vendor-managed inventory solutions or vending machines account for slightly less than half of e-commerce sales. How is that ratio trending so far for this year and what are your expectations for the full year?
Roth: The overall trend remains positive and consistent with e-commerce increasing modestly as a percentage of our overall sales.
Q: MSC has reduced its reliance on paper catalogs and promotes using the website to locate products. But there are still catalogs. How do the website and paper catalogs complement each other and why do some customers prefer paper catalogs?
Roth: We believe our website and Big Book catalog complement each other quite well. We believe it’s critical that whatever our customers see in print connects back to what they see online. Many of our customers tell us there are still advantages to a curated catalog that aren’t easily replicated digitally. For that reason, we believe it is important to have both to engage customers in the manner they prefer.
Q: How do you see blockchain, IoT, and artificial intelligence working together to improve e-commerce, either in the near term or long term? (Please comment on what MSC may be researching and developing in these areas.)
Roth: We believe the supply chain experience will continue to be enhanced by these types of technologies. However, in a world becoming increasingly digital, we believe people matter more than ever. Driving the success of our customers is all about combining technology to improve transaction efficiency and the customer buying experience with the extensive knowledge and expertise that our people bring through decades of experience in metalworking and MRO. You typically can’t find the expertise through an online marketplace alone.Favorite