B2B ecommerce is projected to grow at a slower rate in 2020, mainly because of the unevenness in distributor vertical markets disrupted by COVID-19.
In 2020, all digital sales—which include diverse channels such as electronic data interchange, ecommerce sites, log-in portals, marketplaces, e-procurement and private internet networks such as SAP Ariba—will grow by 1.6% to an estimated $2.61 trillion from $2.57 trillion in 2019, according to data and analysis in the 2020 B2B Distributor 300 Report, a new research report from Digital Commerce 360 B2B.
Dealing with ‘demand destruction’
B2B ecommerce industry analysts and distributors also are anticipating lower business-to-business ecommerce growth in 2020. “There will be lower sales,” says Forrester Research analyst Joe Cicman. “It’s in lock-step with the economy at large. In aggregate, it’s a function of demand destruction.”
State Electric Supply Co., a 67-year-old regional distributor of electrical, data communications and power transmission products, is bracing for a decline in sales this year—but also taking steps to return to more aggressive growth online in 2021, says vice president of ecommerce Dave Gravely. “2020 will no doubt be a down year, but we did see a resurgence in July, with each month after getting slightly better,” he says. “When 2020 closes we anticipate being down around 7 to 8% if we don’t see a setback—which is not bad when you consider the disaster April, May and June were.”
The distributor, which sells products through an ecommerce site and 44 physical branch locations in seven states—Illinois, Kentucky, Ohio, Pennsylvania, North Carolina, Virginia and West Virginia—says ecommerce sales this year have varied widely from market to market. “We are seeing some customer segments doing well,” Gravely says. “Construction is coming back quickly in the Carolinas, where they had a lot of permits and projects planned, and they are getting back to business as safely and rapidly as possible.”
But “the energy segment, is not doing so well, it was heading in the wrong direction and COVID accelerated that,” he adds.
Looking ahead to 2021
As State Electric moves further into the fourth quarter and then into 2021, the company’s primary goal is achieving the same level of total and ecommerce sales next year that the organization attained in 2019. “We think 2021 will be back to our 2019 level, plus a slight increase,” Gravely says. “When asked by our vendors about 2021, we are telling them we will be back to 2019 numbers in 2021—which oddly enough is a good thing at this point.”
Growth online among distributors remains uneven in large part because several industries were declared essential by the federal government to operate as normally as possible during the pandemic, while other companies and other market segments were declared non-essential and forced to curb operations or close down entirely, according to data and analysis in the 2020 B2B Distributor 300 Report.
The Distributor 300 Report gives all the players a chance to read the scorecard and get into the game in a bigger way—or get left behind.
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