Distributors benefit from e-commerce platforms that deliver better customer experiences to their buyers, but there’s often a gap between what buyers want and what businesses deliver.

Digital experience platforms (DXP) can help even the slowest digital adopters boost their e-commerce presence, growth, digital revenue and improve profitability, according to MDM’s recent webcast, “How a DXP Can Boost Your E-Commerce Sales.”

“When I’m talking about a DXP, what I’m talking about is the platform that essentially helps you manage one of the biggest challenges for B2B e-commerce, which is, what is the experience that your customers are having with the information on the product lines that you’re showing?” said Jason Hein, principal B2B strategist at Bloomreach, during the webcast.

Distributors’ customers want websites that work like their outside sales staff. This is where site search recommendations come into play. But, if a website is poorly designed, it may take scrolling through numerous pages before customers find the product they are looking to purchase. According to research cited by Hein, 25% of B2B business decision makers said direct websites are their fastest-growing channel, while 56% of B2B customers would pay more for a better or faster buying experience.

While DXP-enabled e-commerce platforms can provide a better customer experience for existing customers and reel in new ones, 50% of B2B customers are unlikely to purchase from the same seller again if they had a bad experience, said Hein.

“If that experience was really terrible — you’re not recognizing the terms that I’m using and the keywords and category structure are terrible — the recommendations aren’t meaningful,” Hein said. “How do you know your [customers’ web] experience is bad? Well, it’s pretty easy. Generally, your customers will tell you. They’ll be complaining, ‘Oh, your search doesn’t work. You’re trying to sell me something that I don’t need anymore,’ or, ‘that products is not going to work for what I need.’”

By using machine learning and artificial intelligence, DXP e-commerce platforms can learn what categories, description and keyword searches are the most meaningful for a distributor’s website.

“What a DSP does is it essentially is a tool that tracks the behavior of every user who comes to your site and analyzes it,” Hein explained. “And it actually looks at: What is that customer doing? What pages are they looking at? What queries are they searching for? What recommendations and widgets are they clicking on? What results are they clicking on?”

Hein said that while DPX capabilities are reminiscent of data analytics, the difference is that DXP gives distributors the ability to use machine learning tools to scale data into reports and automatically make decisions about criteria such as customer searches.

“I’m showing that customers who searched for this term bought this product, but then also bought this other product,” Hein said. “So just think of the ability to have every single one of those transactions rolled up into an algorithm that can make merchandising decisions for you. What are customers looking for? How do customers decide what to view versus what to purchase? How can I get more customers exposed to more of my selection?

“This is actually one of the big challenges that Amazon is going to face. Amazon has a massive assortment of [roughly] 75-billion SKUs, because that’s been a part of their driver — this endless-aisle concept. But the problem is, if you don’t have a discovery experience that can get you to all of those products, then there’s really no point in having so many SKUs.”

Bloomreach, which counts Watsco, HD Supply, Sonepar and Global Industrial among its distributor customers, has built machine-learning datasets that are specific to e-commerce while also using algorithms to help optimize that data increase revenues.

AI is not the rise of machines

One of the common misconceptions about artificial intelligence (per HBO’s “Westworld” or the movie “Ex Machina,” for example) is that artificial intelligence-based platforms will eventually run amok. During the webcast, one of the attendees asked if AI could be trusted for the merchandising of technical products, or whether a distributor would still have control over the algorithms. According to Hein, the answer to both questions was, “Yes.”

“Here’s the great thing about AI,” Hein said. “AI is thought of as this kind of scary thing. But fundamentally, if AI is truly artificial, it’s not going to be intelligent, and if it’s really intelligent, that means it’s not artificial. Because we’re using a machine learning component, the recommendations that the algorithm starts to generate are based not on some sort of speculative thing, it’s really based on the sum total of all of your customers’ behaviors. So what gets served up is not a speculation of the algorithm, it’s really a distillation of what your customers are doing.

“We have customers who basically let the algorithm handle everything, and we have customers who have also said, ‘There are certain things we want to be able to tune in.’ When it comes to enterprise software, there’s always some degree of tweaking that happens, and that’s one of the conversations that we have with customers.”

To listen to the webcast in its entirety, click here.

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PPG (NYSE: PPG), Pittsburgh, Pennsylvania, on Monday announced that it has completed its acquisition of Wörwag, a global manufacturer of coatings for industrial and automotive applications. Financial terms of the deal weren’t disclosed.

Wörwag develops sustainable liquid, powder and film coatings and operates locations in Germany, the U.S., China, South Africa, Mexico, Spain, Switzerland and Poland, with headquarters in Stuttgart, Germany. Founded in 1918, the company employs about 1,100 people globally.

“The acquisition of Wörwag is another step forward in PPG’s strategic growth plan that will provide further value to our customers and shareholders,” said Rebecca Liebert, PPG executive vice president. “Both companies have a strong history of providing high-quality and sustainable solutions. Wörwag’s customer and product footprint, sustainability focus and customer-centric approach are highly complementary to PPG’s business. We look forward to serving both PPG and Wörwag customers in new ways, and continuing to develop an industry-leading automotive coatings portfolio.”

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Below is a rundown of how public companies in distribution performed during the third quarter. The list includes companies across a variety of verticals and includes some manufacturers pertinent to this space.

Click the company name for more details on their quarterly earnings, including year-to-date performance.

Also of note: The following companies were sold in recent months and no longer report earnings — Foundation Building Materials Inc., HD Supply Holdings Inc., BMC Stock Holdings Inc. and Houston Wire & Cable.

• 3M (NYSE: MMM) — The St. Paul, Minnesota-based company reported first-quarter revenues of $8.9 billion, by close to 10% year-over-year. Net income increased 23.7% to $1.62 billion.
• Applied Industrial Technologies Inc. (NYSE: AIT) — The Cleveland, Ohio-based distributor reported sales for the fiscal third quarter of $840.9 Million, which marked a 1.2% year-over-year increase. Applied’s net income of $56.1 million was up from a loss in the same quarter a year ago.
• Arrow Electronics Inc. (NYSE: ARW) — The Centennial, Colorado-based electronic components distributor reported revenue for the first quarter rose 31.3% to $8.4 billion. Profit of $206.3 million was up threefold from $49.5 million in the year-ago period.
• Avnet Inc. (Nasdaq: AVT) — The Phoenix, Arizona-based distributor reported sales for the fiscal third quarter ended April 3 of $4.9 billion, up 14.1% year-over-year. Profit for the quarter was $107.5 million, up from a loss of $128.7 million in the year-ago fiscal third quarter.
• Beacon Roofing Supply Inc. (Nasdaq: BECN) — The Herndon, Virginia-based building materials distributor reported revenues for the fiscal second quarter of $1.3 billion, a 10.1% increase from the same quarter a year ago. The company reported a profit of $22.1 million, up from a loss of $22.4 million the year prior.
• BlueLinx Holdings Inc. (NYSE: BXC) — The Marietta, Georgia-based building materials distributor reported sales of $1 billion in the first quarter, up 58% from the same quarter a year ago. BlueLinx also reported a profit of $61.9 million, up from a loss of $0.8 million in the prior-year period.
• Builders FirstSource Inc. (Nasdaq: BLDR) — The Dallas-based building materials distributor reported sales of $4.2 billion for the first quarter, up 133.6% due to its recent merger with BMC Stock Holdings. Net income of $172.6 million was up significantly from $56.9 million in 1Q 2020.
• DXP Enterprises Inc. (NASDAQ: DXPE) — The Houston-based MRO and industrial distributor reported first-quarter sales of $245.6 million, down 18.4% compared to the first quarter of 2020. The company reported a profit of $0.3 million, down from a profit of $5.6 million in the year-ago period.
• Fastenal Co. (Nasdaq: FAST) — The Winona, Minnesota-based company reported first-quarter sales of $1.4 billion, a 3.7% increase compared with the same period a year ago. Quarterly profit was $210.6 million, also a 3.7% increase compared to the year-ago period.
• Ferguson (NYSE: FERG) — Ferguson reports fiscal third-quarter earnings on June 8.
• Genuine Parts Co. (NYSE: GPC) — The Atlanta-based parent of Motion — what GPC calls its “industrial parts group” — reported that the distributor’s first-quarter sales of $1.5 billion were up 0.1% year-over-year and represented 34% of total company revenues (the same as the prior quarter).
• Huttig Building Products Inc. (Nasdaq: HBP) — The St. Louis, Missouri-based building materials distributor reported sales of $214.7 million in the first quarter, up 5.8% from the first quarter of 2020. Net income of $8.1 million was up from a loss of $8.9 million a year ago.
• Lawson Products Inc. (Nasdaq: LAWS) — The Chicago-based MRO distributor reported first-quarter sales of $103.6 million, up 13.8% compared to the first quarter of 2020. Net income of $3.6 million, however, was down significantly from $12.5 million in the year-ago period.
• MRC Global Inc. (NYSE: MRC) — The Houston-based pipes, valves and fittings distributor reported first-quarter revenue of $609 million, up 5% higher from 1Q 2020. The company posted a first-quarter loss of $9 million, down from a profit of $3 million in the same period a year ago.
• MSC Industrial Supply Co. (NYSE: MSM) — Industrial distributor MSC Industrial Supply Co. (NYSE: MSM), Melville, New York, reported sales of $774 million for its fiscal second quarter, a 1.5% decrease compared to the year-ago period. Quarterly profit was $18.1 million, a 67.4z% decrease compared with the second quarter last year.
• NOW Inc. (NYSE: DNOW) — The Houston-based distributor reported sales for the first quarter of $361 million, a 40.2% decrease from the same period a year ago. The company reported a loss of $10 million, compared to a loss of $331 million in the year-ago quarter.
• Pool Corp. (Nasdaq: POOL) — The Covington, Louisiana-based distributor of swimming pool and related backyard products reported first-quarter revenue of $1.1 billion, up 56.6% from the year-ago quarter. Net income of $98.7 million was more than triple its year-ago profit of $30.9 million.
• SiteOne Landscape Supply Inc. (NYSE: SITE) — The Roswell, Georgia-based landscape supply distributor reported sales for the first quarter of $650.2 million, up 41.4% from the same period a year ago. The company posted a profit of $7.4 million, up from a loss of $17.5 million in 1Q 2020.
• Systemax Inc. (NYSE: SYX) — The Port Washington, New York-based parent of Global Industrial reported sales for the first quarter of $251.1 million, up 10.5% from the year-ago period. Profit declined 33.7% to $5.5 million.
• United Rentals Inc. (NYSE: URI) — The Stamford, Connecticut-based company reported revenue of $2.1 billion in the first quarter, down 3.2% from a year ago. Rental revenue of $1.6 billion was down 6.5%. The company’s net income was $203 million in 1Q, up 17.3% year-over-year.
• Watsco Inc. (NYSE: WSO) — The Miami-based HVACR distributor reported first-quarter sales of $1.1 billion, up 12.7% from the year-ago quarter. Profit increased 80.6% to $55.1 million.
• WESCO International Inc. (NYSE: WCC) — Thanks to its 2020 acquisition of Anixter, the Pittsburgh, Pennsylvania-based electrical distribution giant reported first-quarter sales of $4 billion, doubling its revenue from the same period a year ago. On a pro forma basis, WESCO sales grew 3.2% in the period. The company reported a profit of $74.1 million, which also roughly doubled its profit of $38.3 million in the year-ago period.
• W.W. Grainger Inc. (NYSE: GWW) — The Chicago-based distributor reported first-quarter sales of $3.1 billion, up 2.8% compared to the year-ago quarter. Grainger’s profit increased 37.6% to $238 million.

*Not all public distributors or companies relevant to the distribution space are included in this roundup. We will continue to build out this list in the coming quarters.

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The combined value of distributive trade sales and manufacturers’ shipments for March, adjusted for seasonal and trading day differences but not for price changes, was estimated at $1,638.2 billion, up 5.7% from February 2021 and 18.5% from the same month in 2020, according to the U.S. Census Bureau.

Manufacturers’ and trade inventories for March, adjusted for seasonal and trading day differences but not for price changes, were estimated at an end-of-month level of $2,014.3 billion, up 0.3%  from February, but relatively flat (0.5%) when compared to March 2020.

The total business inventories/sales ratio based on seasonally adjusted data at the end of March was 1.23 while the March 2020 ratio was 1.46.

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