YOUNGSTOWN, Ohio – A few years ago, Adam Jugenheimer and his colleagues at Jugenheimer Industrial Supplies noticed they kept getting the same kind of question from customers: Can we place our order online? Competitors were adding their own e-commerce sites. To avoid falling behind, Jugenheimer eventually added its own.
It has since become a core part of its business, says the Hubbard company’s vice president and sales manager, and expanded the company’s customer base beyond the Mahoning Valley and western Pennsylvania.
“You might get someone in Texas or wherever they had never heard of us but now they’re shopping with us because they found us online. We didn’t have any of that business outside the area before,” he says. “Some people will come and buy some random items and some will do their regular ordering through there.”
Although e-commerce has been a facet of American life for more than two decades, much of the attention has been on consumer retail. But that’s not its only application. In fact, according to the U.S. Census Bureau, retail trade was the smallest e-commerce sector in the country in 2018, the most recent year for which data are available, with total revenue of $519.6 billion.
By comparison, manufacturing e-commerce accounted for $4.01 trillion, wholesale e-commerce for $2.64 trillion and service e-commerce for $1.15 trillion.
In manufacturing, which reported the highest amount of revenue from electronic sources, 13 industry classifications reported that e-commerce shipments accounted for more than 60% of their business, led by transportation equipment manufacturing at 82.1% and beverage and tobacco product manufacturing at 80%.
And with the coronavirus pandemic, e-commerce has become a lifeline for many businesses.
“People who are shopping haven’t been to stores or in some cases allowed to go to stores. In order to sell, you almost had to be online. People are feeling that and seeing the benefit of a web presence,” says Pat Cioffi, vice president of NEO3, Canfield. “There is certainly a benefit to business, whether you’re B2B or B2C.”
NEO3 is a provider of NetSuite enterprise resource planning software, which can include options for e-commerce. That can range from a webstore to a portal that allows customers to check their accounts, pay bills and even check on the progress of their orders.
“You can just set up a customer portal and give them all the access they need to their information,” Cioffi says.
While activating an e-commerce system can be a few clicks, much preparation is involved.
For a company like Jugenheimer Industrial Supplies, which has more than 100,000 SKUs, that involved getting pictures, descriptions and pricing listed on every one.
“It’s every single bolt and fastener. There were so many parts that we had to build this for. And it was very time consuming. It was a whole bag of ‘How do we do it?’ ” Jugenheimer says, noting that his company eventually worked with Profit 21, an ERP software company, to build the site.
“With our vendors, we were able to go through most of them for things like pictures and descriptions. … Because it’s built ahead of time. Now whenever we need to add something, it’s just an update.”
At Grove City College’s Center for Entrepreneurship and Innovation, director Yvonne English works with students to help them develop and launch business ideas.
In addition, she teaches e-commerce courses, giving students the know-how they need to start a business without a bricks-and-mortar storefront. As with any business consideration, there are always pros and cons to each approach, she says.
“Is this business appropriate for e-commerce?” English says of questions she asks students. “That’s when practical matters come into play such as procurement, manufacturing, fulfillment and shipping considerations. You also want to consider your comfort level with technology when thinking about launching as you’ll need a website and an online marketing strategy.”
But just as Jugenheimer started in 1976 as a physical store and recently added a web presence, the opposite also can be an approach for startups to consider, English says.
“Many businesses these days are omnichannel, meaning that they are both online and in person. Even well-known brands that started online such as Away Luggage and Warby Parker have retail stores now,” she says. “That said, the current pandemic is hitting brick-and-mortar retail hard. So it remains to be seen as to whether this trend will continue.”
For businesses that look to expand by supplying national chains, e-commerce also plays a role, NEO3’s Cioffi adds. When companies like Walmart or Dick’s Sporting Goods agree to buy products, they require that the ordering process be done electronically through EDIs – electronic data interchanges.
“It has to go in the way they want; they don’t want to call you. If Walmart wants two pallets of your product to sell in their stores, it has to be in their format and they want to know it’s in stock. So there’s a portal to go through where they can check,” he explains. “Orders, purchasing, everything comes from your NetSuite platform through a third-party EDI that manages all the orders.”
Beyond just adding another avenue of business, digital storefronts can also improve efficiency. Because the systems for ordering are automated, it doesn’t require a human hand to key in orders. What a customer selects will be what gets ordered.
At Jugenheimer Industrial Supplies, it’s also proven to be a means to improve customer service.
“If they don’t know what we’re talking about or they’re describing something and we’re trying to figure out what it is, now the website has pictures that makes that whole process so much easier,” Jugenheimer says.
As with most business decisions, Cioffi says, the question of whether to adopt an e-commerce system is one of cost, both short- and long-term, and if the investment will pay off.
“Your whole goal is to build the business and you need some sort of web presence to do that. It’s a balancing act. Is it going to take off and justify the cost and time?” he says, noting that the cost of e-commerce platforms has come down because “it’s such a normal part of business.”
And that normal part of business is becoming more and more common.
It’s why Jugenheimer added its webstore a few years ago, its vice president says: competitors were offering similar products online and it was easier for customers to buy them there. So that’s where they placed their orders. It’s not something that will go away. Not doing so, Jugenheimer says, would cripple the business’ growth.
“I don’t ever see it being all online. But I see it being more important than it is now. Especially as we get younger and younger buyers – they want to do their buying online,” he says.
Pictured: When Jugenheimer Industrial Supplies added its web store, its vice president Adam Jugenheimer says, one of the challenges was logging its massive inventory.