Whole Lotta Sales

e-Commerce strengthens wholesalers position in supply chain, Census data indicate

Philadelphia  March 20, 2002  e-Commerce sales by U.S. wholesalers hit $213 billion in 2000, a 17 percent increase over 1999, according to new figures released this week by the U.S. Census Bureau.

The bureau's E-Commerce 2000 E-Stats report, which tracks e-commerce sales for manufacturing, merchant wholesale distribution, retail and certain service sectors, showed that merchant wholesalers accounted for more than one-fifth all e-commerce sales in the economy, as measured by the Census.

Merchant wholesalers had e-commerce sales of $213 billion in 2000, equal to 7.7 percent of total merchant wholesaler sales. Overall, e-commerce sales by wholesalers grew by 17 percent over 1999.

"Savvy wholesalers are using the Internet to communicate more frequently and strategically with suppliers and customers," said Adam Fein, president of management consultancy Pembroke Consulting. "Contrary to many predictions, e-commerce technologies are strengthening the wholesaler's position in the supply chain."

Pembroke analyzed the new Census Bureau data and found that drug wholesalers had the largest percent of sales via e-commerce, at 31 percent, followed by motor vehicles parts and supplies (19 percent) and professional and commercial equipment and supplies (13 percent). These three industries represented 63 percent of total merchant wholesale e-commerce sales. Excluding these three industries, four percent of wholesale distribution sales were via e-commerce.

Fein noted that the wholesale distribution industry appears to be adopting e-commerce much more quickly than the retail industry, which saw just 0.9 percent of its total sales in 2000 conducted via e-commerce.

In addition, Fein said the vast majority of all merchant wholesale e-commerce sales are being transacted via electronic data interchange (EDI), but his consultancy has forecast that Internet technologies will eventually replace many of these EDI transactions. "To succeed in the future, wholesalers must be equally agile with phone, fax, in-person and e-commerce," Fein said.

Pembroke Consulting provides management consulting about distribution channels and marketing strategy for manufacturers, distributors and B2B technology companies.