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E-business@ Grainger

E-business@ Grainger

The Internet is growing exponentially and many businesses are throwing up web sites looking to secure their share of E-commerce. Some of these companies have "brick and mortar" establishments and some only exist in the digital world. In either case, their marketing efforts will most likely determine the success of their Internet site. The marketing effort or strategy for their Internet site will most likely be significantly different from that of their "brick and mortar" site. Grainger Industrial Supply is a company that for the past 70+ years has built its business through its "brick and mortar" sites. In 1995, Grainger moved into the digital world and established grainger.com. In 1996 Grainger began taking orders online and fully immersed itself in e-commerce. Still, it was not until 1998 that the company recognized the need for different marketing strategies for the traditional branch based business and the new digital based one.

Grainger Industrial Supply started business in the 1920's selling products through a catalog and over the last 70+ years has steadily grown. The catalog, which once held 100 items now, contains over 81,000 items only a fraction of the total number available for purchase. To support the growing business over 370 branches nation wide have been established along with 10 distribution centers to keep the product flowing. Grainger's marketing strategy for this business has been to grow sales through catalog purchases and personal selling. Approximately 732,000 catalogs were mailed to customers in 1999 and more than 1,800 full time outside sales representatives carry the message to customers that Grainger Industrial Supply is ready to find solutions to their maintenance, repair, and operating (MRO) needs (Grainger, Inc., 2000). Another 10,000 branch based employees stand ready to help the 2.1 million customers in complete their transactions. While direct mailing of the catalog and personal selling are the primary means of marketing strategy of the company, advertising in trade magazines, direct mail pieces, Nascar Truck Series sponsorship, monthly sales and promotions, and trade show participation have also been utilized. This marketing approach has served the branch-based business well and the company continues to be successful on this front.

In June of 1995, Grainger launched its web site, grainger.com offering little more than information about the company. By 1996, the site offered access to 100,000 catalog items and online ordering capabilities (Grainger, Inc., 2000). For the next 2 years enhancements to the site such as navigation, product search, item expansion, credit card acceptance, and customer specific pricing were added. The marketing strategy for the site up to this point was virtually non-existent. Outside the initial press releases announcing the site's existence, the only other form of promotion or advertisement for it was word of mouth by the inside and outside sales representatives and the inclusion of the web address on all correspondences (i.e. invoices, letters, faxes, etc.). In 1998, Grainger saw the potential to gain market share and increase profits via the Internet. It was at this point that the marketing strategy of the traditional business and online business were separated. Grainger recognized that it was no longer feasible to apply its traditional marketing strategy to the online business. Sure they needed to work closely with one another but the online business needed a different approach. Soon promotions were being sent using the traditional direct marketing channels, such as mail, inviting customers to use the web site and offering free shipping. These promotions then grew to include free giveaways for every order placed along with free shipping. Next, customer surveys were sent inquiring about Internet buying habits and procurement methods coupled with giveaways to encourage response to the survey which, conveniently included a request for an e-mail address that was later used to send digital marketing material. Finally, interactive kiosks were installed at every branch location to allow customers to register and shop online with a trained staff available to assist them through the process. The strategy was to get as many people to the web site and have them initiate a purchase. Once the customers saw the easy of use and benefits of using the web site, the hope was that an ongoing e-commerce relationship would develop. Sales via the Internet continue to grow at a substantial rate with repeat business overshadowing that of newly registered customers.

The overall goal of the company is to make a profit by sell MRO products. Both the traditional marketing strategy of direct sales using inside and outside sales representatives and the online marketing strategy of offering incentives to try the service are aimed at supporting this goal. Both strategies while geared towards getting customers to buy product do so through very different means. The traditional strategy brings the product to the customer through a catalog and the personal selling approach. The Internet on the other hand lets the customer view all the catalog items and more and requires no interaction with the sales force allowing customers take a more independent roll in the purchasing process. Just as customers differ, the marketing strategy to appeal to them must also differ. When Grainger recognized this important fact it was able to effectively market to both types of customer and ultimately increase sales and profits.

Grainger, Inc., (2000). Investor relations. [Online]. Available: http://investor.grainger.com

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