For the last two decades as more and more technology is introduced into our personnel lives our expectations and perceptions have been placing higher demands on B2B companies or even our own employers. With each passing year and technology advancement the lines between B2B and B2C get blurrier. Early on in this phenomenon the priority for B2B companies was to get online and then to continually improve upon their digital channel. For many it was and is hard to keep up.
As things evolved this technology trend led to disruptive business models being launched and further changes in buying behaviors, not just the digital experience. Delivery expectations have changed too. In the B2B arena we now have moved from next day delivery to same day delivery or order online for pickup. In B2C we have seen even more options with order online for pickup at your local store, even outlets like Uber and Door Dash who will go pickup and bring your order to your doorstep and personnel shoppers who will do all your shopping for you. Covid has fast-tracked some of these delivery channels and added a new one, Curbside pickup for both B2C and B2B channels. While at home from school during Covid, my kids have become Instacart shoppers by day and DoorDash consumers by night.
Home Depot and HD Supply becoming reunited will just accelerate the blurring of the B2B and B2C lines in the Industrial Distribution industry further with effects both the digital and the physical buying experiences. The acquisition for Home Depot makes a lot of sense. They have been able to leverage their B2C platform (physical and digital) to appeal to more and more B2B customers. With HD Supply, they greatly increase their addressable market, opening up access to an even broader piece of the industrial segment, with more cross selling opportunities and the ability to increase the share of wallet with the Pro (contractors) customers. HD Supply can exploit the delivery trends as well with over 2,000 stores to leverage as B2B logistical hubs where Pros can pick-up materials for their projects or have them delivered straight to their job site. It is estimated that Pros at Home Depot make up less than 10% of the company’s customer base, but generate between 40-50% of its sales. These numbers just went up with this move and is likely to accelerate both sides of their business.
It allows Home Depot to have some distinct advantages over their digital competitors like Amazon Business. Beyond the physical presence their ability to offer value-added services that can make a Pros experience better and job easier. In certain segments the B2B buyer and the B2C buyer are the same person buying with both roles in mind at the same time. In Home Depot’s case the DIY (do it yourself) home owner and Pro buying building materials for today’s job and more for this weekend’s home project. This is especially true with smaller businesses, where the buying behavior of the individual and as business owner are hard to differentiate.
There are other examples of large retailers where the lines are blurry too. Office Depot’s business model caters to both B2B and B2C, selling office supplies and to students as well as offices. You see something similar at Costco which is primarily regarded as a B2C outlet channel, 40 % of its members are small businesses and recently acquired a last mile logistics services provider from Sears. Gordon Foods has 175 stores that service both the local restaurants and schools but is open to the public as well. Closer to home, one of Home Depot’s most familiar competitors Lowe's is making investments in B2B too. They recently announced they are making updates to their LowesForPros.com ecommerce site and upgrading its stores to attract more of both B2B and B2C customers.
There are numerous other examples, the Home Depot move is just the latest that is starting to make Industrial Distributors see cross-eyed.
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