The company’s financial gains reversed recent quarterly declines, as Bodor noted that Protolabs did well in Q3 despite continued softness in manufacturing markets.

Robert Bodor, president and CEO, Proto Labs Inc.

“We continue to accelerate innovation for customers with the fastest and most reliable lead times in the industry,” Bodor said on a Q3 earnings call. “The broader economic environment is still uncertain. Manufacturing conditions in the U.S. and Europe remain soft and have not consistently improved throughout 2023.”

Protolabs revenue in Q3

Despite that economic downturn, Protolabs “grew in the quarter, especially in our digital manufacturing network business,” he said.

Bodor added that Protolabs is gaining market share with larger companies and expanding in new markets.

“Recently, a luxury high-end automotive manufacturer selected Protolabs to assist with its first foray into the electric vehicle market,” he said, without naming the manufacturer.

Bodor added that Protolabs worked with vehicle manufacturer’s design firm, Hutchinson, to make prototypes for and electric vehicle battery pack cooling system.

“We rapidly manufactured injection molded parts, which meant stringent project timelines and quality utilizing our speed, reliability and quality,” he said.

Bodor noted that Protolabs’ traditional business over most of its 24-year history has been in manufacturing prototypes of parts that customers use in designing and testing new products. But it is now seeing growing demand for parts that customers use in the production of final products.

Protolabs “is becoming a one-stop shop for custom prototypes and low-volume production,” he said.

Protolabs’ services include:

• Injection molding
• 3D printing
• Sheet metal
• CNC machining

CNC machining is a manufacturing process in which pre-programmed applications dictate the movement of factory tools and machinery. The process enables three-dimensional cutting tasks to be accomplished in a single set of prompts.

Protolabs reported for the third quarter ended June 30:

• 23,800 product developers served by its digital manufacturing.
• Gross profit of $59.28 million, for a gross margin of 45.4%. That’s up from $53.6 million and 44% a year earlier.
• $19.5 million in earnings before interest, tax, depreciation and amortization (EBITDA) or 14.9% of revenue. That’s up from $11.4 million and 9.3%.
• Net income of $7.95 million, up from $3.95 million.

For the nine months ended June 30:

• Revenue of $166.18 million, nearly unchanged from $166.85 million a year earlier.
• Net income of $10.32 million, down from $11.60 million.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s Protolabs update.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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The Beer Bat’s business model is to operate with a lean staff and put its resources behind product development and quality control. As a result, the company has about a dozen employees, which limits their ability to answer sales calls and fill orders.

“What we wanted was a platform that takes the salesmanship out of sales and enables more of an Amazon-like model of point, click, buy, and deliver, as opposed to figuring pricing and placing the order with a sales representative over the phone,” says Sam McGee, president of The Beer Bat.

The Beer Bat needed a platform that could scale up

At the time, The Beer Bat was using the WooCommerce platform, which could not scale to handle the increase in order volume and required a software developer to write code for any of the changes the company wanted to make to the platform, as it does not employ a code writer in-house.

What The Beer Bat sought was a platform that could support B2B and B2C sales and had the features to support the company’s future growth. The Beer Bat settled on BigCommerce as its new platform provider not only for the platform’s scalability and features, but for the BigCommerce support team.

The latter was important to The Beer Bat as it wanted a platform provider experienced in working with small, but rapidly growing businesses.

“We wanted a platform provider that was personal, not transactional,” McGee says. “BigCommerce does not treat us like a transaction, and we are a small business that values the human side.”

With the BigCommerce platform, The Beer Bat has implemented a customer portal for buyers to place an order, typically 10,000 to 15,000 units at a time, upload their artwork or logo to be printed on the Beer Bat, and automatically receive an invoice once the order is complete. Buyers can also see pricing specific to their account. On the B2B side, The Beer Bat sells to food and beverage retailers and distributors, and concessions operators.

“Manually processing orders of the size we typically get is a lot of work. Now, the ordering process is a lot more efficient,” McGee says.

Beer Bat’s origins

The idea for The Beer Bat grew out of McGee’s business philosophy that there is a product for every market and a market for every product. At the time, Green Egg Design LLC, a manufacturer of plastic bottles owned by McGee, was producing branded drinkware for the Hard Rock Café’s outdoor casino in Las Vegas. When the Hartford Yard Goats, a minor league baseball team, announced it would begin playing in Hartford, Connecticut, where Green Egg is headquartered, at the start of the 2017 baseball season, McGee saw an opportunity to develop a new drinkware product unique to the team.

“I did some research and I learned that the [Yard Goats] baseball park seats about 8,000 people, and everybody is drinking, 48% drink beer, and the other 42% are drinking non-alcoholic beverages,” McGee says.

The goal was to develop a product that not only fit the fan experience inside the park but enhanced it. McGee pitched several ideas to Yard Goat management, including The Beer Bat. In the end, The Beer Bat won out. The product debuted at the Yard Goats’ stadium in August 2018.

From minor leagues to major leagues

The company continued its focus on signing minor league teams for the next year until Major League Baseball’s Atlanta Braves franchise came calling.

“We initially focused on minor league teams as there were more than 300 of them in towns across the country at the time. That’s a good foundation when it comes to potential markets,” McGee recalls. “When the Braves saw our product in a promotional video that went viral, they called.”

The Braves debuted The Beer Bat when their new stadium opened in 2020. In 2021, MLB’s San Diego Padres signed as a client. The Beer Bat supplies its product to stadium concession operators for five MLB and 27 minor league teams. And the company has established online storefronts in several countries including Canada, Japan, Mexico, South Korea and Taiwan. The company also has licensing agreements with all 30 MLB teams, as well as the Negro League Baseball Museum to sell The Beer Bat featuring their respective logos.

“The multi-storefront functionality of BigCommerce allows us to go global locally with a single back end,” McGee says.

Business is growing fast

In 2023, The Beer Bat expects to deliver about 470,000 units, compared to 235,000 in 2022. Since installing the BigCommerce platform, The Beer Bat has increased orders by 71%, increased revenues by 115% and seen 98% increase in visitors to its B2B and B2C storefronts.

Always looking for the next great product idea, The Beer Bat plans to introduce a cup shaped like a hockey stick later this year. The cup will be based on the same business model as The Beer Bat.

“I think hockey has the potential to be bigger than our baseball business,” McGee says. “It could be our Mona Lisa.”

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ACV Auctions is a Buffalo, New York-based B2B marketplace. On it, used-car dealers view, bid on, and purchase used-car inventory.

ACV Auctions B2B marketplace

But ACV Auctions’ B2B marketplace total revenue, including marketplace and service revenue, grew 13%. That’s an increase to $119 million from $105.4 million in the prior year. Net loss was $18.2 million compared with a net loss of $23.6 million in the third quarter of 2022.

“We sold 150,000 vehicles in the quarter, resulting in 13% year-over-year growth, reflecting further adoption of our marketplace solutions targeting dealer engagement,” CEO George Chamoun told analysts on an earnings call. “GMV of $2.1 billion was flat year over year, reflecting continued moderation of wholesale market prices.”

ACV sees stronger growth ahead as the wholesale and retail market for used vehicles begins to normalize after inventory shortages in recent years, Chamoun said.

“While volumes continue to lag pre-pandemic levels, inventories improved, which is key to supporting a sustained recovery in retail sales, trade and dealer wholesale supply,” he told analysts. “Used vehicle retail units modestly increased sequentially and year over year, but also remain well below historical levels as affordability issues continued to pressure consumer demand. In terms of vehicle sourcing, our data indicates that dealers retain a higher-than-normal percentage of trade for retail inventory.”

For the fourth quarter and the full year, ACV Auction B2B marketplace projects:

• Total Q4 revenue of $116 million to $120 million, an increase of 18% to 23% year over year and a GAAP net income loss of $24 million to $26 million.
• Total yearly revenue of $479 million to $483 million, an increase of 14% to 15% year over year and a GAAP net income loss of $75 million to $77 million.

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Through the first three quarters of 2023, the combined sales of B2B manufacturers and distributors declined to $11.010 trillion. That’s down 1.5% from $11.182 trillion in the first three quarters of 2022, based on a Digital Commerce 360 estimate using monthly B2B sales data from the U.S. Department of Commerce.

For the period January through December, manufacturer sales grew 0.3% to $5.010 trillion in 2022. At the same time, sales for business distributors and wholesalers declined 3% year over year to $5.986 trillion from $6.171 trillion.

Manufacturers, distributors examine ecommerce performance

Many distributors are seeing slowing sales from repeat customers as they scale back orders due to a softer economy. A case in point is MSC Industrial Supply Co.

MSC reached a milestone during its 2023 fiscal year ended Sept. 2, surpassing $4 billion in annual net sales for the first time. But ecommerce sales, which account for more than 60% of total sales, slid by 3% year over year in the fiscal fourth quarter. The distributor attributed the drop in digital sales mainly to public sector sales occurring in non-ecommerce channels.

But MSC, like many other B2B distributors, continues to double down on expanding digital commerce as the business markets shift to accommodate even bigger waves of digital-first customers.

“Looking forward, we expect improvement in our ecommerce sales, particularly through MSCDirect.com, as we start rolling out enhanced capabilities, including improved search and navigation functions,” said MSC chief financial officer Kirsten Actis-Grande in the company’s most recent earnings call with investors.

More Charts & Data Stories

Check back soon for more Charts & Data Stories, like our weekly B2B infographics. Here’s last week’s. We add new content regularly. 

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Wabash has a 49% stake in the new company. It formed the joint venture to enhance its ecommerce platform and partner ecosystem. Wabash is a Lafayette, Indiana-based manufacturer of such transportation and logistics products as:

• Dry freight
• Refrigerated trailers
• Flatbed trailers
• Tank trailers
• Structural composite panels

It says it took a minority stake in the new company so it could remain nimble in rolling out its end-to-end digital platform.

Wabash wants ‘a more B2C-like digital experience’

“We’ve been looking for a partner to deliver a more B2C-like digital experience to our suppliers, dealers and customers,” says Mike Pettit, chief financial officer for Wabash. “We have a strong presence and expertise in transportation, but not the digital expertise.”

In addition to gaining access to the technical expertise it needs to launch its tech initiative by partnering with Fernweh, having a minority stake in the joint venture will allow Wabash to take a startup mentality to its technology initiative without having the oversight that comes with being a publicly traded company, Pettit adds.

“For us, being able to move quickly on our tech initiatives is more important than overall control,” Petitt says. “This joint venture provides us with the speed autonomy of a startup while using the [technical] expertise of Fernweh.”

Topping Wabash’s list for improving its digital platform are:

• Expanding the parts available through parts.onewabash.com
• Scaling its trailer-as-a-service capabilities
• Adding new value-added services for dealers and customers that may include partnerships with technology or logistics providers

Wabash trailers as a service (TaaS)

Wabash launched TaaS in July 2022. It provides access to trailers and maintenance and repair services through the company’s extensive dealer channel and parts distribution network. FreightVana LLC, a Phoenix-based third-party, was the first company to make use of Wabash’s TaaS capabilities.

Looking ahead, Wabash sees an opportunity to use its TaaS platform to digitally connect to dealers, customers and suppliers in new ways and enable them to facilitate interactions across the transportation ecosystem in a one-stop shop.

“[Shipping and logistics] is a highly fragmented, complex and cyclical market that has a lot of players with a lot of handoffs between them, which makes technological innovation difficult,” says Petitt. “More than 90% of the players in this space are small companies that lack scale. Even if they want to find a solution, the question is often where to go to find it. Our mission is to connect the players.”

For its part, Fernweh sees its role as providing the expertise to help Wabash accelerate its technology roadmap by partnering with third parties in the logistics ecosystem that reduce customer and supplier friction during the exchange of services and solutions, says Fernweh CEO Nick Santhanam.

“We see the digital platform as the next evolution in Wabash’s TaaS offering, adding value to all stakeholders by connecting Wabash’s dealers, customers and suppliers to facilitate interactions across the transportation ecosystem in a one-stop shop,” Santhanam says in a statement.

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The distributor operates 569 locations in 42 states and generated sales of $27.62 billion in 2022. It’s staging a full rollout of a new digital platform in early 2024 that will generate “hundreds of millions of sales,” said chief financial officer Peter Jackson on the company’s recent third quarter earnings call.

“The other big important piece for us is digital, and we think that we already have a lead. We think we’re already the easiest to do business with, we’re the most efficient, we’ve got the best technology and we’re about to take a big leap in that space that we think is going to be both hugely beneficial to our customers, but also make us even more the supplier of choice and the partner of choice in this industry,” Jackson told analysts.

MyBLDR: Builders FirstSource’s digital platform

Builders FirstSource’s digital platform, called myBLDR, is built on digital infrastructure and modeling applications from Paradigm technology. It gives builders and contractors access to:

• Project document storage tools
• 3D homes previews
• Online material estimates and ordering
• Features to check delivery status, job scheduling and other tasks

“As we look forward to our full product launch in Q1, we have made it a priority to drive digital adoption across our operations. MyBLDR.com is designed to create efficiencies for both our team members and customers by offering improved transparency and engagement in the homebuilding process,” CEO Dave Rush told analysts, according to a transcript from SeekingAlpha.com. “Taken with our proprietary estimating and configuration tools, this gives our customers more control over the entire building process, saving both time and money for our customers and their clients, while making the homebuilding process more personalized.”

For the third quarter ended Sept. 30, Builders FirstSource posted net sales of $4.5 billion. That’s a 21.3% decrease from sales of $5.76 billion in the prior year. Net income was $451.45 million. That compares with net income of $738 million in third quarter of 2022.

“The feedback’s (about myBLDR) been great. We’re really pleased with the tools and the development successes,” Jackson says. “We’re meeting milestones and feeling really good about the product that we’re going to have to show the market. And we’re excited that the market’s going to be able to benefit from the tools to improve efficiency and take costs out.”

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That pressure stems from ARG’s role as a light custom-manufacturer as well as a distributor of more than 25,000 SKUs for  industrial hoses, fittings and related products for such industrial uses as oil rigs and fuel-delivery trucks. Most of its business involves replacing broken industrial hoses, and ARG’s sales and product teams often work with customers to assemble customized hose products and systems.

Mike Powers, director, ecommerce and digital, ARG Industrial

“You have to make sure that you’re getting the right data from your suppliers, and also that you’re presenting the right data on these assemblies to your customers,” says Mike Powers, ARG’s director of ecommerce and digital. Ship a hose assembly with the wrong specifications, and the customer could experience severe problems, he adds.

ARG B2B digital commerce sales

ARG is working with the the Industrial Distributor Cooperative (IDCO) buying group and product information management (PIM) and other software from digital commerce technology vendor Unilog to expedite how it receives product data from Midland and other critical suppliers.

Ross Baker, director of product strategy, Midland Industries

“It’s the way of the future,” says Ross Baker, Midland’s director of product strategy. “The more distributors that are pulling this data we’re putting into the PIM, the more chances there are for sales to increase on both sides.”

Powers asserts that companies involved in ecommerce face challenges in pulling data from legacy enterprise resource planning systems and integrating that data with a customer-facing ecommerce site.

“They’re realizing that the complexity of integrating legacy ERP and B2B ecommerce is very, very tough,” Powers says. He adds that companies then often find it difficult to find the people with the necessary expertise to work with legacy ERP systems.”

Working with Unilog and IDCO, ARG receives more consistent and helpful product information from Midland and other suppliers.

Midland is now pushing new product updates quickly to ARG, “instead of us waiting 12 months to get a new catalog,” Powers says. “All we need to do is log in.”

Data collaboration results

He says the much-improved product data flow is producing several results, including:

• Increased web traffic through improved keywords and search engine optimization.
• A more useful site search tool and increased sales of newly released products.
• ARG’s enhanced ability to develop a new configurator that lets customers who want to build their own hose assemblies to order an accurate product set.
• ARG’s enhanced ability to provide punchout catalogs that let buyers punch out from their procurement software to an ARG product catalog.

Baker adds that Midland expects to extend the level of product data-sharing it does with ARG to more companies to foster increased revenue for both Midland and its channel partners.

The Cashing in with Digital Channel Partners report is available for a free download.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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Yoav Kutner

The distribution industry stands at a crossroads. For decades, the familiar model of manufacturers selling to distributors who then sell to customers has been foundational across industries. But with the emergence of digital tools that empower manufacturers to deal directly with consumers, this time-honored structure has faced deepening disruption.

While distribution remains essential, manufacturers can now own the customer relationship end-to-end with little input from intermediaries. Combined with the meteoric rise of ecommerce, this direct-to-consumer revolution threatens to make distributors obsolete. Amazon and other digital juggernauts are also building formidable logistics capabilities that threaten to undermine the function of traditional distributors.

To survive in this new paradigm, distributors must take a page out of the D2C playbook and undergo their own digital transformation. They need to reimagine their value proposition and business models for an increasingly tech-focused world. Distributors that fail to adapt risk losing relevance as manufacturers bypass them to sell directly to customers online. The choice for the distribution industry is clear: digitize or die.

The threatening dawn of D2C

D2C represents an existential threat to the traditional distribution model. Manufacturers are rapidly exploring innovative sales channels that feed directly to end users, taking cues from disruptive startups like Dollar Shave Club and Casper. These digital native D2C brands have shown that enormous success can be achieved when control over pricing, customer relationships, and end-to-end experiences is kept in-house.

For manufacturers, D2C delivers a gold mine of customer data to tailor products and personalize engagement. Combined with the explosive rise of ecommerce, producers now have direct access to vast pools of customers without the need for distributor middlemen. This trend is unlikely to peter out; between 2019 and 2022, customer-direct purchases increased by almost a third, with sustained growth forecasted through the middle of the decade and beyond.

As D2C continues to gain momentum, distributors are likely to find once-reliable clients starting to question indirect sales. This is particularly true of manufacturers who’ve sunk millions of dollars into their own digital capabilities, and, as a result, are rapidly seeking higher margins by eliminating intermediary markups.

A narrow window of opportunity 

Despite this, distribution remains essential across the majority of modern industries. Distributors provide vital value through their technical expertise, expansive product selection, and customer service. But much of this value can now be replicated or replaced through technology. Even the least future-facing manufacturers are wondering whether they need third-party distributors to the extent they once did — thanks, not least, to the sudden emergence of eye-catching alternatives.

Powerful ecommerce enterprises, like Amazon and Alibaba, have surged into the packing and delivery spaces, offering services once fulfilled solely by distribution specialists. Their expertise in digital shopping and advances in logistics allow cost-effective shipping of products — including large and bulky items — neutralizing an advantage established distribution players previously enjoyed. These digital disruptors are also beginning to match distributors in terms of technical proficiency, leveraging artificial intelligence, algorithms, and data analytics to close the knowledge gap.

For traditional distribution companies, the window of opportunity to secure a sustainable future is closing fast. But it isn’t too late for these tried-and-true providers to cement themselves as essential cogs in the ecommerce machine. To remain relevant in a rapidly digitizing world, they must recognize the need for reform, casting aside antiquated models to deliver the experiences that modern-day manufacturers — and their customers — want.

An investment worth making

Moving forward, distribution leaders must strive to deliver seamless omnichannel journeys formulated to meet fast-evolving customer expectations. Siloed channels and fractured data severely degrade these experiences, so the focus should be on unified commerce solutions spanning web, mobile, and marketplaces.

Investing in flexible, customizable B2B ecommerce platforms purpose-built for the distribution space provides a strong foundation for unified commerce, empowering distributors to blend digital efficiency with high-value account management and the other areas in which they excel.

To fortify fulfillment and logistics as customer demands escalate, distributors must also optimize supply chain operations for speed, transparency, and flexibility. They can achieve these operational improvements by digitizing warehouse management, selectively applying automation, exploring innovative last-mile delivery partnerships, and closely monitoring supplier relationships. While superior fulfillment and logistics remains a distributor stronghold, digital disruptors are advancing quickly, so established disruption players must urgently double down on this advantage before it evaporates entirely.

In both the short term and the long term, those that modernize their supply chains will gain a powerful competitive edge. However, to truly thrive in the evolving distribution landscape, distributors must expand their value proposition far beyond just moving products.

Doing so requires a realization that they shouldn’t be competing with manufacturers, but rather complementing their operations. This means providing services, insights, and specialist know-how that make them the expert distributor, an indispensable partner. With knowledge and relationships baked deeply into the customer experience, manufacturers will be less incentivized to cut distributors from the chain — especially in economically uncertain times when increasing value is imperative.

Ready to thrive 

There’s no doubt that D2C is here to stay, but manufacturers will continue to seek the services of digitally enabled distributors who provide value far beyond basic order fulfillment. That’s why, to remain competitive, distribution players must augment their value proposition by evolving into trusted advisors and strategic partners.

Getting this right relies on comprehensive digital transformation encompassing ecommerce, supply chain, and service delivery operations. Distributors that fail to adapt their business models and stubbornly cling to antiquated, unsophisticated approaches will inevitably fail.

Adapting to this new distribution reality is no small task. But it has become necessary for survival — and with the right tools and technology, it can be a remarkably painless process. With commitment to change, investment in digitization, and a tireless customer focus, distributors can reinvent themselves as next-generation enterprises ready to thrive in all market conditions — now, and in the future.

Yoav Kutner is co-founder and CEO of Oro Inc., an open-source business technology company serving B2B merchants.

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Bachir Kassir, founder, MyTradeZone.com

“We know that 40% of B2B marketing budgets are spent on trade shows and that over 95% of marketers use social media content in their campaigns,” he says in his promotional material, adding: “So why is there no social network specifically dedicated to B2B trade?”

That’s where MyTradeZone fills the gap in B2B commerce, he adds.

“On MyTradeZone, each business can both market its products/services and source what it needs, all within the same platform,” he says.

Kassir notes that he founded and launched the site quietly several years ago, building a base of about 50,000 users through word-of-mouth.

A toolset with CRM and email marketing

But he recently publicized MyTradeZone’s official launch in a press release and is considering taking on investment partners to spur growth. He adds that he expects the site to begin generating revenue in the first quarter of next year.

MyTradeZone.com provides built-in features ranging from site search, product listings, and online video chats to email marketing and CRM software applications to help buyers and sellers find and build business relationships with particular types of trading partners.

It offers limited access to these features at no charge under its basic membership plan. Premium plans will provide the same features and higher site search rankings for monthly fees from $20 to $50 based on the volume of activity.

In addition, the top premium plan will let participants earn fees from online ads placed on the social network site. MyTradeZone will take a cut of those ad fees.

MyTradeZone.com does not operate as a conventional ecommerce marketplace hosting product and services sales transactions among participating buyers and sellers, who complete those transactions outside the networking site. But it will let users monetize business communities, such as by setting up industry organizations and charging membership fees through the Stripe online payments system. In that case, MyTradeZone will charge a fee based on a percentage of the membership fees.

Kassir says MyTradeZone has been gaining about 100 members daily — a figure he wants to grow to about 1,000.

To get there, he says he’ll continue to invest in “lots of business tools” available to members and offer premium membership deals to trade shows, business networking groups and trade associations. He adds that while he has mostly self-funded MyTradeZone, he may consider outside investors.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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For the third quarter ended Sept. 30, Global Industrial posted sales of $354.6 million. That’s an increase of 18.8% from sales of $298.5 million in the third quarter of the prior year. Net income also grew, reaching $20.7 million compared $20.3 million in Q3 2002.

“Top line performance was once again led by our ecommerce channel, as recent investments and actions to drive digital transformation and enhance the online shopping experience are delivering returns,” says CEO Barry Litwin.

For the first nine months of the year, Global Industrial sales increased 5.4% to $954.2 million. That’s compared to $905.6 million in the prior year. “We continue to leverage digital marketing to deliver healthy customer acquisition and retention rates,” Litwin told analysts on the recent earnings call based on a transcript from Seeking Alpha. “Our web and marketing teams have been doing an outstanding job executing on our strategy, and we’ve been very pleased with the recent ecommerce performance.”

For the year, Global Industrial is counting on basic business performance and smaller customer orders to generate sales. “Our direct one-to-one sales channel remains a key focus to deepen customer relationships, build larger accounts and expand into new end markets,” Litwin told analysts. “While we did see some nice gains in select national and public sector accounts, and overall order volume improved, we continue to see muted large order volume. This reflects the cautious customer behavior we’ve observed throughout the year.”

About 60% of all Global Industrial sales are now generated digitally, the company said in the second quarter.

Percentage changes may not align exactly with dollar figures due to rounding.

Check back for more earnings reports.

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