Why Manufacturers Need To Focus On eCommerce Now More Than Ever Before

This article was first published on the WebriQ blog - HERE

Historically, the manufacturing sector hasn’t been filled with early adopters or fanboys on some bandwagon. But manufacturing firms certainly follow the market - especially when visionary leaders decide to challenge the status quo, and spark meaningful change to the market.

Often times these leaders are focused on production. For example, Henry Ford reimagined the automotive sector with the conveyor belt and integrated supply lines. Jacob Davis and Levi Strauss changed textiles with the creation of a new category and the world fell in love with denim.

Meanwhile, modern brands such as Nike, Audi, and Siemens among others are honing their fully automated smart factory solutions.

Tackling production has its merits but there seems to be a market revolution that has been slow for manufacturers to adopt. I am of course talking about ecommerce. It seems that manufacturers, especially in the B2B space, have overlooked a major and important transformation happening with their buyers and how they want to buy.

Today B2B consumers do not stick to traditional methods or a single sales channel, online or offline. They have so many choices and options at their fingertips and constantly changing demands from their own customers yet, for the most part, B2B manufacturer buyers are stuck waiting for a revolution in their online buying experiences.

If you want to be among the industry pioneers, this post offers a deep dive into e-commerce for manufacturers — from new customer expectations to essential prep steps for running digital commerce operations.

How B2B Manufacturing Buyer Habits Are Changing

Talking about COVID-19 seems obvious now many months into the aftermath of the pandemic, but it really has caused major changes. The pandemic greatly affected manufacturing companies. The National Association of Manufacturers (NAM) reported in Feb-March 2020:

• 35.5% of manufacturers faced supply chain disruptions.
• 78% felt that the uncertainty around COVID-19 would also have an impact on their businesses.

This is of course pushing most manufacturing companies to reconsider many aspects of their business. From sales, operations, vendor relations, purchasing, etc. many manufacturers are looking to make changes to improve their position in the market and make a lasting impact on their bottom line. One particular way firms can make a major impact is by exploring and implementing ecommerce into their brand.

Last year, in 2020, total manufacturing and distributor sales grew by 1.5% to $17.5 trillion. But B2B buyers in all industries spent almost $9 trillion online. That is over 10% more than they spent online in 2019. Business is moving online and it is moving there at speed.

This of course makes a lot of sense when considering the pandemic but the trend was there long before COVID-19 and stay-at-home orders. The chief reason is millennials. Tech-savvy millennials are now a major cohort of B2B buyers. Many members of the millennial generation had embraced e-commerce long before the pandemic and they have come to expect similar shopping experiences from their B2B suppliers and vendors.

This trend line is set to grow in the coming years, due in large part to millennials becoming the largest segment of buyers in the market. On top of that millennials prefer to purchase directly from manufacturers versus distributors or marketplaces. In the 2019 UPS study, millennials made the largest portion (38%) of their total industrial purchases directly from manufacturers. For comparison, only 29% of Boomers choose to buy from manufacturers.

It won’t be as easy as placing a Buy Now button on your website. Online ordering is just the beginning of what many B2B buyers are looking for. Many B2B buyers are looking for a complete buying experience. Accenture found that over 63% of B2B executives are looking for personalized information online. Many buyers, millennial and otherwise, want to engage with B2B suppliers who offer user-friendly and modern online ordering features, as well as online quote requests for personalized pricing. In fact, 64% state that they'd switch to another vendor if the company provides real-time, personalized pricing.

Factor in the other experiences B2B buyers are looking for online like shipping quotes, pricing tiers on bulk ordering, previous order history, real-time inventory, and other customization opportunities, preferably on demand whenever the buyer is looking.

These demands are not handled easily. They require a thoughtful approach to e-commerce and manufacturers will need best-in-class tools and services to deliver the buying experiences their customers are asking for.

What Manufacturing Firms Can Achieve with eCommerce

The world is spending more and more money online. Just the B2B spend is expected to reach $1.8 trillion by 2023. That’s trillion with a “T”. Put another way, digital commerce will account for roughly 17% of all B2B sales in the US by 2023. That’s a lot of cheddar. Having your own seat at the table is becoming a no-brainer. However, there are plenty of other reasons for manufacturers to jump on e-commerce than just monetary gain.

1. Connect with your customers directly.

The shortest path between two points is the direct path. There is a lot to like about a Direct-To-Consumer (DTC) business model. Plenty of B2C brands have experienced these benefits but B2B manufacturers can experience these benefits too by selling through their website too. This gives them access to:

• Preserving higher profit margins.
• Exerting greater control over brand representation.
• Ensuring optimal pricing and discount strategies.
• Collecting customer data for personalization.
• Increasing customer loyalty through on-brand retention campaigns.

Access to your customer’s data creates a plethora of opportunities for developing new business opportunities. In addition to invigorating your sales and marketing efforts direct access to the customer does wonders for your product development too.

2. Happier distributors.

Many B2B manufacturers worry that e-commerce will cause problems with their distributors, but the inverse is more likely. With eCommerce, you can give your distributors a more personalized buying experience on demand. They can have private access, views on inventory, lookup previous orders, purchase with customized pricing and they don’t have to mess around on the phone, use cumbersome PDFs or excel sheets, or get lost in the shuffle.

Many distributors are looking for this very kind of buying experience to streamline their own business models. They’ll appreciate the touchless experience and on-demand access. If they need to pick the phone they can, and will, but the option to streamline their purchasing helps them out just as much as it helps you.

3. True scalability.

One of the many limiting factors in scaling up sales is order taking. Many B2B manufacturers have people-driven systems for collecting and processing orders, even with a well-implemented ERP the front end is a weak point. With eCommerce your front end on both direct and wholesales ordering is on-demand and much more scalable. No need to worry about having a highly staffed phone bank or experiencing the ups and downs of staffing.

4. Improved efficiencies.

To piggyback on the previous point, e-commerce offers better integrations for the rest of your operations. Orders can quickly move to production and fulfillment in a streamlined fashion. By embracing digital transformation on the front end of your business it can also have trickle-through effects on the rest of your business.

5. Brand awareness.

According to Google, 58% of B2B industrial manufacturer buyers start their research online with product focused search. Only after they’ve found initial information do they then follow up with a brand. Your ecommerce website can be SEO-optimized to receive traffic from search engines for both types of queries — product and brand-name ones. So that more buyers get familiar with your brand and full product range.

6. Use of analytics.

With full access to customer data, you can employ an array of ecommerce analytics solutions to boost CX and increase sales. For example:

• Personalized similar product recommendations.
• Dynamic real-time pricing for different customizations and order volumes.
• Relevant up-sell/cross-sell positions.
• Best suited warranty, servicing, or customer service packages.

Things that Manufacturers should understand about eCommerce

As we’ve noted above B2B buyers are coming to expect better customer experiences and digital commerce from their suppliers. In order to capitalize on this trend here are 4 things to consider as you prepare to start ecommerce with your brand.

1. Understand your audience.

Unlike B2C, B2B brands cater to a smaller universe of shoppers with highly specific needs. The knowledge of who your ideal buyers are, where they dwell and how you can best serve them has to stand in the mortar of your e-store.

Start with preliminary online market research:

• What are your competitors doing?
• Understand your own internal channels and opportunities.
• Analyze the standard sales cycles in your industry.
• Identify the key steps in the customer lifecycle.
• Outline the main pain points your target audience deals with at every stage.
• Brainstorm ways for alleviating these via digital means.

Then get to the virtual drawing board and start mapping the main customer navigation flows through your website. It's good to have a UX/UI designer at this point. Your goal is to envision how a potential buyer will move — from the homepage to the shopping cart — and determine what could help them progress faster.

2. Determine what you will sell.

Starting with your entire catalog marketed to every sales channel may not be the best idea. It is also worth noting that not all B2B goods can be sold online - nor should they if they require major customization and consultation. However, you decide to set up a dedicated product catalog it can be helpful to separate your products into two categories:

• Available for instant online ordering.
• Sold in-person/via sales reps.

For the first product category, you can create a B2C-like shopping experience online that includes:

• Online product listings.
• Easy filtering and search.
• Instant pricing.
• Detailed product descriptions.
• Attractive photos and/or 3D models.

For your distributors and wholesalers, you can create a private section of your website with even more options like:

• Order history
• Inventory information
• Customized pricing
• Product configuration

3. Figure out how you’ll build your storefront.

This step is where a lot of your time should be spent. How you create your online experience matters. Many businesses run head fist into the latest all-in-one platform and stand up a shop without taking a long-term view nor remembering all the careful considerations from steps 1 & 2.

Your storefront needs to be extensible and scalable and also able to meet the expectations of your niche buyers. In general, you have two options. You can choose the more traditional option with platform commerce or go for the more customizable headless commerce approach. While a platform will be easier to implement in the beginning it will be more expensive and harder to customize long term while a headless solution takes time and money upfront it is much easier to scale and grow over time.

4. Create your e-commerce team to support your store.

Remember: over half of buyers will still want to speak to a sales rep before purchasing online. So ensure that you have a properly staffed e-commerce sales division to support digital commerce. In many ways, you can use chat tools and software to help scale this and retrain existing CSRs.

Your existing inside sales team can also be very useful here as they can help to manage the website and their traditional sales support roles. These folks should keep track of average buyer re-ordering cycles and reach out to prospects when it's time for repurchasing. Plus, they can also introduce new customers to core products and/or after-sales propositions to drive loyalty.

Lastly, you may also need an eCommerce development partner on call to help with website improvements, troubleshooting, and new extensions. This is where we can help with our Website as a Service approach.

Talk To Us

We have a number of manufacturer customers and know how to help not only create great experiences for your customers both direct and distributor but also how to create a system that fits uniquely with your brand.

No two manufacturers are alike and everyone needs different tools, experiences, and processes to make sure their ecommerce solution works exactly how it should. We don’t offer one size fits all solutions like Shopify or Magento. We offer Headless Commerce solutions for modern brands that want the best solution for their customers and for themselves.

Feel free to learn more about our opinionated approach to websites and Jamstack methodology and learn more about Headless Commerce. When you’re ready, reach out to us - we’d be happy to take your digital commerce to the next level.