The majority of manufacturing businesses predict that at least 41% of their revenue will be derived from e-commerce websites they own or operate by 2051, be that selling online to business customers or with a direct to consumer offering.
This is a staggering figure when thousands of UK manufacturers have yet to even put pricing on their websites, let alone delve into the deep waters of e-commerce.
New research by creative and digital transformation agency Access into the pros and cons of e-commerce has highlighted the three top concerns preventing most UK manufacturers from selling online:
- The biggest barrier is how selling online will affect their relationship and margins with existing distribution partners. A fear of breaking what they have already got and losing credibility within the market.
- Second is the business-wide disruption of moving to web sales. Bolting on a Shopify platform isn’t the issue; it’s how a shift to online selling would change many business’ entire infrastructure, including customer services. In fact, many of those who took part in the research project cited that a manufacturing business would actually have to adopt a retail mindset to be successful.
- And the third obstacle is cost. Few manufacturers felt they had the capabilities in-house to cost-effectively implement an online sales process and that the investment needed to bring an Amazon-like experience to meet its customer expectations would be a huge expense.
Having worked with clients to help them navigate the shift from manufacturing into e-commerce, the pros outweigh the cons when it comes to making the transition into online retail.
We’re increasingly approached by manufacturing businesses looking to explore the potential of e-commerce; and we’ve seen many examples of extremely successful ventures into online selling.
Quite simply, key reasons clients make the jump is the realisation that if they don’t they are likely to be left behind. E-commerce in manufacturing is going to continue to grow – as research shows more than one in three businesses expects to invest in e-commerce within the next two years. Attitudes have changed and there is a general consensus that the shift will come; with both manufacturers and distributors adapting to this shift.
In some cases, distributors are the ones pushing for change; in other cases it’s the customers within the sector that have changed and businesses need to adapt to cater for them.
When presented with the facts and solutions, it’s easy to see why e-commerce does make business sense.
The benefits of e-commerce
In a recent Episerver report, the ability for businesses to self serve online topped the list of ways B2B companies can make it easier to do business. Increased data and insight on customers that comes from digital commerce gives manufacturers unrivalled and hugely valuable information to help drive future strategies.
There is a growing trend for 24/7 business operations, and an ability to search and buy products has become the norm in most markets.
E-commerce can reduce a huge amount of office admin (some reports estimate it at 60%).
The market is also opening up with small businesses buying more as consumers turn to run their SMEs, which e-commerce can facilitate.
Many ‘trade-only’ products can now already be found online anyway, through trade stores and diverse shopping portals such as Amazon.
Giving customers the convenience and speed to buy online can leverage a more premium price and distributor pricing can be managed.
Finding the right solution
When helping businesses to transition into e-commerce it’s essential to look at digital technologies and solutions that cater for the business as a whole. E-commerce cannot be viewed in isolation to the business’ overall strategy and operations. It’s not just a ‘sales strategy’ or ‘digital strategy’; there is little point just giving a manufacturing business ‘an online shop’. We use technology that can work with current processes that are best suited for the markets in which the business operates.
In many cases, the most viable route is a new platform, as it just isn’t cost effective to try and adapt many time served websites into something that can flex enough to future needs.
For some clients it’s important that the platform can operate on a global scale with centralised governance as well as localised content. We have two major clients at the moment that are successfully implementing a digital transformation programme that involves numerous Drupal sites and ecommerce functionality.
In all cases, being committed as a business is crucial to make the shift.
Where existing customer relationships could be heavily affected, the solution has been to approach e-commerce under two brands. While the downside of this is that they are not leveraging the strength of the master brand, it means it reduces risk and lessens the channel conflict. The key to any approach is to cater for all audiences coming to the site, whether they arrive for a large scale project or single purchase.
Using customer insight and the continual analysis of data for UX is a big advantage of eCommerce. Being totally customer-centric in the solution you provide - prototyping, testing and iterating - will ensure the approach will fully resonate with audiences.
Personalisation is another massive opportunity and there is some 82% of B2B companies looking to use some form of AI to help personalise experiences in the next three years.
Many businesses we’ve worked with have successfully tested the market and entered into eCommerce by trialling it first. Trialling direct sales by making slightly different products available online can also reduce any negative feedback from distributors. This also avoids cannibalisation of sales.
Another route to entering into e-commerce is to bring in a third party to handle transportation and distribution logistics. Orders and picking is done within the business’ systems and delivery specialists do the rest.
So, really the question for manufacturing businesses aiming to future-proof their business isn’t ‘to e-commerce or not to e-commerce?’; the question is ‘how soon and what’s the best approach for our customers overall?'