The majority of manufacturing businesses predict that at least 41% of their revenue will be derived from eCommerce websites they own or operate by 20251 - 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 eCommerce.
As part of our roundtable event last month, we researched 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 their customer services function and their brand positioning. 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 the 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 customer expectations would be a huge expense and disruption.
As a digital agency, we’re increasingly approached by manufacturing businesses looking to explore the potential of eCommerce; and we’ve seen many examples of extremely successful ventures into online selling. We've also worked with clients to help them navigate the shift from manufacturing into eCommerce, and we believe that the pros outweigh the cons when it comes to making the transition into online retail. And there isn't a one-size-fits-all approach, different business dynamics require different eCommerce strategies and we often help navigate these decisions with customers. However, to make eCommerce a success for any business, strategy and planning is key.
ECommerce in manufacturing is going to continue to grow – as research shows more than one in three businesses expects to invest in eCommerce within the next two years. Attitudes have changed and there's 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 eCommerce does make business sense.
The benefits of eCommerce
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 business1. Increased data and insight on customers that comes from digital commerce gives manufacturers unrivalled and hugely valuable information to help drive future strategies. Other benefits can include:
- With a growing trend for 24/7 business operations, an ability to search and buy products has become the norm in most markets - this will open manufacturers up to new audiences
- ECommerce 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 to run their SMEs, which eCommerce can facilitate
- Many ‘trade-only’ products can now already be found online anyway, through trade stores and diverse shopping portals such as Amazon, why not sell it yourself direct?
- Giving customers the convenience and speed to buy online can leverage a more premium price and distributor pricing can be managed
Deb Group (now SC Johnson Professional) explored eCommerce to strengthen their market positioning
Finding the right solution
When helping businesses to transition into eCommerce it’s essential to look at digital technologies and solutions that cater for the business as a whole. ECommerce cannot be viewed in isolation to the business’ overall strategy and operations. It’s not just a ‘sales strategy’ or ‘digital strategy’; there's 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 some 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 others it’s important that the platform can operate on a global scale with centralised governance as well as localised content. 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 eCommerce 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 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 eCommerce or not to eCommerce’, the question is ‘how soon and what’s the best approach for our customers overall'. Whatever the route - with a strong, effective and well thought out strategy, you should be on the road to success.
Discover how Access can help build your strategy with you.