eCommerce for mid-size manufacturers: thinking beyond the shopfloor

Over the last few years this trend has been accelerated by pandemic and war, both of which have disrupted traditional sales channels as well as global supply chains. These changes are forcing manufacturers to adapt both the buy and sell sides of their businesses.

But what are the benefits and challenges of eCommerce for mid-size manufacturers? How can they leverage digital technologies to improve supply chain efficiency and create a seamless and engaging customer experience? And what are the best practices and strategies for implementing eCommerce in manufacturing?

In this article consultant, Kurt Dressel, explores these questions and provides some insights and helpful tips.

Benefits of eCommerce for manufacturers

eCommerce can offer many advantages for manufacturers, such as:

• Increased sales and margins: eCommerce can help manufacturers reach new markets, segments and customers, as well as upsell and cross-sell more effectively. By selling directly to customers, manufacturers can also reduce intermediaries and increase their margins.
• Improved customer satisfaction and loyalty: eCommerce can enable manufacturers to provide more personalised and convenient customer journeys, from research to purchase to after-sales service. Customers can access product information, reviews, recommendations, demos, videos and other content on the manufacturer’s digital channels, as well as place orders, track shipments, manage accounts, request support, and provide feedback. This can enhance customer satisfaction and loyalty, as well as generate valuable data for the manufacturer.
• Reduced costs and risks: eCommerce can help manufacturers optimise their inventory management, production planning, logistics and distribution processes, as well as lower their operational costs. eCommerce can also help manufacturers mitigate risks associated with supply chain disruptions, demand fluctuations, regulatory changes and competitive pressures.

Challenges of eCommerce for manufacturers

eCommerce is not without its challenges for manufacturers, such as:

• Complex product portfolio: Unlike online retailers that sell standardised products, manufacturers often have complex product portfolios that vary in size, shape, weight, configuration, customisation, pricing and availability. This can make it difficult to display and sell products online, as well as to manage shipping and delivery.
• Channel conflict: Manufacturers that attempt to sell directly to customers may face resistance or backlash from their existing channel partners, who may see eCommerce as a threat to their business. Manufacturers need to carefully balance their channel strategy to maintain good relationships with their partners.
• Digital transformation: Manufacturers that want to succeed in eCommerce need to undergo a digital transformation that involves not only creating a website or app, but also integrating their systems, processes, data and culture. This can be a daunting and costly task that requires strong leadership, vision, strategy and execution, not to mention time.

Best practices and strategies

To overcome these challenges and reap the benefits of eCommerce, manufacturers can follow some best practices and strategies, such as:

• Define your target market and value proposition: Manufacturers need to identify who their ideal customers are, what their needs and pain points are, how they search for and buy products online and what value they expect from the manufacturer. Based on this analysis, manufacturers can craft a clear value proposition that differentiates them from their competitors.
• Design your eCommerce platform with the customer in mind: Manufacturers need to create a user-friendly and responsive eCommerce platform that provides a seamless and engaging customer experience across devices. It goes without saying these days that business customers are also consumers and expect an Amazon type experience even when buying for their business. Your platform should offer rich and relevant content that showcases the product features and benefits, as well as interactive tools that allow customers to configure, customise, compare or visualise products. The platform should also facilitate easy ordering, payment, shipping, tracking, returns, support and feedback.
• Integrate your eCommerce platform with your back end systems: Manufacturers need to ensure that their eCommerce platform is integrated with their back end systems such as ERP (Enterprise Resource Planning), CRM (Customer Relationship Management), SCM (Supply Chain Management), PLM (Product Lifecycle Management), CMS (Content Management System), etc. This can enable data synchronisation, automation and analytics across the organisation, as well as improve efficiency, accuracy and visibility.
• Leverage data and analytics to optimise your eCommerce performance: Manufacturers can collect, analyse and act on data from their eCommerce platform and other sources to measure and improve their eCommerce performance. Data and analytics can help manufacturers understand and segment their customers, personalise and optimise their marketing and sales campaigns, test and refine their product offerings, pricing and promotions, monitor and enhance their customer satisfaction and loyalty, identify and resolve issues and bottlenecks and discover new opportunities and trends.

Getting started

For mid-size manufacturers just getting started on their eCommerce journey, it may seem an impossible mountain to climb. However, the most important aspect has nothing to do with technology and everything to do with identifying business priorities and securing executive and board level leadership to ensure a successful transition to a more digital business. Every manufacturing business is different, but here are a few practical steps that can make the digital journey a bit easier.

1. Before implementing a full transactional eCommerce capability, why not consider implementing a self-service customer portal that will enable your customers to track orders, check invoices and payments, research information and access FAQs. This is a great way to build a solid foundation for a future transactional selling capability.
2. Although your suppliers may not be the first thing that comes to mind when considering eCommerce, improving supplier communication and the purchasing process can help to build a sound foundation for eCommerce. A supplier portal is a relatively straightforward way to reduce the complexity of dealing with suppliers. It can help to reduce the amount of effort required to onboard and manage suppliers and can have an immediate impact on your supply chain efficiency as well as adding resiliency to help cope with future disruption.
3. Another system that can help build a strong foundation for transactional commerce is a PIM or Product Information Management system. For companies that have many and/or complex products, a PIM will help you get those products organised and will make it much easier to keep the vast range of product details up to date. In many instances, it will be possible to integrate your PIM with your ERP system or even directly to your suppliers’ systems. When you are ready to implement your full eCommerce system, having a PIM in place will make it much quicker and easier.
4. A successful implementation of B2B eCommerce is rarely as simple as turning it on and reaping the benefits. Without education and preparation your customers may be reluctant to change their ways. And, perhaps even more critical to success, is getting your sales team on board. It’s not unusual for salespeople to perceive the advent of eCommerce as impinging on their role. So, it’s usually best to involve your sales leadership right at the beginning of the project and to make sure they understand how the new system will help them and their team be more productive and successful by reducing the amount of time spent on repetitive mundane tasks and giving them the tools and time to find new customers and enhance relationships with existing accounts.
5. For many manufacturing enterprises their biggest customers are their existing distributors and dealers. The previously mentioned self-service customer portal will generally be welcomed by your channel partners as it saves time and gives them 24×7 access to vital information and processes. However, selling directly to their customers may not be so warmly perceived. For some manufacturers it may make the most sense to continue to direct end users to channel partners to close the sale. Or it may make sense to segment the product lines with some going through the channel and others being sold directly. Every situation is different and will require a well thought out strategy that doesn’t alienate your important partners.
6. One of the great benefits of digital commerce is the latitude it gives you to extend your market by selling to new and different customers and/or to new geographic regions… both with relatively low cost of sales. If you currently rely on distributors for your domestic market, it might be best to leave those relationships in place while leveraging your eCommerce platform to gain sales in new geographic territories.

Conclusion

eCommerce is a game changer for the manufacturing industry, as it can help mid-size manufacturers increase their sales and margins, improve their customer satisfaction and loyalty, and reduce their costs and risks.

However, B2B eCommerce also poses some challenges, such as managing complex product portfolios, dealing with potential channel conflict, and the costs of digital transformation.

To overcome these challenges and succeed in eCommerce, manufacturers need to follow some best practices and strategies, such as defining their target market and value proposition, designing their eCommerce platform with the customer in mind, integrating their eCommerce platform with their back end systems, and leveraging data and analytics to optimise their eCommerce performance. By doing so, even mid-size manufacturers can create a competitive edge and grow their business in the digital age.

Kurt Dressel is a UK based industry consultant helping manufacturing and distribution businesses implement digital solutions which maximise their sales and improve supply chain efficiency.