The Rise of the Application of E Commerce in Manufacturing and 7 Benefits for Manufacturers and Distributors
The Internet’s large-scale global penetration has spawned an increasingly large number of technology and web-savvy consumers, creating a huge opportunity for both industrial manufacturers and their end customers. Over the past decade, the application of e commerce in manufacturing and industrial distribution, has evolved from basic communication and transaction channel between buyer and seller, to an end-to-end collaboration medium between all stakeholders. This collaboration is driven by companies looking to increase sales by offering online product recommendations and promotions, as well as end-customers seeking the rich and personalized online experience that many retail Web sites offer.
A Brief Background of the Evolution of Application of E Commerce in Manufacturing: From Consideration to Implementation
“The industrial manufacturing sector is leading the U.S. economy out of the recession on the strength of a number of key growth strategies. Selling into new industries, innovating to develop new products and services, and leveraging the Internet to pick up the pace of business are the top growth drivers. Of the 1,176 respondents to the survey, 71% said their online strategy would be important or critical. The Internet, it turns out, has taken center stage in this recovery.”
Three years later, as recovery out of the recession is no longer a focus for manufacturer’s and the industrial space, but instead maintenance and sustainable growth, the 2013 Industry Market Barometer study from ThomasNet stated:
“One major finding from the study is that websites are soaring in the role they play in business development. For 2013, nearly three times as many manufacturers (62 percent) as compared to 2012, say their websites will have the most impact on securing more business. In 2012, respondents ranked a company's website 6th in reaching current and prospective customers as a means of building business.”
Manufacturers have now gone from thinking about implementing an application of e commerce in manufacturing, or an online strategy, to now seeing the industrial space executing internet and e-commerce applications as a way to grow and acquire new business. Three years. This is the speed of manufacturing today as it applies to business.
The Agenda for the Effective Application of E Commerce in Manufacturing and Industrial Distribution
Effective e-commerce lies in the ability to deliver a buyer-centric and engaging online experience that enables customers to interact and transact with the brand and allows manufacturers to reduce administrative costs, increase sales and improve brand loyalty. This is achieved by reducing costs through the following means:
- Ensuring a minimum-touch, 100% accurate order in the least possible time;
- Understanding customer needs and behavior to deliver specific marketing messages to influence decision makers
- Providing a rich customer experience by leveraging powerful online and web based applications, such as a shopping cart within a content management system (such as Magento, Shopify, and BigCommerce).
o These platforms will have plugins and applications available to help manage the experience on both the customer’s and merchant’s side, such as freight shipping applications, to aid in accurate shipping quotes to serve up to the customer in the shipping cart, and easier freight management for the shipper.
To achieve the above stated objectives, industrial manufacturers will need to:
- Aggressively adopt B2C and retail best practices (remember, even in B2B online sales, there are PEOPLE behind the decision making. See our first post on the Evolution of Logistics and Supply Chains in E-Commerce)
- Target customers with buyer-specific online promotions, recommendations (testimonials, user reviews) and messages
- Increase brand visibility by utilizing social media and content marketing (See Report: Content Marketing Making Strides in the Manufacturing Industry and Leads & Brand Awareness For B2B Manufacturers with Social Media)
- Open new markets and channels through alternate business models, such as mobile commerce (See Study: Nearly 80% of Manufacturers to Develop Mobile Application this Year)
The 7 Benefits of Application of E Commerce in Manufacturing and Industrial Distribution
E-commerce is a way for manufacturers to experiment with new products without risking a significant investment. Instead of setting up brick-and-mortar stores, or keeping inventory on hand, you can start offering this new product on your new store.
There are three :
- Direct access to customers. Besides having higher profit margins, you will interact with customers, letting you learn from them and fine-tune products.
- More prospects. A larger arena yields more sales possibilities, although you have to be cognizant of your existing distributors. Potential problems can often be sidestepped by offering your products to a different market, so you're not competing with your current network.
- Opportunities to innovate. Finding customers outside your existing relationships also frees you from the specs you have to adhere to now. If you have an idea for a better product, you can act on it, allowing for product analysis and iteration over time based on what your customers wants.
- Scalability. An effective application of e commerce in manufacturing will enable your organization to grow and scale easily to meet market demand and customer needs by opening new sales channels and continuously reaching new market segments.
- Improved efficiencies. Through integration to the enterprise resource planning (ERP) and other back-end business systems, ecommerce provides marked efficiencies for manufacturers. Customers are able to order online whenever and wherever suits them, customer service can focus on actual customer service functions – such as transparent freight shipping costs and timely shipping – rather than simply being order takers, and the need to rekey data in independent systems is eliminated, thereby eliminating the possibility of errors and improving shipping processes and increasing order throughput.
- Improved brand awareness. Just as ecommerce can help manufacturers and industrial distributors find new customers, so can it help improve brand awareness in the market place. Developing pages that can be indexed by search engine crawlers is the fastest way to improve your site’s search engine optimization and improve the likelihood that your target audience will know who you are.
- Analytics. The application of e commerce in manufacturing provides the perfect platform for an organization to launch a comprehensive analytics campaign. Through ecommerce, manufacturers and distributors can measure and evaluate marketing campaigns, sales effectiveness, product mix, inventory turns, customer sales effectiveness, and customer engagement like never before. When combined with a freight shipping application in the shopping cart which is bolted onto a transportation management system, you truly can use data to make better and better business decisions that impact the bottom line.
Manufacturing is rapidly moving toward a multi-channel commerce model that integrates several channels (e.g. online, print catalogs and sales teams) into a single, unified ecosystem. Those manufacturers who achieve effective application of e commerce in manufacturing stand to have a competitive advantage above those manufacturers stuck in a brick and mortar only world. Looking ahead, leading manufacturers will take the multi-channel concept a step further and prioritize the implementation of omni-channel commerce platforms — technologies that deliver seamless shopping and fulfillment experiences across all possible connection channels. We will explore multi-channel and omni-channel commerce in the manufacturing world in more detail in this series, so stay tuned!