As the pandemic continues to drive the push for digital transformation and the imperative to enhance supply chain efficiency, manufacturers are increasingly adopting strategies to boost their businesses. One of these pivotal trends gaining traction is business-to-business (B2B) ecommerce.
Transitioning from traditional offline operations to an online model can manifest in various ways and business models. For some, it involves digitizing their product catalog, which can be a simpler step compared to launching a full-fledged e-commerce website. By placing their catalog online, businesses can empower users to request quotes conveniently. Upon request submission, you receive the details via email for further processing.
On the other hand, certain manufacturers are adopting B2B ecommerce platforms to directly sell to their end customers, thereby bypassing intermediaries such as distributors.
These platforms provide comprehensive B2B ecommerce solutions, enabling seamless digital B2B sales experiences. These platforms offer features akin to those found on B2C ecommerce sites. This includes advanced search capabilities, tools for comparing pricing, easily accessible and well-presented product information, descriptions optimized for search engines, dedicated sections for new products and featured items, and other Amazon-like shopping experiences.
Nonetheless, establishing an online store is a significant undertaking that requires careful consideration and investment.
For some, it happens when the sales demand is higher than the manpower they have to support it. For others, a rise in overhead costs and reduced margins are what turns the team’s attention to an ecommerce strategy and business. For others still, the turning point is when customer demands become impossible to ignore.
Even omnichannel selling, a trend right out of the B2C playbook, is becoming top of mind for businesses. New data shows that all B2B customers prefer omnichannel, no matter their industry, country, size, or customer relationship stage. So whether you sell exclusively through distribution and retailers, direct, or through a marketplace, adding to that mix an online channel not only helps you meet increasing digital expectations, but it allows you to provide a balance across many channels.
According to McKinsey, 72% of B2B companies that sell via seven or more channels grew their market share.
As it becomes clearer and clearer how ecommerce can actually enhance, not disrupt your channel strategy, the time to act is now. U.S. B2B ecommerce sales are expected to grow at a CAGR of 10.7% over the next five years, and the businesses that invest today will get ahead.
According to Twilio, companies that invested in digital customer engagement have seen revenue growth of 70% on average. But before diving into an B2B ecommerce project, manufacturers should already be considering how to get the most out of it.
As a B2B ecommerce payments platform, we go to our partner network to deliver the actionable insights manufacturing companies need to hit the ground running. Because in order to start with payments, you need to start with ecommerce.
We sat down with Randy Higgins, Chief Strategy Officer at Shift7, to provide manufacturers with a practical framework to successfully launching an online sales channel and bolstering revenue as a result.
B2B ecommerce for manufacturers: The state of the trend
Before we jump into a go-to-market path for ecommerce, it’s important to first understand the current state of the industry. According to Statista, 20% of professionals implementing digital commerce initiatives worked in the manufacturing industry. That number outranked industries like retail (8%) or wholesale (5%). And there’s plenty of success there.
In 2021, Digital Commerce 360 reported that manufacturers grew online sales by 18.4% to $543.25 billion. These growth rates are 1.45 times greater than the growth in all manufacturing sales.
Within reason, 66% of U.S. manufacturers agree that implementing digital sales and marketing over the next two years is a “high” or “very high” priority. Among buyers, digital commerce is already the preferred way to complete a purchase, with 86% preferring online ordering over speaking to a sales representative.
They are also willing to pay more. The share of B2B buyers who would pay more for better ecommerce experience increased from 74% in 2019 to 87% in 2021.
The bottom line is that the manufacturing industry is clearly in a strong position to take advantage of digital adoption to accelerate growth. Buyers want the perks of online commerce and manufacturers can give it to them if they have a solid plan in getting there.
Manufacturers should start with a B2B ecommerce ROI
It takes more than data alone on the market and opportunity to convince organizations to invest in B2B ecommerce. After all, it’s a project of tremendous scale, complexity, and cost. It's difficult to get the organization to rally around the idea of a digital channel. Especially when companies operate on some fairly thin margins.
This is why Randy explains that they build an ROI case from the beginning. “When we build the plan for an ecommerce project”, Randy says, “most of our initiatives are going up at least to the C-suite, if not to the board for approval.”
Shift7 typically builds the ROI model around things like:
- Share of wallet gain: Cross-selling with smart merchandising and marketing automation
- Higher order values and velocity reorder cycles
- Cost per order: Comparing channel costs vs order volume
- Productivity metrics: Sales teams & service resources moving towards higher value tasks
- Adoption rate: Percentage of the customer segment shifting to self-service
With strong metrics as a north star, organizations can be better aligned with their digital initiatives. Plus, when you have a specific timeframe and goals, it’s a lot easier to optimize along the way. Once an ROI is in place, Shift7 also dedicates a lot of time to upfront customer research that produces personas and journeys.
“We want to understand where the friction is between the manufacturer and their customer.”
Randy describes that even though many manufacturers are interacting with their customers and are familiar with some of the pain points, it’s important to hear directly from customers, rather than internal stakeholders alone. “I would say most of our clients do not have a very clear picture of what their customer journey looks like. So we're usually doing primary customer research for them.”
The next step is to take this research and use it to create an optimized customer-centric experience.
Choose an ecommerce platform that will enhance self-service capabilities
Now that manufacturers know what their customers need and what they are trying to achieve, it's time to build out the right functionality and features. This is where the vision meets the technical investment. As an example, one of the main steps here is ecommerce platform choice.
“There's usually already some technology investment within the organization”, explains Randy. For example, around ERP, CRM, they probably have a website, so, Shift7 looks to recommend things that will naturally fit or extend that ecosystem. Since manufacturers typically are not exclusive to one sales channel, an ecommerce platform that connects customer data, all in one place, is very important.
Why? Sales and customer service teams can provide a better service if they can easily view and manage the customer experience across all touchpoints.
Break down the manufacturer buyer experience
With all of the research and logistical steps out of the way, manufacturers can get to the fun part: rolling out the digital experience. Randy recommends treating this step like a product that is evolving over time.
Some helpful points Shift7 asks manufacturers are:
- How am I continuing to groom and refine customer and user stories?
- How do I continue to enhance demand generation for the experience?
- How can I create self-service touch points across the customer journey?
If you think about a typical product management life cycle, it’s about building something and then make sure people are actually using it. In B2B ecommerce, the experience is only as good as how easy it is for customers to order online and find what they’re looking for, in a short amount of time.
Can they find personalized product recommendations? Do they have flexible payment options? Can they view their order history? Do they have the right pricing? And do they have shipping options that actually work for them?
There's a lot of nuances. Manufacturing is a vertical that has very specific ecommerce needs and granular requirements.
Everything from inventory availability to shipping and payment can have specific use cases that differ based on the customer. But when customers are able to do business with you more easily and benefit from an experience that boosts the relationship with your brand, there’s a lot to gain.
Let's summarize the benefits
After learning Shift7's tips on effectively using ecommerce for manufacturing, it's essential to understand the business opportunities that come with it.
Here's a summary:
Having a direct channel to customers:
Direct-to-consumer (DTC) has been a popular trend in B2C for a while, and its benefits apply to B2B too. With a DTC model, you can avoid third-party costs and boost margins by working directly with customers.
Manufacturers can control how often and in what format they reach customers, providing a personalized experience. Essentially, ecommerce allows you to reach your customers and build relationships while preserving higher profit margins.
Ecommerce provides manufacturers with the opportunity to scale their operations without the need to attract more distributors or hire additional sales representatives. With an ecommerce platform, you can process orders quickly and efficiently, while also making it easier for customers to purchase from you.
In addition, ecommerce allows you to attract new customers, especially when selling to the long-tail.
B2B ecommerce can provide a more efficient buying experience for customers who don't require a high-touch sales experience. For example, customers who buy frequent and lower value items may prefer to place orders online, without the need for a sales rep.
By offering a self-service ecommerce channel, manufacturers can cater to these customers, while also freeing up sales reps to focus on higher-value accounts. At Balance, we help manufacturers sell to their long-tail segment online by enabling them to extend net terms easily and digitally.
Ecommerce enables manufacturers to streamline their operations by automating manual processes, such as payments, billing, and inventory management.
This automation can reduce errors and improve the speed and accuracy of order processing, leading to greater efficiency and cost savings. Furthermore, modern ecommerce platforms often offer a range of integrations and APIs that allow manufacturers to seamlessly connect their ecommerce system with other business tools, such as accounting software, marketing automation tools, and customer relationship management systems.
These integrations can improve data accuracy and streamline workflows, freeing up time and resources that can be devoted to other core business initiatives. Overall, this shift can lead to greater innovation, improved customer experiences, and increased revenue and profitability.
Ready to start working on your manufacturing ecommerce store?
The move to building a strong online presence and ecommerce channel could be just what you need to take your business to the next level. But if the task of incorporating successful ecommerce and handling B2B payments seems daunting, don't worry - we're here to help.
At Balance, we offer a digital payment platform that can help your manufacturing business easily move online and meet increasingly sophisticated customer expectations.
We know how hard change can be, but with partners that can help you build a practical roadmap forward, you can create the best possible digital experience out there. To learn how your manufacturing business can start addressing B2B ecommerce payment needs, reach out to our team.
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