Sana Commerce, an eCommerce platform for SAP and Microsoft Dynamics published the findings of its Benchmark Report for Manufacturing E-commerce. Alongside Sapio Research, Sana Commerce surveyed more than 800 manufacturers across various industries in the US. For most, their digital transition is already in full swing with 50% of revenue already being generated by online channels. However, this success doesn’t come without its challenges.
Economic uncertainty has driven most manufacturers to change their market strategies, making the leap to selling direct-to-consumer. The study found that 94% of respondents said they would change their market strategy, due to economic uncertainty. 67% are now selling direct-to-consumer through their own eCommerce website and 63% through online marketplaces such as Amazon and eBay.
Despite the significant upside, respondents to our survey said that they faced a number of challenges. This included specifically:
- handling complex order processes (36%);
- driving traffic to online channels (35%);
- slow customer adoption (34%);
- internal resistance towards eCommerce (33%).
Manufacturing going digital
Manufacturing going digital is the new standard. Once viewed as an afterthought, digitization has now become a standard necessity for B2B manufacturers. The latest data shows that 98% have, are implementing, or are planning to implement an online sales channel. This is up 14% percent from the 2017 data. While most manufacturers are firmly embracing digital, businesses’ perspectives, motivations, and initiatives do vary across sectors.
- The Construction industry relies on online channels more than any other at 64%, with Electronics a close second (62%).
- 71% of manufacturers within the Construction and Industrial Materials sector are using online marketplaces: 8% more than the average.
- Food & Beverage are the least reliant on online marketplaces (53%).
- Electronic Data Interchange (EDI) models remain popular in the Automotive industry with 43% reporting they employ one.
- In terms of those who still have a heavy reliance on field sales, Medical Devices (31%) and Automotive (27%) sectors lead the pack.
- The sector often determines how online channels are leveraged and what their success looks like. Home Goods and Furnishings are generating as much as 60% of revenue through a bespoke platform.
As a result of eCommerce’s impact, web store adoption has also become a priority among manufacturers. Webstore growth has seen a large rise, when compared to data from the digital transformation research conducted in recent years. Nearly 2/3 of manufacturers are operating a webstore for sales, up 17% from 2017 and up 29% over 2015. Today, more manufacturers are using online marketplaces as a sales model: 37% more than in 2017.
Despite industry differences, manufacturers do have a lot in common when it comes to the advantages they’re gaining from digitizing and embracing eCommerce. Across all industries, an average of 45% of manufacturers see increased sales as a result of investing in digital strategies. Within this group, digital investments are also providing advantages that span much further: 42% also noticed improved customer relationships.
“Manufacturers today know that they need to be online. Covid was a catalyst to a trend taking place for years,” said Tim Beyer, President, Sana Commerce North America. “However, B2B e-commerce is complex. Many manufacturers haven’t thoroughly considered how legacy business practices also need to change,” Beyer added.
In response to these challenges, 56% said they have improved and invested in personalised online experiences to quicken customer adoption. 55% said that they have trained their sales team to help get customers online. 49% have incentivised customers to order online; and 55% have organized an internal eCommerce team. Just 39% of respondents invested in marketing (paid search, email and SEO) to grow adoption and sales.
Turning to new eCommerce channels
Manufacturers are also turning to various new channels to facilitate their sales strategies. Data shows they’re embracing a wide distribution of new or unfamiliar sales models to supplement and support their eCommerce efforts.
When asked how they are solving the challenge of driving traffic to online channels, 40% said they improved and invested in personalised online experiences. 39% invested in paid social media promotions; and 33% invested in email marketing.
“It’s clear from this study that manufacturers are taking steps needed to reap the benefits of being online,” added Beyer. “But, progress still needs to be made in terms of fully realising all the benefits of e-commerce.”
Enterprise Times: What this means for business?
The balance for manufacturers has been the temptation of DTC revenues and the need to maintain relationships with resellers. Often the retail outlet was the only opportunity for consumers could engage with the customers. Covid-19 changed everything. Economic uncertainty has accelerated eCommerce adoption, but many manufacturers still challenged with change are now embracing the DTC route.
Sana Commerce’s report is an interesting and unbiased. It is an in-depth look into what the digital transformation journey looks like for manufacturers. It potentially can serve as a benchmark to help businesses understand how they compare. Manufacturing businesses going online is expected to become the new normal. Manufacturers will also have to undergo the philosophical revolution of ensuring customer experience and engagement becomes central to this relationship.