As more manufacturing businesses realize the importance of business-to-business (B2B) e-commerce, many are still lacking when it comes to digital marketing and sales programs.
According to a PwC survey, 66% said implementing digital marketing and sales over the next two years is a business priority; 40% said it is a top business challenge. Few manufacturers, though, have robust e-commerce platforms.
Robert Bono, industrial manufacturing practice leader for PwC, said the challenges are nearly identical whether it is a B2B or B2C manufacturer.
“It’s not new, we’ve been talking about this for several years, but the pace of adoption is different for different companies,” Bono told Modern Shipper in a recent interview. He said that the survey confirmed conversations he has been having with manufacturers in recent months.
The survey found that some industrial companies are making plans to accelerate e-commerce sales growth from near zero today to 60% over “the next several years.”
“Indeed, e-commerce is on the radar for most industrials,” the survey noted. “Some are already growing their e-commerce businesses — directly selling to customers (B2C) a diverse range of products traditionally sold in-store by retailers, such as building materials and tires. This marks a radical pivot from the traditional B2B or B2B2C models.”
Bono said the slow adoption of e-commerce by manufacturers has to do with their primary business objectives.
“Manufacturers are not used to dealing with [e-commerce customers],” he said. “Manufacturers are really good at safety and keeping their workers safe.”
An example of this is the complexity of dealing with cybersecurity, a key component of any successful e-commerce platform, even though it is one that is not seen and often has an uncertain return on investment.
“The problem with cybersecurity risk is you don’t know about the opportunity cost until you have a breach,” Bono said. “It’s something companies need to invest in and be diligent about. Manufacturers are used to [seeing a return on investment]. I’m going to make this investment, and I’m going to get this payout. … The problem with cybersecurity and investing in it is the reputational risk, [which] is hard to quantify.”
The survey found that 80% of respondents with predominantly B2C sales are placing a high priority on digital channels in the next two years.
“The pandemic forced them to do it,” Bono said. “People weren’t traveling state to state and salespeople were not on the road and they had to find a different way.”
Bono noted that a lot of manufacturers introduced digital catalogs for the first time, and many have trialed video chats as a way to demo a product. It is an extension of how Americans are consuming goods in the economy.
“As a society we are getting more comfortable with that,” Bono said. “We’re buying a lot of stuff [as consumers] by not going out to the store and … now I can go to work and I feel more comfortable doing it.”
The survey confirmed this, with a majority of B2B buyers searching for items through digital channels.
“The onset of the pandemic accelerated workforce and behavioral trends already underway for years, and that makes a strong case for industrials to embrace e-commerce. Just consider that 65% of B2B buyers prefer to research products online and 86% prefer to reorder online instead of speaking to a sales representative,” the survey noted.
Not every product a business sells can move as easily into a digital ecosystem, but many can incorporate both online and offline attributes. PwC said manufacturers should determine what can be researched and sold online and what can be researched online but purchased offline.
Bono said that is driving more manufacturers to seek out expertise, either through in-house hires or outsourcing, to build and market through digital channels.
Another big change is whether manufacturers need to look at revamping their supply chains.
“They’ve had to make changes because the orders are coming in a different way,” Bono said. “The question long term is whether you need to go to more regional manufacturing” to move items closer to the end customer.
Quicker shipping requirements and rising logistics costs are considerations that affect not only location of facilities but also how those items are marketed and sold.
“It’s increasing another variable into that equation,” Bono noted. “For a while it was how can I get that part as cheap as I can get it. … Now there are other variables — customer demands, lead time and how do I do things quicker — and maybe those variables outweigh cost.”
Bono suggested manufacturers need to examine their supply chains. “What is the supply chain of the future?” he asked, adding that it should “not just be a tweak of the supply chain but a reimagining of the supply chain.”
When doing so, Bono said it was important to start from a blank sheet and “don’t be biased.” He also advised working to understand what the future needs of your customer will be.
“Everything has a digital aspect to it now,” Bono noted, and that includes things like e-commerce payment technologies that most manufacturers have never had to consider before.
“If you don’t take credit cards and use a third party, that is an additional cost,” he said. “When you think through a digital strategy and e-commerce, that is one of the aspects that companies have to think through.”
PwC advised companies to plan their entry into e-commerce.
“Businesses should appreciate that they are on the cusp of momentous transformation with much at stake and that devoting planning and resources at the beginning will help prevent potentially costly shortcomings or disappointments down the road,” the survey advised.
“Clearly, getting e-commerce right for industrials will take time. And remember, not everything can be done at once. We see successful e-commerce programs carried out in incremental steps, with each adding incremental possibilities of value captured by both B2B and B2C initiatives,” the survey said.