Ecommerce for manufacturing companies has long been a challenge. The logistical challenges posed by remote production and the high cost of inventory have kept the more risk-averse companies at arm’s length. But with the right solutions, ecommerce isn’t just a way to increase visibility and sales volume—it’s a tool that can help you cut costs, improve margins, tap into new markets, and streamline processes. For manufacturing companies seeking to reach new markets and eliminate middlemen, ecommerce is a powerful tool for your strategic sales approach. But, keep in mind that ecommerce for manufacturing isn't an 'either/or' prospect or a zero-sum game. Rather, it is an opportunity to expand your go-to-market (GTM) strategy and sales channels, and make your brand more robust, with a greater impact on the market.
First, what is Ecommerce?
Ecommerce is the practice of running a business using online platforms to facilitate sales. It’s often used as a catch-all term that can include online sales, online marketing, and online inventory management. Ecommerce services can be provided by third-party vendors (online marketplaces such as Amazon, Etsy, or Alibaba), or channel partners. These vendors might use their own ecommerce solutions, or work on more robust industry-standard systems like Salesforce Commerce Cloud. All told, digital commerce is about letting vendors sell online, and providing customer experiences that entice repeat purchases.
Digital Experience Benefits for Manufacturing
Ecommerce for Manufacturing brings several benefits to the table. These include:
- Opportunity to reach new customers – Customers are increasingly turning to the internet to discover new products, and manufacturers can take advantage of this. If your product is available online, customers who can’t visit your retail store, channel partner, or value-added reseller, can find out about it, and purchase the item, even if they are remote or in a location not covered by your brand's channel reach.
- Cuts costs – Ecommerce can bring down your costs per unit, as you don’t need a large inventory of physical products on display in stores. For some use cases, you can also eliminate the costs of managing retail stores as well as shipping, storing, holding costs, and inventory insurance.
- Smaller inventories reduce risks – With a more optimized supply chain and online ordering process, a manufacturer and sales representatives can better forecast demand, reducing excess inventory development. That means lower storage costs, and a reduction in money tied up in stagnant inventory. This also reduces insurance premiums, the risks of damage (from storms or floods, for example.), and obsolescence.
- Improve customer satisfaction – By creating an online store, manufacturers can offer more appealing product listings. Customer service improves by providing a full product catalog, with full product information on your site. In effect, it means you manage your brand exactly as you need it managed. This allows the manufacturer to cater to customer expectations. With a direct connection to the end consumer, it also allows manufacturers to offer additional services, such as consulting, design, or product installation—as an expanded business offering.
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Increase profitability – The manufacturing industry is pressed to continually improve the effectiveness of their sales teams, and cater to both B2C consumers and B2B buyers. Going online means catering to the growing desires of customers to interact directly with the brand, while also cutting out the middle-man in many cases. Although distributors and wholesalers provide important business value for many industries, D2C and direct B2B online sales can help manufacturers retain full margins for their products.
Challenges
To paint a balanced picture of ecommerce for manufacturing companies, you should also consider the challenges. Doing so means going into the online world with a sound mindset, and a strategy to overcome the challenges. Be aware of the following issues:
- Finding customers – It’s important to make your products easily findable online. You can do this by creating attractive product listings and descriptions. You can also promote your products on social media sites like Facebook and Instagram, marketplaces like Amazon, and search engines like Google.
- Building an audience – It’s important to have a following online. You can use online marketing tactics to build a following and reputation. Then, once you have a following, it’s important to continue to advertise your products on social media and in search results. Powerful marketing automation tools like Salesforce Marketing Cloud are important considerations here.
- Managing inventory – Managing product inventory can be a challenge for manufacturers who are new to ecommerce. Retail stores usually have the benefit of adding inventory at will. However, most manufacturers need to track inventory at all times. In a business use case, in which the manufacturer develops direct relations with a customer through marketing, yet fulfills sales and orders through channels (B2B2C), the need for order management systems (OMS) grows in importance. As your ecommerce and channel capabilities grow, there is a growing need for robust OMS systems.
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Improving sales – While ecommerce can help manufacturers reach new customers, the challenge is sticking with them after the sale. Retail stores can offer personalized service and advice to customers. However, even after the sale, customers can use these online outlets for future research on the manufacturers and brands.
More than One Use Case
In this article, we largely addressed the importance of ecommerce for manufacturing from a pros and cons perspective. It is also useful to consider the use cases for online sales in the industry. Often, we default to thinking about manufacturing as a B2B (business to business) endeavor. But there are three use cases important to the business. These three use cases are strategies that brands and manufacturers need to consider when thinking through their approach and direction in ecommerce.
Digital transformation for brands breaks down into the three discrete cases:
For each case, the different systems and underlying technologies you need to run them effectively make a difference. We’ll address each case in future posts (stay tuned).
Conclusion
Ecommerce is a growing sales channel for retailers, resellers, and channel partners in the supply chain ecosystem—including manufacturers and brands. In fact, ecommerce for manufacturing can be a great addition and expansion to a company’s strategy. These days, it’s easier than ever to create a store that sells products online. But before you dive in, you need to know what you’re getting into and choose a strategic direction. The benefits of ecommerce are great. When chosen wisely, it can revolutionize, and revitalize your entire business.
If you are considering taking your manufacturing business in the direction of ecommerce, consider the following two technology options. Go Direct to Consumer (D2C) fast with a Quick Start D2C solution. Alternatively, if B2B ecommerce is your direction of choice, consider either a Quick Start B2B option or a fully customized B2B Manufacturing Accelerator solution. Either way, connect with us for a quick discussion of which solution best suits your business needs.
