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Is e-commerce prompting the end of “old school” manufacturing?

May 11, 2021

And if so, how do you smartly take the plunge into e-commerce?

PwC's Bobby Bono

Already underway for years, manufacturers moved quickly into the e-commerce space due to workforce and technological trends accelerated by the pandemic. With digitalization rapidly increasing across markets, manufacturers are questioning how long their “old school” models will remain viable.

Perhaps you are one such manufacturer.

Some industries already have plans to go from virtually zero online sales to 60% of all sales over the next several years. Globally, more than 80% of dominant B2C sales channels see digital sales as a high priority over the next two years. The idea of “no-touch” sales in both the B2B and B2C segments is top-of-mind, but changing existing channels is risky so companies need to take careful consideration.

With two-thirds of US manufacturers agreeing that implementing digital marketing and sales over the next two years is a high priority, most manufacturers already have e-commerce plans in place. The shift to e-commerce provides countless benefits for manufacturers including protecting sales in the event of another pandemic-like crisis, expanding reach into new customer segments, improving revenues, and lowering cost-to-serve by decreasing in-person marketing and selling.

However, this does not come without its challenges.

Adopting e-commerce requires fundamental changes to the business model, significantly affecting manufacturing operations and distributors. This includes new approaches to product assortment and packaging, digital marketing, merchandising and customer service.

Now, let’s get you up to speed on how to successfully implement an e-commerce platform.

Adopt an innovative mindset

As manufacturers dive into the e-commerce space, keep in mind the challenges of pivoting from traditional to digital marketing and sales. Although it is tempting to quickly jump in, companies must consider this a new and complex territory. First, examine what can be sold online and offline. Unlike traditional online retailers, manufacturers have a mix of purchasing models including direct online sales (research and buy online) and research online/purchase offline (Ro/Po). Depending on a company’s needs, this model will likely be different.

Deliberate and thoughtful consideration of the best course of action for each individual company is imperative. Manufacturers are at the cusp of a momentous transformation with a lot at stake, so understanding that this is not a linear progression is key.

Meet customers’ expectations

65% of B2B buyers prefer to research products online and 86% prefer to reorder online instead of speaking to a sales representative. Since e-commerce removes the sales representative from the process, to get the most out of this new system, companies must build a platform that exceeds customer expectations.This means a platform with a wealth of user-friendly functionalities including a fast, personalized and 24/7 experience, similar to what consumers would expect from major retailers.

Customers want to be in control of their online-buying experience; therefore, companies should consider configuration choices and visualization, customer-specific pricing and products, inventory availability, targeted promotions and marketing, order history, product tracking, online product support and after-sales support. It is also important to consider alternative media to differentiate the space and enhance the customer experience—think virtual reality, videos and bots.

Manufacturers can also anticipate customer and distributor needs using artificial intelligence to gain a 360-degree view. Analyzing consumer data offers a plethora of opportunities to expand your business through modified target marketing.

Prepare to be flexible

Not everything can be done at once, so strategize taking incremental steps to get to the end goal. Companies need to be prepared toconstantly assess (and re-assess) progress and step back when necessary. Manufacturers must devote time and resources to preventing potentially costly mistakes down the line.

The relationship that companies have with their customers and suppliers will likely change with a new business model, so manufacturers must be ready to modify if necessary.

The main goal of digital sales is to provide an easier purchasing experience for customers. Although the short-term challenges can be jarring, the long-term benefits outweigh them. To future-proof manufacturing operations, it is worthwhile to take the plunge into e-commerce.

Bobby Bono is the industrial manufacturing practice leader with PwC.