E-commerce in B2B Manufacturing: The Shift towards DTC
The 21st century has seen the digital revolution not just impacting our personal lives but reshaping the vast landscapes of commerce. B2B manufacturing companies have been slower to adopt strategies outside of the traditional. Now, they’re increasingly turning to e-commerce to reach their customers. According to data from Forrester, US B2B e-commerce sales rocketed to a whopping $1.7 trillion in 2021. It's further projected that this figure will exceed $2 trillion in 2023, with a staggering $3 trillion mark anticipated by 2027. As B2B companies scramble to capture a sizable share of this growing pie, it is evident that the integration of new technologies isn't just an option but a necessity.
Making the Case for B2B to Try DTC
Direct-to-Consumer (DTC) isn’t just a buzzword for B2C companies. The demands of B2B buyers are changing. A significant 90% of these buyers are craving DTC-style experiences from their suppliers. The problem? Over half are left disappointed when their expectations aren't met by the brands they engage with.
Consider another compelling statistic: Millennials, the digital natives and the future leaders of tomorrow, now influence 73% of B2B buying decisions. This underscores the criticality of digitizing your B2B enterprise to offer self-serve, personalized, and frictionless customer journeys.
By implementing strategies reserved for DTC companies you can help separate your company from your competition. Other benefits include:
E-commerce and Increased Sales
E-commerce platforms such as Shopify provide a global marketplace that potentially increases sales and revenue. In a B2B context, companies often favor online purchasing due to its convenience and speed. Higher sales mean increased revenue, which ultimately drives Return on Invested Capital (ROIC) upward.
Cost Efficiency through E-commerce
Shopify and similar platforms can help cut costs by reducing the need for physical retail space and in-person sales staff. Order processing automation can drive operational costs down further. Lower costs, while maintaining or growing revenue, result in an increased ROIC, all else being equal.
E-commerce and Inventory Management
Effective inventory management can drastically reduce carrying costs and improve cash conversion cycles, subsequently enhancing ROIC. E-commerce platforms typically integrate with inventory management systems, creating a seamless interface for tracking and optimizing stock levels.
Analytics and Insights
Another value-added feature of e-commerce platforms is the wealth of data they offer. Analytical insights can guide businesses to optimize pricing, products, and marketing strategies, leading to improved profitability and, hence, higher ROIC.
Imagine this, you have a buyer that consistently orders 1,000 widgets from your business. With an e-commerce website build, your client can order directly from the website rather than engaging with a salesperson. What’s even better is that their shopping experience can be personalized. Does widget “Y” pair well with widget “X”? Now your website can offer that suggestion to customers instantaneously.
Companies that sell directly to consumers have enjoyed exciting web designs for years. Manufacturing companies selling to other businesses no longer have to sacrifice on design. Excellent web design and branding will help you differentiate your business from other competitors on the market with minimal lift, plus, the digital experience will help buyers feel like they’re using a tool built for modern times.
What Manufacturers Should Look for in an E-commerce Platform
The case for e-commerce in the B2B space is clear. But, choosing the right platform is where the challenge lies. As more industrial B2B sellers are exploring the potential of e-commerce, it's important to understand the essentials of a good platform. When in the market for a B2B eCommerce platform, manufacturers should think about the following:
We’ve emphasized the numbers behind buyers who are looking for a digital experience. When looking for a platform, you’ll want to make sure that it provides today’s customers with the modern digital experience that they’re expecting.
To do that, you’ll need a platform that has extensive experience with consumers.
In our opinion, the best option is Shopify Plus.
Shopify Plus is the leader for e-commerce businesses. In fact, Over 4.3 million ecommerce sites are built with Shopify and that number continues to grow.
With that many businesses testing their platform, implementing Shopify should be a no-brainer.
Features important to your Business Workflow
With their latest release in the summer of 2023, they’ve made their B2C platform more inclusive for B2B manufacturers. The most exciting features that retailers should be excited about include:
- Tailor the end-to-end experience for each buyer with customized product and pricing publishing, quantity rules, and payment terms.
- Streamline the order process with drafts, payment reminders, invoices, and due-on-fulfillment terms.
- Build delivery and payment logic tailored to your customers right in the checkout using Shopify Functions.
- Create conditional rules for products and variants, including minimums and maximums, case packs, and increments.
- Create wholesale company profiles with multiple locations and associated buyers.
- With access to APIs, you can connect your wholesale store to your ERP, CRM, or other systems you rely on.
Costs and Challenges
Like any business endeavor, e-commerce integration comes with a set of costs. The biggest costs to consider are:
- Platform Pricing - Shopify has plans for every level of business from small businesses to larger enterprises. You can explore options for monthly costs on their website.
- Set Up Fee: A one-time setup fee could be needed to get your store set up. If you want to invest in a custom design, hiring a custom website developer could be in the cards. If you need something more labor intensive like an ERP integration, look for a team that can help you with the setup.
A well-thought-out strategy that anticipates these challenges is necessary for a successful e-commerce implementation. Moreover, the journey to a high ROIC through e-commerce is not always immediate. It may take time for the initial investments to pay off. However, with a steady approach, the potential long-term benefits could be substantial.
Commence Studio has extensive experience working in Shopify and with B2B clients. If you’re interested in an expert-level partner who can help your manufacturing business transition to an e-commerce strategy, contact us today.
Measuring the Success of Your E-commerce Adoption
You’ve adopted e-commerce. Great! But how do you know it’s working? Two crucial metrics can help you benchmark your performance and measure success.
Acquiring New Customers
One of the most important metrics to measure your e-commerce strategy is your ability to acquire new customers. Monitor the growth rate of new customers finding, engaging and purchasing from your site.
Lifetime Value (LTV)
Acquiring new customers is one of the biggest challenges of all online businesses. But one strategy that’s often overlooked is building Lifetime Value (LTV) with your customers. To build lifetime value, brands retain customers through retention strategies, and going digital can take some of that load off of your salespeople.
Action Plan: How to Get Started
So, you're convinced that integrating e-commerce into your B2B operations is the right way to go. Here’s a simple roadmap to kickstart your journey:
- Research and Understand Your Audience: Who are your buyers? What are their digital expectations?
- Choose the Right E-commerce Platform: Our recommendation is to go with Shopify but there are other platforms that can help you make the transition as well.
- Onboard Your Team: Train your team on the new platform to ensure seamless operations.
- Test, Optimize, Launch: Before going full scale, test the platform, gather feedback, and optimize.
- Monitor and Evolve: Continuously monitor performance metrics and be ready to adapt.
In conclusion, as the digital landscape continues to evolve, it's crucial for B2B manufacturing companies to not just keep pace, but to lead the charge. E-commerce isn't just a channel; it's the future of B2B sales. Embrace it today for a prosperous tomorrow and if you need help along the way - we're just one call away.