COVID-19 has fueled a strong impetus for digitalized commerce activities, marking a remarkable turnaround across the manufacturing industry. An even stronger driver for growth appears to be the change in online buying behavior within B2B, which is actively impacting products – small and large, as well as regular and complex – across the world. The world of manufacturing is very interesting. The B2B industry has been watching for years how the B2C industry digitized and adapted its websites to the needs of the consumer. However, now it is the time for the B2B sector to invest and boost their revenue. By being present online, and in a way their customers are already used to.
The benchmark report by Copperberg and Intershop “The State of International E-commerce in Manufacturing” analyses the current state of e-commerce in manufacturing. In addition, it also looks at where companies stand in terms of local effectiveness, product complexity, e-commerce platforms, and future investments.
Almost two-thirds of all B2B purchasing decisions are online
B2B buyers, similar to their B2C counterparts, have advanced online-first expectations. Although more and more international sales interactions take place through online channels, customers are still doomed to navigate the complex B2B buying process. Almost two-thirds of all B2B purchasing decisions are being made on digital channels. Thus, many manufacturers need to adapt to this and get their websites ready for B2B e-commerce. However, not all merchants are used to sell online. Therefore, they are not able to compete effectively. Moreover, the COVID-19 outbreak has led to more companies being forced to adapt. However, this process of adaptation to e-commerce is still ongoing for many.
Even before COVID-19, manufacturers were focused on the online transition. In 2018, approximately 80% of B2B decision-makers said that if their organization does not start with e-commerce now, they will be going out of business in five years’ time.
17% have yet to expand into e-commerce
In reality it seems that not much has changed since 2018. The research in 2020 proved that most manufacturers are not willing or ready (yet!) to tap into the full potential of the digital after-sales business. The most recent report shows that 17% of professionals have yet to expand into e-commerce. Meanwhile, the majority already has a global e-commerce strategy in place. That may be partially (35%) or entirely implemented (31%).
Investing in technology
Manufacturers are largely focusing on investing in technology within the next twelve months. Citing e-commerce solutions (67%), tools for back-end integrations (54%), digital marketing tools (51%), digital self-services (49%), AI/machine learning (44%) and customer portals (43%) as the way to achieving their online goals.
Quick and efficient buying journeys, such as provided by Amazon Business for example, have reshaped the expectations of B2B buyers. In addition, these examples have also shortened the distance between customers and suppliers. However, there seems to be a hurdle that keeps some organizations from optimizing today’s digitally-driven buyer journey. Firms often find themselves under severe budget pressure. Ultimately, this may prompt investors to question whether to drive technology spending or not.
Increase in online sales
Many manufacturers predict a 25% increase in online sales in the next two years. Moreover, many industry players want to lead the path to innovation. More than 60% have a strong ambition to take over e-commerce leadership in their respective markets. 10% of surveyed professionals generate over 90% of their global product revenue through online sales. A similar percentage generate more than 51% of their revenue by selling digitally. However, a significant 47% see no more than 10% of their revenue result from selling online.
Challenges to achieve e-commerce objectives
When asked what the the challenging obstacles to realizing e-commerce objectives are, the respondents answered the following: The immaturity of customers (40%) and the lack of digital skills and knowledge (33%). Furthermore, there is the choice between central efficiency and local effectiveness. Centralized e-commerce and decentralized e-commerce both have their pros and cons. However, 39% of respondents that manage their global e-commerce activities using a central platform and marketing approach, reach up to 25% in online revenue.
On the other hand, the 36% that use a central platform combined with local marketing, alongside the 14% that use a local platform and marketing approach, reach between 25% and over 90% in online revenue. Still, centralized e-commerce seems to be the most common approach.