eCommerce Marketplace Innovation for Manufacturing & Distribution


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eCommerce Innovations Upgrade Manufacturing & Distribution

 

Traditional business models in manufacturing & distribution have served the industry well for more than 100 years, but today’s emerging B2B eCommerce markets have generated paradigm changes in how people shop, buy and research products. Although personal relationships can still be important, many of these affiliations are now cultivated electronically. The prime buyers of today grew up using laptops, mobile phones and computers, so they expect to conduct business on these devices. The growth in eCommerce sales has topped 15 percent each year, according to Gartner research, but brick-and-mortar business have only grown at a modest 2.9 percent annual rate. Research shows that digitally oriented trends dominate the future for distributors and manufacturers: [1]

  • 30 percent of B2B buyers purchase supplies and products online.
  • Around 56 percent of buyers expect to make 50 percent or more of their business purchases online within the next three years.
  • B2B eCommerce sales forecasts predict $1.1 trillion in sales by 2020, which would make up 12.1 percent of all B2B sales in the United States.
  • More B2B companies are using automated software tools for eCommerce innovation, which include price-optimization apps, support for multi-tiered prices for distribution and manufacturer sales and programs that automatically configure products and quote prices as self-service customer-ordering options.

Increasing numbers of computer-savvy executives, sales staff and entry-level millennials face a situation that compares with the changes that Blockbuster Video faced when people migrated from using video cassettes and CDs to downloading videos and ordering live streaming services over the Internet for entertainment. What that means for decision-makers in distributing and manufacturing industries is that customers no longer order the way they did in past generations. If companies don’t change with the times, they could face being passed by the competition. New dynamics and rapidly emerging sales marketplaces complicate the efforts that B2B companies must make to remain competitive. Best practices for the industry include adopting a broad spectrum of user-friendly products and services.

 

Delivering Awesome Omnichannel Experiences


Customers today expect more from the companies they do business with, and if they’re dissatisfied for any reason, they can easily switch loyalty to another manufacturer or distributor. That’s why it’s so critical to deliver a great user experience each time a client or prospect accesses a company's website. Many established distributors and manufacturers continue to operate as they’ve done for generations while relying on the strength of established relationships with customers to survive. These customers, however, are giving way to younger buyers and decision-makers who conduct business exclusively over the Internet.

Many company executives from older generations are also turning to digital technology because of its convenience and self-service options. Fortunately, manufacturers and distributors have access to external infrastructure providers, developers, open source software, consultants, market platforms and aggregation platforms, like Clarity eCommerce, to build a digital foundation for future growth and profitability by providing the kind of awesome website experiences that customers today expect and demand.

 

Changing Product Dynamics


Evolving product dynamics are changing everything about how B2B companies do business. Wholesalers and manufacturing eCommerce solutions are triggering most of the increase in B2B growth, but forward-looking organizations need to accommodate the following product trends:

  • Consumers want personalization, customization and design input on products.
  • Modular technology and wireless connectivity enable companies to create smart devices.
  • Advances in manufacturing technologies enable profitable small-batch production runs, and additive manufacturing enables creating one-of-a-kind products quickly and inexpensively.
  • Consumers can bypass intermediaries and deal directly with manufacturers.
  • Wearables, connected cars and smart homes mean that manufacturers must deal with new issues such as big data, communications compliance, HIPAA guidelines and third-party associates.

 

Shifts in Manufacturing Techniques


The Internet changed the world, and tradition-bound companies are falling victim to the economic successes of lean, agile and connected organizations. These organizations employ the latest digital technologies in the manufacturing process and other business areas such as dealing with stakeholders, marketing products across multiple channels, managing workforces more efficiently and connecting with customers in two-way communications. Additive technology enables small-batch production, automation speeds manufacturing processes and wireless connectivity enables the manufacture of incredibly sophisticated products and the ability to offer ancillary services such as monitoring, connecting with service providers, managing product lifecycles, etc.

81 percent of respondents in a respected Accenture survey admitted that application lifecycle management has grown increasingly important in the industry. [2] Manufacturers can provide their customers with astonishing services such as product lifecycle management, or PLM. In today's heavily regulated industries, PLM can simplify key issues such as:

  • Using tools to collaborate across the company, supply chain, stakeholders and outside resources
  • Gathering customer feedback and analytics data on product performance, maintenance needs, etc.
  • Automating reorders of supplies
  • Monitoring sales to guide manufacturing decisions
  • Estimating the market for upgrades, accessories and replacement units

 

Greater Personalization and Customization


Long lead times and huge runs of products have given way to more frequent production schedules and tighter runs for more efficient inventory management. Customers often ask for product changes in successive runs, and many companies accommodate their customers by offering product customizations and personalizations. Many products come unassembled, which allows DIY enthusiasts to create their own products with modular technology, interconnected kits and smart technology. This “maker” movement has inspired events like the MakerFaire, which Media Maker launched in 2004 and has now spread to more than 100 cities worldwide that hold annual MakerFaire events. [3]

 

Easier Marketplace Entry for Aspiring Entrepreneurs


Manufacturing--and by extension, distributing--in the past required huge capital investment. Competing with giants like Andrew Carnegie, Henry Frick, George Pullman, Cornelius Vanderbilt, Thomas Edison, Henry Ford and John Carnegie just wasn’t a possibility for average inventors and engineers. In the past, barriers to production were extremely formidable, and products had to receive the solid financial backing of multiple intermediaries and stakeholders to guarantee success. However, digital technology fosters easier marketing for ever-increasing numbers of eCommerce innovators. Rapid software advances and access to robotics and open source tools make it easier to begin small-batch manufacturing to satisfy niche markets.

Online marketplace platforms bring together buyers and sellers for both consumer and B2B eCommerce applications. The rise of sites like Amazon, eBay, OpenTable, Yelp, Uber and UShip link consumer-to-consumer, B2B and B2C sales. [4] The technology of these sites often add value by providing maps, product guarantees and other user-friendly features, and entry-level manufacturers and distributors can easily sell and market products through these emerging platforms.

Amazon recently created a platform for industrial sales at AmazonSupply.com that caters to the industrial and scientific communities. [5] As more of these B2B market platforms emerge, traditional manufacturers will be challenged to manage sales across multiple channels, but integrated B2B platforms can automate and manage omnichannel connections easily.

 

Reshaping Industrial Processes with Digital Technology


Manufacturers and distributors face an increasing demand to integrate their processes in ways that foster greater collaboration, mobility, communication capabilities, visualization and analytics. Digital tech can provide a wealth of information to company stakeholders to facilitate making better decisions. Although manufacturing and distributing processes still involve real-world commodities, assembly lines, suppliers of raw materials, supply chains and worker management, many business processes are now based on exchanging information. The financial services industry can serve as a business model because it has long used large and liquid data exchanges and proprietary processes for customers while generating intense competition.

Online exchanges for B2B companies offer auctions, automatic shipments and lower intermediary fees. Some exchanges offer value-added benefits for their customers such as buying and selling used tools and equipment, locating new business opportunities, bringing manufacturers and financiers together, managing payroll and benefits for organizations and other sophisticated incentives.

Exchanges are just one of the many options that the industry must adopt to stay competitive. A Harvard Business Review report suggests that B2B companies must adapt to emergent business models or risk failure. [6] Emerging models include mega-exchanges, E-speculators, solution providers, specialist originators and sell-side asset exchanges.

 

What to Look for in Manufacturing & Distribution Development Partnerships


Changing established distributing and manufacturing processes to adapt to eCommerce innovation can prove difficult unless companies prepare for change and choose a collaborative development partner. This kind of vendor should have experience in the B2B ecosphere, strong coding credentials, familiarity with multiple types of software and systems and the ability to incorporate and integrate the following technologies into a B2B operating platform:

  • Built-in Marketing Tools
    These include features such as custom dashboards, integrated social media connections and advanced SEO capabilities for facilitating on-page, off-page and proprietary-app searches.
  • Full Integration of Operating Software
    Custom development enables full integration of ERP and CRM software, which automates most business processes and reduces administrative delays and errors.
  • Flexible and Extensible
    Experts can integrate features so that companies can customize their operating software to adjust to their businesses instead of changing operations so that the software can work properly. This means that a distribution company or factory can integrate all business functions into a website platform.
  • Scalability
    A robust API software layer enables limitless growth and multiple upgrades without experiencing downtime or operational challenges.
  • Global Capabilities
    Companies can easily incorporate multiple languages and currencies, calculate taxes, customs and duties automatically, provide multiple shipping integrations and automate compliance efforts.

 

Onboarding Your Company for Digital Transformation


The ability to sell connected products, DIY kits, small runs of custom products and personalized goods and services is a key benefit of adopting digital technology. The competitive gap will only grow broader if you wait. There are many helpful technologies, vendors and consultants to service the growing number of manufacturing value chains, evolving distribution strategies and product-to-platform business models. Integrating software and user-friendly features into your organization is the first step to expanding your prospects in the digital ecosystem.

 

References:

[1] Forbes.com: Predicting The Future Of B2B E-Commerce
www.forbes.com/sites/louiscolumbus/2016/09/12/predicting-the-future-of-b2b-e-commerce/#48e97a961eb9

[2] NBTmag.com: Product Developers Need To Shift To An All-Digital Mindset
www.mbtmag.com/article/2014/06/product-developers-need-shift-all-digital-mindset

[3] Dupress.deloitte.com: The future of manufacturing
dupress.deloitte.com/dup-us-en/industry/manufacturing/future-of-manufacturing-industry.html

[4] Abovethecrowd.com: All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces
abovethecrowd.com/2012/11/13/all-markets-are-not-created-equal-10-factors-to-consider-when-evaluating-digital-marketplaces/

[5] MDM.com: 3 Observations on Amazon's New Industrial Marketplace, AmazonSupply.com
www.mdm.com/blogs/1-management-strategy/post/28553-management-strategy-2012-04-23-3-observations-on-amazon-s-new-industrial-marketplace-amazonsupply-com

[6] HBR.org: The Future of B2B
hbr.org/2000/11/the-future-of-b2b