Posts made in March, 2018

Manufacturers See E-Commerce As Transformative Yet Some Still Lag Behind

Posted by on Mar 7, 2018 in Uncategorized | 0 comments

Ran into a great article from by Michiel Schipperus

The article considers the relationship of manufacturers to e-commerce technology, and the adoption of that technology.

To compete in a global marketplace, manufacturing firms are augmenting their e-commerce strategies with new technologies, such as predictive ordering and artificial intelligence (AI), to make it easier and cheaper to do more business, with more customers. But, for every manufacturer on the cutting edge, there is another that is lagging far behind its peers when it comes to e-commerce.

We recently undertook  research of over 220 global manufacturers and found some stark contrasts between those who are forging ahead and those who have yet to recognize the need for change. While many manufacturers are already implementing digital strategies centred on improving the customer experience as a way to grow sales and streamline operations, others are not. Fifteen percent have been using an e-commerce solution for more than five years, but 13 percent still don’t yet use e-commerce at all.

E-commerce improvements are typically part of a wider digital transformation program: manufacturers see e-commerce as playing a vital or very important role in digital transformation. The top reason given for e-commerce adoption by those already up and running was to increase sales volumes (60 percent). Other important reasons included to offer a 24/7 self-service portal (46 percent), to improve sales processes (41 percent), to be able to share all product and price information online (40 percent, to keep up with competitors (38 percent), and to drive global export sales (36 percent).

Those that have implemented e-commerce are seeing results in both their bottom line, businesses processes and the quality of the customer interaction. Ninety-one percent reported that they saw a financial return on investment in fewer than two years with ten percent seeing a return in as little as two months, and 21 percent in two to six months. Eighty-eight percent saw profitability improve by at least ten percent, with nine percent saying profits had increased by more than 50 percent. Other benefits reported include improvements in order process efficiency (89 percent), an increase in order processing speed (78 percent), a reduction in order errors (71 percent), and faster inventory turnover (70 percent).

A further driver for investment in e-commerce is the growth in the range of products being sold over the web. Despite the technical and bespoke nature of many manufactured products, 68 percent of manufacturing respondents agreed that 100 percent of the industry’s products will be sold online. This indicates a market readiness, alongside confidence that e-commerce solutions can and will offer the sophistication required to handle even the most complex purchases.

Many manufacturers also believe that ecommerce will help open the business up to new markets. Seventy-one percent of manufacturing respondents believe that they will sell direct to the consumer, cutting out wholesalers and retailers, in the future. This is another huge change, disrupting traditional manufacturing marketplaces and supply chains. Forward-thinking manufacturers will need to choose systems that will work successfully in both B2B and B2C markets and, as importantly, be able to make the best use of the data it already has to offer better customer experiences.

The research also revealed that many manufacturers are moving beyond e-commerce and embracing some of the newest technologies. Seventy-three percent say they use or intend to use artificial intelligence (AI) to enable automated and/or predictive ordering. Similarly, 81 percent already use or intend to use machine-to-machine communication for automated/predictive ordering.

As customer expectations of online speed and convenience continue to grow and competition ramps up, successful business strategies will increasingly depend on using technology in selling as sophisticated a way as it is used in the manufacturing process itself. It’s clear that manufacturers who accept that the market is changing and respond accordingly will be those best placed to succeed.

Michiel Schipperus is CEO of Sana Commerce.

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