Mark HumphlettIn the early days of e-commerce, industrial manufacturers and suppliers had a free pass. They didn’t feel the same pressure to deploy extensive online sites as the manufacturers of consumer packaged goods faced. Common thinking said business-to-business (B2B) sales were complex, involved quoting make-to-order components and required in-person negotiation of long-term contracts. Online commerce couldn’t support the specialized nuances of the B2B relationship, or so manufacturers once thought. Those days are gone. Now, online services are standard, and their advanced capabilities serve as a key differentiator in B2B competition.
Now, manufacturers or all types and sizes, no matter how specialized the product line, are feeling pressure to offer an extensive online experience for customers. The transition started as a response to customers clamoring for online storefronts, a place to request service or a simple way to reorder standard consumables.
As more manufacturers are tasting the bountiful fruits of omni-channel commerce, they crave more and are rushing into building programs that connect directly with the buyer or end-user. Channel partners and distributors, once firmly planted between manufacturers and end-users, will be left wondering where they fit it to this new dynamic structure. That answer is hard to define. This new e-commerce/omni-channel shopping experience is continually evolving — and no one can predict what the manufacturing landscape will look like tomorrow.
Some analysts have tried to assign a dollar value to the question. According to analyst firm Forrester, the U.S. B2B e-commerce market is worth approximately $829 billion today, and we can expect it to reach $1.2 trillion over the next five years.
Frost & Sullivan is even more optimistic from a global standpoint, predicting B2B online sales could be as high as $12 trillion worldwide by 2020.
Manufacturers, suppliers, contractors, consultants, distributors and channel partners all want a piece of that big, juicy pie. The question is which players in the chain can bring value to the buyer, and which ones just get in the way of clear communication and expedient delivery. In many micro verticals this is still playing out, with value-add services like delivery and set-up, product customizations, private labelling, ease of order entry, training or service contracts being critical factors.
As industrial manufacturers, fabricators, contactors and B2B suppliers all strive to stake out their place in the B2B marketplace, here are some factors to keep in mind:
Consumerization is pervasive. A survey conducted by Google shows that 80 percent of companies implementing B2B e-commerce believe that their customer expectations have changed due to B2C practices. When building online experiences to guide a purchase decision or sale, remember the B2B buyer is still a consumer at heart and likely has had numerous positive experiences with consumer sites, like Amazon and eBay that remember past purchases, anticipate next needs, and make recommendations. Even though the B2B buyer may be making a business-related decision, those past consumer experiences have set expectations.
Customer research and buying habits. Research shows that 57 percent of the buying process is done prior to engaging with a sales person. This is why B2B sites must contain tools assisting the buying journey, from initial fact-finding on broad issues to specific features. In the B2B environment, C-level officers may make final decisions, but mid-level managers are often tasked with doing the leg work and creating a short list of final candidates. Therefore, keep this target persona in mind and provide persuasive, educational materials that can help guide the mid-level manager through questions and answers.
Higher incremental sales. Companies that have already deployed e-commerce programs report an incremental increase in sales, largely from add-on purchases, upgrades, and the addition of services. Some companies report that as much as 23 percent premium can be expected from accounts which are highly engaged through online content. As you plan what your e-commerce site can offer, remember that the expertise and data you collect during normal manufacturing performance testing can have value to end-users. Look for ways to monetize the data you collect from machines and devices, perhaps creating benchmark guidelines, troubleshooting basics or how-to advice.
Customer loyalty and repeat sales. Your e-commerce site is about more than selling. It is an opportunity to build relationships, exchange ideas, reward behavior, inspire action and collaborate on futures ideas or products. In fact, customers report they value information beyond price, such as inventory status, service data and details about product specification.
Ease in managing product personalization. As customers increasingly expect make-to-order product customizations, an online site becomes the ideal way to help customers choose options, envision the personalized product and receive quick quotes. According to Accenture, 50 percent of B2B buyers surveyed identified improved personalization as a key feature for suppliers they would want to work with. Such tools also allow customers to enter ideas about new products, and collaborate on new designs.
Self-service access saves time. Research shows that 40 percent of online B2B customers value sites which integrate with the complete ERP. That integration allows customers to access password-protected portals to check the status of orders in production, view inventory availability, check warranty status of previous purchases, view service history, enter new requests for service, purchase aftermarket replacement parts or make warranty claims. This type of full service site receives the highest ranking from customers. It also provides the greatest level of benefit for the manufacturer, saving time, increasing accuracy and speeding responses.
It is important to consider these factors as you plan your strategy for online communities and the ability for customers to makes purchases online. And as the industry evolves, there is little doubt that trends around this tactic will evolve in parallel. Pacesetters will continue to push the envelope on types of interaction, value-add services and insights that can be exchanged online. Manufacturers must stay on top of the issues and provide the tools customers expect in order to compete. The effort will pay off in improved relationships and greater brand loyalty, laying a foundation for success in the marketplace of the future.
Mark Humphlett is Senior Director of Industry and Solution Strategy at Infor.
