Manufacturers are no strangers to selling products and services electronically through various channels, including electronic data interchange, web-based procurement software, business-to-business ecommerce sites and marketplaces.
But today, even though it’s the fastest growing electronic sales channel, B2B ecommerce—defined as web sales that are placed on an ecommerce site or marketplace or through a log-in portal—is still the smallest electronic channel for many manufacturers, according to data and analysis in the recently released 2019 B2B Manufacturer 300.
Last year, ecommerce sales for manufacturers totaled $356.4 billion and increased 22.5% from $291.0 billion, based on estimates from B2BecNews. Manufacturing B2B ecommerce sales grew nearly three times faster than the growth of all U.S. manufacturing sales, which totaled $6.028 trillion in 2018, up 7.6% from sales of $5.604 trillion in 2017, according to the Department of Commerce.
B2B ecommerce sales from manufacturers also increased nearly 20 times faster than the growth rate for all manufacturer electronic sales, which grew 1.4% to $3.550 trillion in 2018 from $3.500 trillion in 2017.
Despite its fast growth as a sales channel, ecommerce also represents only a small part of total manufacturing sales. Last year, B2B ecommerce sales accounted for about 5.9% of all sales from manufacturers, up from 5.6% in 2017.
For most manufacturers compared and listed in the B2B Manufacturer 300, ecommerce as a percentage of all sales remains relatively small. For 57%, or 171 manufacturers, ecommerce only accounted for a range of 1.1% to 2% of total sales.
The range of ecommerce sales as a percent of total sales also varies based on different industries. B2B Manufacturer 300 companies were grouped by six industries: automotive parts/vehicles, computers/office supplies, and consumer products, hardware/home furnishings, healthcare/pharmaceutical and industrial.
Web sales remain a small part of total revenue for many manufacturers because those companies are only now getting ecommerce underway or implementing ecommerce as part of a broader digital technologies initiative.
For example, only 55% of discrete manufacturers and 50% of wholesalers and distributors say they have a digital transformation underway within their organization, according to Gartner Research. Those two groups compare with 56% of process manufacturers and 71% of business service providers, Gartner says. “Businesses say ‘we are working on it,’” says Gartner vice president of research Penny Gillespie.
Discrete manufacturers produce products such as vehicles and planes while process manufacturers make pharmaceuticals, foods and beverages, and plastic materials.
There are several changing buyer behaviors that are altering the nature of B2B ecommerce, Gartner says. Gartner research shows that 80% of buyers now use digital information at each stage of the purchasing process, and 61% and 33% of buyers, respectively, consult a supplier website or want to complete their B2B purchase online without a sales representative.
But many B2B sellers don’t see their ecommerce sites, log-in portals and other digital channels as always successful, Garter says. That lack of immediate success also has a direct impact on whether a manufacturer wants to expedite online selling, she says.
“Executives typically support what makes money and too often manufactures approach digital commerce incorrectly—thinking it is just a website whereas it can often be an opportunity for transformation— or they are too narrowly focused,” Gillespie says. “The number one reason that companies engage in digital commerce is to transform their business, whereas a few years ago the number one reason was cost savings/customer acquisition—digital commerce is a team sport that crosses traditional boundary lines.”
For more information on “2019 B2B Manufacturer 300 Report,” including how to purchase it, click here.
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