Editor’s note: Manufacturing B2B ecommerce sales in 2109 grew twenty times faster than total manufacturing sales, reaching $430 billion while total manufacturing sales remained flat at about $6.02 trillion. But then came 2020 and the global COVID-19 pandemic. The result of the coronavirus has been a sea change for manufacturers and their B2B ecommerce operations and strategies. Having been through an initial round of crisis management, many manufacturing executives are now looking ahead for new digital opportunities despite a murky future hugely impacted by COVID-19. In this question-and-answer interview with Karie Daudt, senior commerce consultant with digital transformation consulting firm Perficient Digital, she looks at the current B2B ecommerce market and offers insight into what the future holds for manufacturers.
DC360B2B: By our count, B2B ecommerce—the web sales that take place on ecommerce sites, login portals and marketplaces—grew by 20.8% and reached $430 billion last year. We figure that represented 7.1% of all U.S manufacturing sales in 2019. What are the factors accounting for this growth rate?
Daudt: Adoption—buyers are becoming more comfortable with digital commerce as the age of the buyer continues to get younger. Convenience—the ability for buyers to get the information they need on their own schedule is driving adoption.
Manufacturers are getting more digitally mature and providing better experiences, and that is driving adoption.
DC360B2B: Is B2B ecommerce being more—or less—of a strategic priority for manufacturers of all sizes? If so, why? If not, why not?
Daudt: B2B digital commerce is becoming more of a strategic priority for manufacturers of all sizes. We are seeing companies focusing on digital commerce being a part of the way they buy, sell, market and service their customers, and less about being an ecommerce website. When organizations make that shift, they are truly looking at the way customers interact with their business and where the friction and roadblocks are. This becomes an opportunity to address these challenges and fix them across the organization. This approach blends the physical and digital channel, and becomes a strategic approach to commerce and the way manufacturers do business.
DC360B2B: What are some of the biggest challenges manufacturers still face in launching or expanding ecommerce and how are they overcoming them?
Daudt: The top three challenges that we see with manufacturers is data/content, resources and skillsets, and understanding the needs of the technology stack as it relates to commerce.
Many companies still use their ERP as the source of truth as it relates to product content. The challenge with this is that ERP holds data that is intended for internal use and is not customer-ready. A digital commerce approach needs to have a product information management (PIM) system as part of the technology stack to collect product data from multiple internal systems.
The data needs to then be optimized and turned into product content. This effort takes people with skills that are often not part of the internal team. Product content drives both the on-site and off-site search. When data is not optimized for digital content, it impacts the entire experience on the commerce site. It negatively affects commerce conversions and delivers a poor user experience.
Companies are starting to look at their product content and the importance it plays in the customer experience. They are starting to prioritize PIM as part of their technology stack if they currently don’t have one. They are also utilizing external partners to help create a product content strategy and identify resources that can help them get where they need to be.
DC360B2B: What impact is COVID-19 having on manufacturers and their B2B ecommerce operations in 2020?
Daudt: COVID-19 is having a significant impact on manufacturing companies of all sizes. In many cases, their physical channels were limited or even shut down. Companies that had a digital commerce presence fared better than ones without, but no one was left unscathed. We saw a rapid increase in website traffic that highlighted huge issues with performance.
We saw manufacturers that were unable to take orders at all. We saw companies take orders, but have issues with fulfillment. Every single company was impacted in some way, and after they take a breath, they should be thinking about how they make sure this never happens to them again. What worked and what didn’t work? What is the current state of my channel? How can I enable them to be successful in the future? There are a lot of questions that need to be asked and addressed as companies come out of this current situation.
DC360B2B: The impact of COVID-19 on manufacturers and B2B ecommerce in 2020 is very uneven—with some segments way up and others way down. What’s the overall impact here?
Daudt: Every manufacturer out there was impacted in one way or another. Regardless of what happened to them, they have processes that were broken, and those areas of concern need to be addressed as soon as possible.
We saw many manufacturers that were more digitally mature make quick pivots to adjust, but they still suffered in one way or another. The bottom line is that everyone needs to fix something about their business as a direct or indirect impact of COVID-19.
DC360B2B: What trends are shaping manufacturers and EDI in 2020?
Daudt: EDI is still a big part of most manufacturing businesses and will be for some time. The opportunity to provide visibility to EDI orders with digital commerce solutions is a big opportunity for manufacturing companies in the future.
DC360B2B: What trends are shaping e-procurement?
Daudt: We are seeing many manufacturing companies prioritize order management systems as part of their technology stack. The ability to have a 360-degree view of your supply chain was critical during the COVID-19 crisis. What can manufacturers make, what supplies are en route, where are they coming from, what finished goods are available across the entire organization? How can we turn our channel locations into part of our fulfillment process?
Again—the 360-degree view of how you buy, sell, market and service is the future of commerce. It is no longer simply a website, and the companies that are figuring that out will thrive while others flounder.
Sign up for a complimentary subscription to Digital Commerce 360 B2B News, published 4x/week, covering technology and business trends in the growing B2B ecommerce industry. Contact Mark Brohan, vice president of B2B and Market Research Development, at [email protected] and follow him on Twitter @markbrohan.
Follow us on LinkedIn and be the first to know when new B2BecNews content is published.Favorite