Manufacturers can’t hide under the covers anymore. The traditional ways of selling are broken. Their competitor is no longer the person next door, it’s the online back button followed by the supplier who does make their product information easily sourced and vetted online. The wake-up call is over. Manufacturers need to face the fact that if they don’t digitize their operations, they are going to fail.
So why is it so hard for manufacturers to digitize their sales processes?
Sure, change is hard, but manufacturers never shied away from investing in the quality of their products. However, the average manufacturer lags behind 10-15 years when it comes to investing in sales and operational processes. Fear of change, losing revenue, and not wanting to do anything to jeopardize relationships with dealers/distributors tends to paralyze people. While there are other options to list their products on third-party vendors’ sites like Amazon, this often removes pricing controls and dilutes the brand, while forcing manufacturers to meet tight delivery deadlines.
What’s the answer?
Well, doing nothing today is the equivalent of giving up. Today, manufacturers need a strong digital strategy to survive. With 9 out of 10 buyers preferring to source and purchase products online, manufacturers need to provide a seamless buying experience online.
Don’t believe me—look at the statistics and see how the benefits outweigh any risks. According to Digital Commerce 360—in 2019 U.S manufacturers’ B2B ecommerce sales grew by nearly 21% to $430.0 billion. That growth rate is nearly 20 times faster than the growth in total U.S. manufacturing sales.
A self-serve model can improve self-reliance, giving manufacturers more independence. It works for a company like VersaTube, a DIY steel building kit supplier in Tennessee. Like so many companies, their existing sales model was no longer working for them and they reached out for help.
They had three major challenges:
- Most of VersaTube’s business was from a small group of dealers and mass merchants; they were concerned about risks associated with putting your eggs all in one basket;
- They were dissatisfied with how their dealers promoted/sold VersaTube’s products; and
- They needed to reduce expenses—selling direct showed promise for improving margins.
VersaTube knew they needed to build a digital strategy but didn’t know where to begin. Sound familiar? You are not alone. There are thousands of U.S. manufacturers who are facing the exact same challenge.
A Digital Transformation
The first step by BitCadet, the agency responsible for VersaTube’s transformation, was to map out the VersaTube customer buying journey. Next, it enhanced their website by creating an ecommerce channel with an online configurator that connects sales, engineering and customer service with real-time pricing and—shortened lead times.
And then the pandemic hit
DIY Carports and garages may not seem like ecommerce models—but with COVID-19, VersaTube identified a niche of people rushing to tackle all those home projects that had been at the bottom of their “to do” list. Thanks to the ecommerce channel and an online configurator, VersaTube’s sales skyrocketed—to the point where the products are back-ordered in all three locations.
By establishing a direct-to-consumer strategy, VersaTube has grown its sales tenfold to $50 million, increased its online sales to from 5% to more than 60% of annual revenue, transformed how it generates and processes leads, and deployed innovative marketing strategies to reduce its customer acquisition costs.
VersaTube’s story is a powerful reminder that you can create an alternative sales channel without jeopardizing traditional sales processes.
Two major hurdles for manufacturers
Two major challenges include 1) a history of expensive IT projects, and 2) lack of investment in change management processes. Usually, it’s a short period of time before employees see what we bring to the table, however, change management is an area I like to emphasize because I see too many businesses fail to make it a priority until it’s too late.
Most U.S. manufacturers have an overwhelming amount of manual administrative processes ingrained in their employee culture. For many employees—especially those with a decade or more at the company, a new way of operating is often stressful; many people tend to be resistant to change.
For a new system to work well, it requires buy-in (and hopefully excitement!) from employees. It’s crucial for employees to understand the reason why their company is changing a process, how this change will help them and their teammates, and their company must equip them with the training and resources needed to prevent them from switching back to the old manual process. This is a critical part of the overall transformation and a company should make it a priority.
No two manufacturers are alike, but even if your customers are already online, doesn’t it make sense for you to be there greeting them?
Dusty Dean is president and founder of BitCadet, a digital technology services firm that helps manufacturers sell through ecommerce.Favorite