For many manufacturers, selling even more online to business customers—or offering ecommerce for the first time—is rapidly becoming a strategic priority, according to data and analysis contained in the newly published 2021 B2B Manufacturing Report from Digital Commerce 360.
For example, a recent survey of more than 800 manufacturers by ecommerce services providers finds that 98% of companies either have an ecommerce channel already in place or plan on adding one. For 45% of companies, increasing sales was the top reason noted for launching or expanding ecommerce, followed by improving customer relationships (42%), increasing profit margin (41%), and improving product or brand awareness (38%). “Despite industry differences, manufacturers do have a lot in common when it comes to the advantages they’re gaining from digitizing and embracing ecommerce,” the report says.
In general, manufacturers are selling more online to their business customers. And that is even though total manufacturing sales dipped for the second year in a row, according to the U.S. Department of Commerce. There are currently about 249,014 manufacturing companies and, collectively, those manufacturers generated total sales of $5.678 trillion in 2020, down about 6% from total sales of $6.021 trillion in 2019, says the Commerce Department.
Total manufacturing sales already were flat going into 2020, having declined about 1% from $6.028 trillion in 2018 to 6.021 trillion in 2019. As the pandemic impacted large parts of the U.S. economy, some manufacturers in some verticals closed operations altogether or scaled back production. In early 2021, total manufacturing was beginning to rebound, according to Commerce Department data. In March, sales for durable manufacturing goods totaled $475.9 billion, up from $468.7 billion in March 2020.
The pandemic also had an impact on manufacturers’ B2B ecommerce sales. In 2020, B2B ecommerce sales for manufacturers grew year over year by 6.7% to an estimated $458.7 billion from $430.0 billion in 2019, based on a projection by Digital Commerce 360. That growth rate was about three times slower than the prior year (2019) when B2B ecommerce sales for manufacturers grew by about 21%.
Many factors accounted for a slower ecommerce growth rate in 2020. The COVID-19 pandemic, which caused many parts of the economy to close or at least slow, was a big contributing factor. But supply chain disruptions, the closing down or scaling back of traditional sales and distribution channels, and spending cutbacks by business customers were other reasons for slower ecommerce growth.
“The message here is that ecommerce works for all manufacturers, and they need to make it a priority,” says Karie Daudt, senior commerce consultant at Perficient and a veteran of B2B commerce.Favorite