It’s true that many industries have experienced dramatic changes due to digital transformation. Over the last decade, however, manufacturers and distributors have experienced more than their share of change. While these forces of impact are both internal and external, it’s clear that eCommerce is one of the biggest drivers of disruption, particularly for small to mid-sized organizations.
It has been easy to blame a lot of this turmoil on Amazon, but the reality is that most of the disruption is caused by the complex nature of B2B commerce itself. B2B buyers are demanding a new experience based on their personal online consumption. Our customers are aspiring to a 100% self-service buying cycle, but the complexity of B2B always will require a hybrid commerce model that blends best practices when it comes to data, sales, pricing and technology.
The rate of change may seem overwhelming, particularly for smaller manufacturers and distributors, but it’s proportional to the opportunities hidden within that change. Understanding the biggest impacts facing the market and embracing change can turn disruption into competitive advantage in 2019.
The following is a list of the primary manufacturing and distribution disruptors in 2019 – and ways to transform the obstacles into opportunities.
1. Data-Driven Marketing: As more of the customer experience moves online, marketing rather than sales is driving the buyers’ journey. The job of the salesperson is much more consultative, as lower value tasks like reordering and returns have become automated. In addition, personalization and data science have become a competitive edge for manufacturers. As large distributors advance in the use of AI and other techniques to automate the customer journey, competition is becoming fiercer as well.
Building strong data-driven marketing practices after relying for years on a sales-based model may seem daunting. However, smaller organizations that may be much closer to the customer often have a more in-depth understanding of their buyers than some of the larger organizations. That “personal” customer knowledge can be combined with small steps to improve digital personalization.
Finding opportunities to collect data wherever possible, and analyzing that data at a micro-level can uncover patterns and trends that can be used to determine additional sales opportunities and increase share-of-wallet. For example, collecting data on the average purchase by customer, and tying that purchase to relevant items can be a way to improve revenue and efficiency through cross-selling. Good data practices start small and grow; they aren’t implemented from the top down. Understanding that sales may already have much of the information you need – and identifying ways to digitize that information – is the key to addressing this disruptor.
2. Manufacturer direct sales: Today more than ever, customers want control over their own buying journey. They are demanding more independence and prefer to self-serve whenever possible. As a result of changing buyer preferences, manufacturers are under a lot of pressure to sell direct. Manufacturers need to get closer to their customers to better understand the buying journey and gather information. In order to best support the channel, manufacturers need to ensure the channel is providing the experiences customers expect.
Distribution companies can respond to – and even get ahead of – the pressures manufacturers are facing by evaluating their own digital experience and readiness. Modernizing tools, delivering eCommerce experiences and adjusting to how customers want to buy are all factors to consider when assessing digital readiness. Distributors need to understand the value they provide for the manufacturer and continue to reevaluate that value as part of an ongoing commerce strategy. If they need to respond quickly to the mandates manufacturers are setting forth, distributors should look for an eCommerce solution with out-of-the-box B2B capabilities that allow the organization to be digitized quickly.
3. Transparent pricing: A major part of the traditional manufacturing model is the need to support manual, complex pricing. In fact, many manufacturers and some distributors still employ entire departments devoted to custom quotation processes. This practice continues to be disrupted at an accelerated pace as more B2B eCommerce solutions provide capabilities such as price optimization algorithms and dynamic tools that calculate product pricing. Pricing in manufacturing and distribution is only becoming more complex. Manufacturers and distributors must work together to clearly understand aspects of their pricing models such as discounts, negotiated pricing and so forth.
The ability to make the right pricing decisions with data and information is key to managing margin and maintaining profitability. Determining the scenarios in which custom pricing is still providing value – and where transparent pricing can deliver a higher return is the key to success.
4. Technology itself: Larger organizations with budgets to manage every aspect of the eCommerce enterprise can purchase best-in-breed technologies to handle CRM, ERP PIM and commerce capabilities. However, the majority of manufacturers and distributors may not have the budget, staff or time to implement such a massive endeavor.
Instead, small to mid-size distributors need to find the solution that answers their requirements right out of the box, with the ability to extend, customize and adapt as business grows. There are quite a few good quality, affordable tech stacks that provide most B2B commerce needs. At the same time, it’s a good idea to have an eCommerce platform that is designed for B2B commerce, rather than trying to extend the capabilities of an existing CRM or ERP system.
The need for transparent pricing, shared data and a hybrid experience means that the eCommerce system itself must be able to handle a personalized buying experience. Too often manufacturers and distributors fall for solutions with features that are best suited for B2C and lack a robust B2B core. Understanding the organization’s requirements, customers’ needs and specific goals for eCommerce should uncover the actual technology requirements that will help grow the business.
For many manufacturers and distributors, there may be many smaller impacts hidden within these four primary disruptors. Staying ahead of disruption by incorporating data, direct sales, price and technology into an eCommerce strategy is important in 2019.