Is it Time to Drop the ‘e’ in B2B eCommerce!
Several interesting new things related to maturing digitization of B2B businesses caught our attention this month. The story they tell reminds us of the caterpillar developing into a butterfly and then taking off. Digital strategies enable leading B2B companies to drive growth, improve customer experiences and meet their expectations. Here's our take for industrial B2B suppliers that want to become butterflies and take off too.
- Forrester analyst: “I’m done talking about ‘eCommerce’ as an adjunct to business—it’s not.” - B2B e-Commerce used to be a new way for industrial suppliers (manufacturers and distributors) to operated commercially. Now it is so significant a part of modern commerce that Forrester is calling for dropping the name “eCommerce”. Andy Hoar, principal analyst for e-business at Forrester Research, said in a B2B Online conference keynote speech this week that manufacturers and distributors should think of digital commerce as core to their business rather than an add-on.
- McKinsey has the benchmarks to prove it! - Always systematic in their approach McKinsey & Company has measured the Digital Quotient® (DQ™) of B2C and B2B companies around the world by evaluating 18 management practices related to digital strategy, capabilities, culture, and organization that correlate most strongly with sales growth and profitability. As the chart shows digitization drives superior business performance – see 'Leading B2B companies are using digital to power sales growth’.
- Leading industrial suppliers now receive more than half their revenue via eCommerce! - For example, in their Q1, Grainger’s online sales increased 15% to exceed half of their total sales. eCommerce accounted for “about 51%” of total sales. By those figures, Q1 eCommerce sales were about $1.296 billion, up around 14.7% from about $1.130 billion last year!
- Growth expectations are now often tied to eCommerce initiatives - and for good reason!
- See U.S. MANUFACTURING PRODUCTION UP, ECOMMERCE UP EVEN MORE!
- Amazon B2B portal hit $1 billion sales within its first year and is growing at a month-to-month clip of 20%.
- See the recommendations in this post, HOW HAS B2B ECOMMERCE BUYER BEHAVIOR CHANGED IN 2017?
- Buyers prefer online self-service! - A 2017 B2BecNews and Internet Retailer study found that 68% of online business buyers think that their online service research is superior to the information they typically get from sales reps. As Forrester’s Andy Hoar summarized it:"What is happening with B2B buyers is they are becoming more digital, using more devices, doing more pre-research and expressing more preference for doing things in a self-serve capacity.” That doesn’t mean everyone is going to buy everything online, “but where people start highly correlates with where they finish!”
Conclusions and Recommendations
Digital strategies of B2B businesses are driving commercial growth, productivity improvements, new business models, product improvements (e.g. IOT), sales and marketing efficiency and more. It doesn't matter whether we call the digital commerce component ‘eCommerce’ or just ‘Commerce’. Either way it isn’t going away and future growth, even survival, of your business may depend on it!
Why Is Future Growth and Even Survival Dependent on it?
Answering for distributors (though there are parallels among manufacturers too) we can see that there are now three types of distributor:
1. Experienced distributors who have or are taking the digital transition in their stride and are leveraging it for growth, customer satisfaction and acquisition.
2. Experienced distributors who have or are ‘missing the eCommerce boat’. According to Industrial Distribution’s 2017 Survey of Distributor Operations – “37 percent of respondents said eCommerce is not a priority for them, 43 percent aren’t offering eCommerce, 49 percent said their website content is updated less than monthly and more than 19 percent said they can’t recall how long it’s been since their website was redesigned.”
3. A new type of distributor enabled by the rise of eCommerce. New companies that get a warehouse, fill it with product and start selling online. Selling exclusively (or mostly) through eCommerce reduces overhead.
For industrial suppliers (manufacturers and distributors) of mechanical parts and components, one of the easiest and most impactful digital strategies is to add online commerce with a SaaS digital catalog including 3D CAD models and 2D drawings of their products. If the products are configurable add Configurator/s too. Start simple but choose solutions carefully so you can add sophistication over time (eCommerce, ERP and CRM integrations, etc.).
However, before they can be purchased, your products need to be found where people are searching. And, once found, selected and spec’d into new designs. That’s where the pre-drawn CAD parts save customers a lot of time, in many ways. Customers find the supplier they need, get the specifications they need, download the CAD model or drawing so they don’t have to design from scratch and eliminate potential errors by using the suppliers’ quality assured CAD files. The easier the information is to find and access, the more likely engineers will be to spec in the part or component and the sooner the item will be ordered!
If you’d like to discuss how much impact this B2B eCommerce recommendation could have on your industrial manufacturing or distribution business please call or click either button below.