Two numbers inspired the creation of our Guide to Commerce for Manufacturers. First, Forrester estimates that US B2B eCommerce is about to hit $1 trillion. Second, B2B eCommerce World found that only 40% of US Manufacturers have an eCommerce platform, which means 60% of Manufacturers aren’t able to serve customers where they want to buy. That’s a pretty big gap. At SMITH, it’s our job to help manufacturers better serve their current & future customers.
One of the leading challenges facing manufacturers is that selling directly online is counter to how they’ve always done business. Most large manufacturers have a distribution channel of partners who’ve historically been responsible to selling to the business customer. Since this is the way business has been done, Manufacturers can’t afford to create conflict with their leading sales channel. However, it leaves them distanced from the customer, and often leaves the customer with a disappointing experience when they come to the manufacturers site wanting to learn and buy. The typical ‘Where to buy’ experience is resulting inconsistent and poor experiences that result in low or no conversation. SMITH has partnered with Mirakl to address this exact challenge.
“The commerce challenge that many manufacturers are facing is vexing: to build deeper end-buyer relationships via personalized, omnichannel customer experiences, but maintain heathy partner channels. Mirakl’s solution is a B2B Distributor Platform that elegantly solves this tension. It’s for that reason, and our shared organizational values and team synergies, that we consider Mirakl one of our most critical partners in helping brands make buying and selling awesome,” notes Ryan Heusinkveld, CTO of SMITH.
The Guide, which can be downloaded here, outlines key trends and best practices for manufacturers in four key areas:
- Customers: Learn to adapt to evolving business buyer expectations
- Sales: Master increasingly complex distribution channels
- Operations: Improve and integrate marketing operations
- Employees: Enlist team members in the digital transformation, providing a new channel to handle non-strategic sales, while freeing up time for sales to focus on strategic relationship building
Many manufacturers have steered clear of heavy investments in digital platforms and direct-to-customer sales channels, with a primary factor being avoidance of channel disruption. However, the increase in customer demand for digital self-service and changes in the sales ecosystem are forcing manufacturers to re-evaluate their customer experience design and how they manage channel conflict. The marketplace model, which Mirakl enables, allows Manufacturers to provide a direct sales experience where the transaction is processed on their site, but the distribution partners are still selling, fulfilling, and servicing the customer. It’s exactly what manufacturers have been looking for to be able to conduct eCommerce on their site to better serve the end customer, all while embracing their distribution channel instead of competing with it.
The New Competition
There’s a great range of variance between manufacturing verticals – a bolt is sold differently than an aircraft, but in many cases the distributor is promoting competitive products next to each other as a key element of their value to their customers. What’s relatively new is distributors using their better access to sales data (aka market demand) to create white label products that compete with their manufacturing suppliers.
The most familiar example of this is in food manufacturing and distribution. Grocery stores stock their own products priced lower and featuring similar attributes as their product suppliers. Grocers have access to a complete view of all sales data from competing manufacturers, allowing them to find gaps in the market to create their own products. They also have the capability to prioritize promotion of their own options to customers. Perhaps an unfair competitive advantage.
This trend is true in more than just food. The flattening of the global economy and easy access to other manufacturers in emerging markets like China and India make it easier for distributors to create cheap alternatives to the other products they sell. (And, perhaps the distributor found and transacted with them through their eCommerce platform.)
Now more than ever, manufacturers need to (at minimum) start learning more about their end customer and building relationships through content with a longer-term plan of selling directly to avoid further competitive disruption to their business. Studies have found that customers would rather buy from the manufacturer and are even willing to pay (slightly) more to do so based on the confidence in the right product to serve their need.
But for many manufacturers, a sudden move to selling directly could completely disrupt their channel to their own detriment, or at minimum create some bad blood with their distributors.
And that’s why we’ve partnered with Mirakl. It solves some of the thorniest obstacles that stand in the way of manufacturers to starting their commerce evolution.
SMITH’s role in your digital transformation as a manufacturer is helping refocus your business strategy on your customer, designing a customer experience that makes buying with you enjoyable, and orchestrating the technologies, like Mirakl, that bring it all to life and keep it running.
Download the Guide here.