Historically, e-commerce for manufacturers and distributors has been lagging with some exceptions. I know of two industries that have adopted e-commerce quickly—distributors of industrial automation products and electronic components.
However, times have changed. Industrial manufacturers and distributors are poised to dive right into e-commerce. The pandemic has accelerated the trend towards online sales.
According to an article published by PwC, “Two-thirds of U.S. manufacturers (66%) agree that implementing digital marketing and sales over the next two years is a “high” or “very high” priority.” (See chart below).
The pandemic has disrupted supply chains for many manufacturers, and there is still a lot of uncertainty about the long-term impact of the COVID-19 outbreak.
The National Association of Manufacturers (NAM) surveyed its members on the impact of the COVID-19 outbreak from February 28 to March 9, 2020, and reported some telling facts.
Supply chain disruptions had a significant impact. When commenting on supply chain disruptions, respondents noted issues with parts arriving late and delivering to customers late as a result. While some say these disruptions are “manageable at this point,” they do create “some additional costs.”
Many mentioned having to find “alternative suppliers,” and while disruptions are characterized as “minor now,” they are expected to become more serious “if slowdowns continue beyond next quarter.”
So what does all this have to do with e-commerce for manufacturers and distributors? Glad you asked. Here are some positive statistics on this trend: (Source: Statista).
Total manufacturing B2B e-commerce sales in the United States from 2016 to 2018 (in billion U.S. dollars)
E-commerce as percentage of total manufacturing shipments in the United States from 2010 to 2019
More statistics from Statista:
Those are some big numbers, and one can’t just ignore them.
How have all these changes affected the industrial buying process? To understand that, I went to the source – UPS, after all, that’s “where the rubber meets the road” and downloaded their 2019 Industrial Buying Dynamics Study. They reported some interesting findings, many that were broken out by age groups.
Millennials, Gen Xers, and Boomers all rely on a vendor’s website for information in the Research phase of their buying journey. Millennials supplement that source with social media, whereas the Boomers tend to reach for Sales Reps.
The differences in buyer behavior by age don’t stop at the research phase. It influences the buying pattern too. Millennials are far more likely to purchase from manufacturers and online marketplaces (68 percent) than are Gen Xers (62 percent) or Boomers (54 percent). An online marketplace is an e-commerce site that connects sellers with buyers.
You may be thinking that Boomers are quickly reaching retirement age, and you don’t need to market to them much longer, think again!
A 2018 Gallup poll revealed that 41 percent of Boomers expected to work past age 65. (In 1995, only 13 percent of Boomers stayed on the job past 65.)
You already know that Millennials are growing in numbers. However, they don’t have years of experience and the final buying authority like their senior colleagues. So for all practical purposes, Boomers will continue to wield buying influence, even if in diminishing numbers.
I have written several posts about the importance of understanding the age difference among engineers. Read some of them if you want to learn more about this topic.
It is not just age differences that influence the source of industrial purchases. The product type also matters in choosing the source, as seen in this chart from the UPS study.
Statistics are great for planning and strategizing, but what do those numbers mean in the real world? In other words, what are some of the advantages of online sales for industrial companies?
Let me summarize what I have found based on several articles that I’ve read from trusted sources. But, more importantly, these findings align very well with what I’ve seen first-hand working with my manufacturing and distributor clients who have implemented e-commerce.
I don’t want to make it sound like adding e-commerce to an industrial website is all there is to it. There are many moving parts to mesh together and take care of many details. I say that from my own experiences of creating e-commerce websites for manufacturers and distributors.
Some of the challenges that I have seen are:
To see examples of industrial e-commerce, read these two case studies where I worked on setting up e-commerce for my clients. The first one is for a manufacturer and is a straightforward e-commerce example, and the second one is for a distributor with ERP integration.
This post provides a good overview of what is involved in e-commerce for manufacturers and distributors, but there’s a lot more to it. So let’s talk if you are interested.
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