The mid-2019 Status of Industrial Manufacturer eCommerce

How Manufacturing Segments Compare in percentage of revenue via eCommerceImage credit and source: DigitalCommerce360.

Industrial Manufacturer eCommerce Adoption and Maturity

DigitalCommerce360's new 2019 B2B Manufacturer 300 research report shows that eCommerce adoption and maturity by industrial manufacturers differs widely. As they say, "only five of the manufacturers in the study are well on their way to becoming digital-first companies, with web-based sales making up more than 25% of total revenue." However, if you note the line we've highlighted in their graphic above, three of the five are industrial product manufacturers! It's also worth noting that this report includes just manufacturers, not distributors, so the leading industrial distributors, such as Grainger and MSC (who have >50% of revenue via eCommerce), are not included. See Industrial B2B eCommerce - a mid-2019 Update  for a broader update including distributors.

The sample size is small but clearly most industrial manufacturers have adopted eCommerce - only about 1 in 10 have eCommerce revenues less than 1% of total revenue. At the other end of the scale, about 1 in 4 Industrial manufacturers have eCommerce revenue (as a percentage of total revenue) greater than 5%, and about 1 in 7 have eCommerce revenue greater than 25%. Conversely, almost 70% have eCommerce sales between just 1% and 2% of total revenue. The rest are scattered in between 2% and 25%.

Industrial eCommerce ROI

Like any business investment, eCommerce should be planned with a return on investment (ROI) then monitored to confirm the actual ROI achieved over time. As in any ROI calculation the expected financial benefits need to be set against the costs of creating and running the eCommerce. Examples we've seen indicate many are taking a too simplistic approach to their ROI calculations and missing some important considerations. Here's a partial list of possible considerations - choose those that apply to your situation:

  • Increased Revenue from eCommerce - the worst case assumption is that eCommerce sales will simply be shifts from other existing channels. But that ignores that eCommerce can expand market share by opening new sales opportunities, for example, via greater brand awareness, or products becoming more discoverable via Search Engine Optimization (SEO), and by inbound/outbound digital marketing.
  • Incremental Revenue from eCommerce - eCommerce gives you 24*7 opportunities to incrementally increase revenue from new and existing customers with personalization, up-selling, cross-selling, promotions, re-marketing, IIOT based marketingpersonalized pricing and AI-based purchasing analysis. All these capabilities will increase over time and be 'tuned' to maximize incremental revenue - so eCommerce should become the channel that 'keeps on giving'!
  • Increased Revenue from Increased Sales Resources - eCommerce frees up some amount of customer service staff time as a result of customers self-helping. That time can be re-purposed for proactive revenue generating activities.
  • Cost Reduction by Carrying Less Inventory - digital analytics from eCommerce vastly exceed those of traditional sales channels, for example, what products do customers search for but find or not buy due to unavailability or out-of-stock situations? Over time the analytics enable better inventory and supply-chain management for more right-time, right-place stock availability.
  • Cost Reduction from Reduced Returns - providing your product data is comprehensive and up-to-date, eCommerce usually provides customers with more information pre-purchase. For example, not just product specs but also, 2D CAD drawings and 3D CAD models (for viewing and downloading) make for a superior user experience and better informed customer product selection, hence reduced returns and more satisfied customers.
  • Cost Reduction from Fewer Order Processing Errors - Manual order entry leads to more opportunity for human error. eCommerce locks in repeatable and reliable processes that help prevent error. For example, product configurators ensure only correct product components are assembled, pricing is accurately calculated and viewing of the resulting CAD models ensures customers know exactly what they ordering.
  • Cost Reduction from Less Data Mistakes - similarly manual data management creates opportunities for human error. Having all your master product data in one location from which all derived copies or versions are managed (for example on all a manufacturer's distributors websites) simplifies the process and reduces costs.

As always, if you have comments or suggestions please make them below, click to ask us a question or call for a discussion. For CAD questions see: Digital Marketing with CAD - Get the FAQs! In the meantime we'll continue to keep you up-to-date on eCommerce and new technologies impacting industrial suppliers

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