Driving Digital Transformation Today
A 2020 Gartner report confirmed what manufacturing leaders have seen for years - that increasing competition is putting pressure on businesses to “reduce cost, improve customer experience, and increase profitability. Organizations armed with digital forces are disrupting business models with new value propositions.”
In addition to the slower-moving trend of digital transformation in manufacturing, the 2020 global pandemic caused widespread ripples in how manufacturers do business. Manufacturers faced a slowdown or stop in their field sales, distribution network, and supply chain.
Increasing competition in the manufacturing industry puts pressure on organizations to reduce costs, improve customer experience and increase profitability. Organizations armed with digital forces are disrupting business models with new value propositions. This disruption causes a challenge for manufacturing organizations but is also a chance to adopt digital themselves. — Gartner
As the world restructures, we’re seeing a move towards a new reality of remote working, shuttered distributors, and a new dependence on digital experiences. eCommerce and digital fulfillment plays a key role in transforming your business: creating effortless digital experiences for your sales associates, partners, and customers.
But how do evolve strategically? In this white paper, we’ll talk about phased approach for rolling out eCommerce.
Our detailed analysis has identified a pool of $74 billion to $298 billion in revenue growth that could be tapped through enabling technology in sales. The value comes primarily through new customer experiences, refined pricing, and enhanced selling processes. — McKinsey
A Strategic Approach to Rolling Out eCommerce
B2B eCommerce for Your Key Partners
Enable your sales team and buyers to transact quickly, easily, and efficiently. For many manufacturers undergoing digital transformation, their priority in the eCommerce journey is digitizing their catalog and distributing it to their internal sales team and key partners. Or it may be connecting digitized inventory with online checkout. In either case, start with defining:
- Your core audience: key accounts you want to move to a digital experience. Who are your most enthusiastic advocates?
- Your KPIs: key performance indicators that will measure success for your business. Are they conversion, revenue, retention, cost?
- Your digital experience: the design and user experience for your website. How will you make it as easy as possible for users to research, order, and manage their accounts?
- Your technology stack: the software and systems that allows you to create the experience you want. What is the technology stack that provide you with flexibility and scalability?
- Your go-to market and adoption plan: launching your new site. How will you get your strongest, most enthusiastic customers using your site?
Growing and Scaling B2B eCommerce
With base capabilities in place, how can you begin expanding your offering to more partners and customers? Where can you compete on product, pricing, terms? What self-service tools can you implement that make the digital experience as effortless as possible - whether your sellers and buyers are at home, on the road, or in the office?
With the initial eCommerce experience in place, you can begin rolling out your platform to more partners and customers.
Out of respect for channel partners, B2B brands often redirect customers to partner sites — but in the process inadvertently frustrate and disappoint these originally eager customers as well as hurt their bottom line. Historically, brands and the channel have enjoyed a mutually beneficial relationship that has consistently grown the pie for both parties. But changing B2B buyer behavior is now forcing digital business pros at B2B brands to rethink their traditional channel-centric selling strategies. — Forrester
The Myths of Moving Direct to Consumer
Traditionally in manufacturing, the old guard has held on to the existing supply chain structures, but the global pandemic and economic fallout have required a rethinking of the way manufacturers do business.
Myth One: Channel Conflict will Kill Our Business
With disruptions in distribution channels, now is the time to rethink how and why you manage manufacturer D2C channel conflict. Think strategically about how you can support your resellers and your existing sales infrastructure while building a sustainable direct-to-consumer channel. Consider pricing structures for partners, incentive programs for sales, and product mix across channels. Get alignment on serving your customer, get your channel on board, and build initiatives to keep all players motivated and engaged.
With consumers ever more digitally connected, branded manufacturers are enticed by direct digital commerce benefits, including better sales margins, increased product control, and deeper customer relationships.
Myth Two: We Can't Expose our Pricing (It Will Kill Our Business)
It likely won’t. In fact, hiding your pricing can make you look less trustworthy. In the age of Amazon Business and eCommerce your pricing will come at no surprise to anyone doing the research. Instead, show your retail pricing upfront and offer discounting behind a verified login. You can offer tiered pricing and volume pricing. You can build your business on brand, loyalty, and customer experience.
Conflict with traditional retail partners can be a concern for many brands, preventing them from developing and maturing a direct digital presence and commerce capabilities. But even brands with serious channel conflict concerns have successfully managed retail partner relationships alongside D2C commerce initiatives by being transparent and clearly communicating noncompetitive objectives. — Forrester
Myth Three: Our Customers Don't Shop Online
We bring this up for posterity. Recent events have shown that your buyers are moving online and are happy to stay there. Owning your online distribution channel means owning your direct consumers, shaping their customer journey, and creating their user experience. Here is where you can differentiate with a custom experience - leveraging experience design best practices and reflecting your core brand and values.
Bonus Benefit: Your Direct Channel Unlocks Consumer Insights
Your direct-to-consumer website gives you real-time data and insights into what your customers and prospects are searching, researching, and abandoning. Having your own eCommerce platform allows you to test and learn about pricing, positioning, promotions, as well as product assortments and expansions.
Traditionally one step removed from the end consumer, branded manufacturers pursue D2C initiatives for the value of direct consumer insight and relationships, rather than the initial revenue gains. A branded manufacturer’s own website and digital presence do not have to be transactional to have an influence on sales. Many branded manufacturers use their digital presence as a platform to test, measure, and refine product and brand decisions. — Forrester
A MACH Approach to Scale and Grow at Your Right Pace
There are new challenges and benefits to digital transformation in manufacturing. But with the MACH Approach, you can utilize new levels of flexibility and scalability in your rollout. MACH stands for Microservices, API, Cloud, and Headless, and provides a customizable, modern approach to developing eCommerce websites.
- Microservices: small, stand-alone applications that can be individually designed and deployed by dedicated teams. Building a network of these services enables flexible development and shorter release cycles.
- API: the “glue” that connects two or more applications. APIs exchange data fast, in a structured way, and can be used to integrate different solutions or communicate with smart devices.
- Cloud: scalable hosting infrastructure that allows businesses to access on-demand resources to run their applications (rather than running and maintaining their own data centers).
- Headless: meaning that the solution comes without a graphical user interface (GUI), for example an eCommerce shop front end. A headless solution focuses purely on background processes and making data available to separate frontend applications.
MACH is leveraged by eCommerce leaders because it allows them to quickly transition to a digital experience they need for their users. Unlike slower, monolithic applications, a MACH approach means that microservices can be independently developed, deployed, and managed by a small team of people from different disciplines.
MACH gives businesses the flexibility to bring new features and functionalities to market quickly. Microservices creates a building-block approach to digital development - allowing you to pick best-in-class solutions that give your users their best experience. Whether it’s enabling your internal sales team, your key customers, or direct consumers, this approach provides built-in flexibility.
Implementing Digital Transformation in Manufacturing in 2021
For manufacturers specifically, a MACH approach to eCommerce allows you to collaborate with your partners’ existing technologies. Even if they have different technology stacks, maturity, or enablement, you are well positioned to easily integrate with your partners’ systems by leveraging APIs. A microservices approach makes working with varying business models easier to support and manage.
For example, your distributors may each be differently structured: one reseller wants drop-ship, another carries inventory, and a third uses your inventory. A microservices approach that allows you to build a solution for each scenario gives your business the flexibility to create custom, seamless experiences for your key partners.
As you build those initial experiences, a microservices-based approach allows you to scale those experiences for your broader customer base, launch directly to consumers, and meet modern challenges in the manufacturing industry.