Manufacturers and distributors in even the most traditional industries need to embrace the move to e-commerce. Here’s why:
- Your customers expect it and will soon demand it!
- It can increase your top-line revenues.
- It offers the opportunity to operate with more efficiency, eliminating 5 percent to 10 percent of the cost of each order processed.
- B-to-B buying behavior is changing. The millennial generation is moving into buyer roles. They expect you to provide engaging technologies and multiple buying options.
- Amazon.com and Google are now open for business in the B-to-B e-commerce space, creating more disruption in manufacturing and distribution.
If you’re a manufacturer or distributor, transforming your business in the digital age will require a move from a first-generation shopping cart or e-commerce solution to an enterprise, customer-oriented B-to-B e-commerce experience. That change may seem daunting.
There’s a saying that the best way to eat an elephant is “one bite at a time.” Tackling your e-commerce initiatives in bite-sized chunks is the best way to get started.
What are the core elements every e-commerce initiative should have? They can be found in the STORM (strategy, technology, operational change, resources and marketing) framework. This is a framework that can be used as a starting point to craft a new business model that weaves e-commerce into its fabric, embracing the potential of B-to-B e-commerce:
- Strategy: Most companies starting a new e-commerce project don’t have a comprehensive strategy for digital or e-commerce initiatives. A good strategy includes these pieces:
- Determine where you’re starting from. Assess the current state of your B-to-B organization in areas of leadership, technology, resources and management.
- Change your lens. C-level leaders need to be engaged and embrace e-commerce initiatives strategically. Their leadership is critical in driving alignment throughout the organization.
- Craft a three-year plan. This plan should be a living, breathing document. Create e-commerce initiatives in phases with an average duration of six months to nine months. Review the plan every three months to six months.
- Partner wisely. You can’t craft and execute these strategies on your own. Acquire an e-commerce technology partner that will offer strategic leadership for technology selection, integration and implementation.
- Adopt a customer-first viewpoint. Historical business models for distributors and manufacturers aren’t wired for the age of the customer. You need to reimagine these historical models in order to acquire and retain customers.
- Set goals and measure. Most e-commerce initiatives can drive both top-line revenue increase and operational cost decrease if executed well. Set only two or three goals at a time and accomplish them as quickly as you can versus setting a lot of goals that you may never accomplish.
- Establish a new culture. Your organization should adopt a new mantra that recognizes the need to innovate and be agile.
- Technology: In every environment there are core systems (ERP, CRM, e-commerce platform, data warehouses, PIM, DAM and other systems that support source data). From an e-commerce perspective, there are four key components to be aware of: an e-commerce framework, an integration framework, a web page library and analytics. Make sure the core technologies you have in place can take you where you need to go for the next five years to 10 years.
- Operations: As soon as you begin a robust B-to-B initiative, you immediately slam into a historical business model that’s complex, entrenched and often not in line to support e-commerce initiatives. Recognize that you’ll have policies and processes that must change. From pricing programs to commission programs to inventory availability to freight programs to return programs to drop-ship programs, etc., e-commerce will impact your current model.
- Resources: To accommodate the transformation, your organizational chart will change over the next several years. Customer service resources can be redeployed to digital teams to acquire content or manage programs, for example. Planning for the future state of your organization and looking for opportunities to shift resources to the new business model is key. There’s a domino effect of opportunity here.
- Marketing: There’s an opportunity and need to reimagine marketing. Many distributors complain that their customers aren’t aware of the breadth of their product line. Couple this with the fact that most distributors want to dramatically increase their SKU count. This suggests that the customer is deficient in their efforts to understand the product offering instead of the distributors realizing that they have a marketing-related problem. When you launch a B-to-B project, intentionally set goals and craft supporting programs to increase revenue from existing customers.
Even if your B-to-B organization hasn’t begun to think about implementing e-commerce, there’s a very good chance that your competition has. The most important realization is that your customer now expects the ability to purchase online and their loyalty to you will be in question. The entry of Google and Amazon into the B-to-B e-commerce space isn’t the end, but the beginning of a new opportunity where e-commerce can help you solidify your market position.