Manufacturers Are Turning to E-Commerce

Digital transformation is the name of the game in sectors like smart city, healthcare, and manufacturing. In fact, research from Mordor Intelligence suggests the digital transformation in manufacturing market will reach $767.82 billion by 2026, up from $263.93 billion in 2020. As part of the digital transformation process, automation is helping manufacturers cut costs and become more efficient. After a year marked by change and upheaval thanks to the COVID-19 pandemic, manufacturers are moving forward in 2021 (and beyond), in part by adjusting their market strategies.

A new report from Sana Commerce says going digital is the new standard in manufacturing. In 2017, the firm’s data suggested 84% of organizations were prioritizing digitization by implementing or planning to implement an online sales channel. In 2020, that percentage jumped 14%; 98% of organizations surveyed now say they’re implementing or planning to implement an e-commerce solution. What’s behind the change? It could be COVID-19 and the economic recession.

Sana’s Manufacturing and E-Commerce Benchmark Report says an overwhelming majority of manufacturers (94%) are willing to change their market strategy in the face of economic uncertainty. Unfortunately, 2020 certainly delivered plenty of economic uncertainty, and businesses in every industry had to figure out how to move forward. One-way manufacturers are shifting market strategies is by selling directly to consumers instead of through distributers. In fact, Sana’s data suggests manufacturers are generating about half of their revenue from online sales channels, and more than half are bypassing distributors and selling to consumers via their websites (67%) or through online marketplaces like Amazon (63%).

How does this compare to years passed? The number of manufacturers with an e-commerce presence is up 17% over 2017 and 29% over 2015, according to Sana’s historic data in the space. And the new sales model is working. Increased sales, improved customer relationships, increased profit margins, improved brand and product awareness, and improved agility as a business topped the list of benefits manufacturers reported from investing in digital strategies.

The change hasn’t come without challenges. Respondents in Sana’s survey report challenges like handling complex order processes (36%), driving traffic to online channels (35%), sluggish customer adoption (34%), and difficulties with web store data management (34%). Other hurdles include internal resistance toward the shift to e-commerce, poor customer experience, order errors, and a lack of budget to make the switch.

As in other industries, COVID-19 has spurred digital-transformation trends on in manufacturing, perhaps accelerating adoption of e-commerce solutions by several years. And while manufacturers are quick to say they’ll embrace change in the face of adversity, and a majority are backing this up with action or action plans, B2B (business-to-business) e-commerce is complex, and some manufacturers continue to struggle with the process. However, overcoming challenges will pay off for manufacturers that continue to be agile in the face of change with the help of technology.

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