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Many manufacturers are considering launching a new digital commerce channel that targets consumers directly. The pandemic dramatically increased the the urgency of this manufacturer e-commerce strategy.
But even if a manufacturer has a B2B e-commerce solution in place today, there’s much more to adding a new D2C or B2B2C channel than just implementing a new webstore. A new digital channel will require substantial business changes as well as entirely new processes in order to succeed.
Here are the top things manufacturers need to consider for e-commerce success:- How is the customer different?
- What’s the value of the new digital channel?
- What business changes are required?
- Are you prepared to handle a new e-commerce channel?
- What product or products are best suited for the channel?
- Will your product offering meet customer needs?
- How will you handle fulfillment and logistics?
- How will you market and avoid channel conflict?
1. How is the customer different for this new manufacturer e-commerce channel?
Don’t underestimate the time you need to spend thinking about your customer for this new channel. They may have quite different characteristics and needs than your current customers.
For example, a large manufacturing company revamped its e-commerce site to make it more B2C-like, more of a retail experience. The feedback from customers? It’s terrible – just like Amazon!
The company had failed to think through all the personas, especially the buyer persona. The most important requirement for these buyers was ordering efficiency. They didn’t need features like a rich product detail, and they didn’t want to search in a traditional retail sense. So, while trying to bring a more B2C experience to a B2B situation, the site ended up introducing a bunch of unnecessary friction points.
So it’s very important to start with your customer, and map out exactly how they’re interacting with your brand. Tools such as empathy maps, customer interviews, and competitor analysis can be helpful with that analysis.
And remember that you’re not going to be judged just against the experience your customer has with your competitor; you will be judged against every experience they have online.
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2. Define the value of the new digital channel
The value drivers fall into two big categories:
- How will this new channel drive new revenue?
- How will it reduce costs by serving customers digitally?
For example, one large manufacturer had about 180,000 calls and 1.3 million emails per year coming into their support center. A vast majority of these inquiries were related to price availability and order tracking updates.
If a customer service rep answers each of these requests, it uses up a lot of resources. But if these inquiries can be handled in an automated or self-service way, it saves a ton of time and money.
When it comes to increasing revenue, you need to determine whether you’ll be reaching net new customers or increasing the average order value by offering smart cross-sell and upsell product recommendations based on a customer’s online behavior.
Analyzing key metrics such as AOV ensures that you have the right strategy for market penetration, customer acquisition, diversification, and product introduction.
Lastly, and perhaps most importantly, the value and vision for a new digital channel needs to be well communicated and aligned across all the stakeholders.
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3. What business changes are required?
Launching a new manufacturer e-commerce site will require business process changes. It’s easy to make the mistake of thinking of a channel as just a new software platform that you’re going to launch versus an actual business that you’re going to run.
Don’t overlook key functions. This is especially relevant in the case of a dealer network, because the dealer or distributor may have been historically providing some or many of those business functions.
That’s why implementing a new D2C or B2B2C channel will require an entire cross-functional team.
For example, a business introducing a new direct-to-consumer channel in a new market will require collaboration across merchandising, finance, logistics, customer care, and legal, just to name a few.
Moreover, different financial models will result in different risks. The supply chain now needs to adapt to handle individual retail orders (compared to bulk orders), as well as returns and reverse logistics.
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4. How do you evaluate manufacturer readiness?
As a manufacturer, there are three key areas to consider to determine if you’re ready for a new e-commerce channel:
- How digitally mature are the customers within this segment? How ready are they to adopt a new digital solution?
- How mature are internal business processes? Will they align or conflict with the new channel when it comes to inventory, handling customer queries, aligning with internal sales teams, etc.?
- How mature are back-office capabilities like accounting, settlements, and IT services?
While more mature organizations may be capable of launching the channel technically, they might overlook the complexity of the impact on business processes. So, it’s very important to do this evaluation before launch.
5. What product is best for the new digital channel?
When analyzing and deciding what products to offer through the new e-commerce site, consider factors such as:
- Benefit and risk to the brand
- How well does a given category or sub-category of products fit with a digital model
- Customer demand for that product or category of products
- How digitally savvy is the customer
- Risk of channel conflict
- Is the product a commodity or highly differentiated?
- Geographic considerations
- Product complexity
- Supply chain maturity
After this evaluation, assign a score to each potential product:
- Good for a self-serve digital channel
- Okay, but requires consultative collaboration, for example with dealership
- Not good for digitization at this time
Then, you can create a phased plan for rolling out the product catalog. A good rule of thumb is to leave any complex, made-to-order products that require configuration for later phases.
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6. Meet customer needs with the right products
A common mistake manufacturers make when deciding what portion of the product catalog to make available through the new site is that they don’t offer enough of their catalog.
This can happen when they want to roll out quickly and hit a particular go-live date, or because they don’t think a particular market segment will need all the extra offerings. The result is two-fold. Customers won’t use the digital channel because it doesn’t have everything they need. Those that do have a frustrating experience that forces them to call a service agent or a support line, which defeats the self-serve nature of e-commerce.
When you launch, make sure you offer everything your target customer segment will need. Otherwise, you risk hurting adoption and you won’t see the ROI you expected. It may be hard to overcome that poor first impression.
Also consider the whole data set and metadata required for each product, including photography, specifications, and descriptions. A manufacturer will be very good at engineering products, but may never have had to create this enriched set of product-related content. Don’t underestimate the time and effort required to create the product content required to meet the needs and expectations of a consumer-facing channel.
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7. Fulfillment and logistics
You’ll either launch a new e-commerce site in an offline-only market within existing supply chain processes, or you’ll introduce a new direct-to-customer channel in an existing market where a digital B2B channel already exists with associated fulfillment processes.
In the second case, there will need to be a big process transformation as you move from delivering bulk orders, a pallet of items, to a single item. That takes a physical change in distribution centers.
And because the customer expects to know how long delivery will take, you’ll need good visibility into inventory levels and an order status tracking system.
It might be helpful to consider outsourcing some or part of delivery logistics in order to launch the channel faster.
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8. Manufacturer e-commerce marketing
When promoting their new direct-to-consumer site to foster adoption, businesses that have existing channels like dealer networks need to consider the possibility of channel conflict. For example, it’s possible that conflicting promotions run at the same time.
Rather than compete on price, try to determine what strategies might be used to drive adoption. Instead of a discount, offer a giveaway or free shipping.
Marketing should also include internal efforts targeting field sales and operations teams to help with overall awareness.
Businesses often make the mistake of thinking, if we build it, they will come. But it seldom works out that way for several reasons, starting with conflicts with the existing sales team.
Field and operations teams must be aligned with the new channel.
It’s not easy to incentivize customers to move online when they’re used to what they do today: picking up the phone and calling a rep. But if you take the right steps and plan ahead, you’ll see the kind of changes that increase ROI.
This article was co-authored by Ashok Vishwanath, Senior Principal, Digital Strategy & Innovation, Infosys.
