The U.S. B2B eCommerce market is enormous, with sales approaching $1.2 trillion in 2018 and an annual growth rate of around 8 percent before the COVID-19 pandemic, which spurred even faster growth. B2B eCommerce sales for the third quarter of 2020 were at least 20 percent higher than the previous year. Yet, in 2019, less than 6 percent of manufacturer sales were made via eCommerce.
Of all B2B organizations, manufacturers haven't been as keen to quickly digitize their businesses. The reasons are complex and include both technological and business-model blockers to eCommerce adoption. However, by 2021, innovative B2B eCommerce platforms have solved the technical challenges, and the business motivations for eschewing eCommerce look increasingly weak in the face of buyer demand for integrated digital solutions.
Before we look at some of the reasons manufacturers should get on-board the eCommerce train in 2021, let’s consider why they have been less than enthusiastic thus far.
Resistance to Adopting eCommerce
Why go to the trouble of building, deploying, and managing an eCommerce store when traditional sales channels work as well as they ever did? Manufacturers spend years creating efficient sales workflows that support long-lasting buyer relationships. Buyers understand traditional sales channels and have built processes around them. Moving them to eCommerce is likely to require significant investment in support—if they’re willing to move at all.
"Our Distribution Partners Wouldn’t Like It"
Many manufacturers rely on a network of distributors, wholesalers, and sometimes retailers to generate demand and sell their products into the market. Introducing eCommerce into the mix could disrupt the channel, information flows, pricing models, and relationships with distribution partners.
"Our Field Sales Team Prefers Traditional Sales"
Field sales professionals often see eCommerce as a threat. After all, if distributors and wholesalers can buy direct from an information-rich eCommerce platform, why would they need to rely on sales reps? This concern is not groundless because, while eCommerce doesn’t make sales reps redundant, it can instigate a change in focus from maximizing the value of existing relationships to building new ones.
eCommerce Technology Hadn't Been Designed with Manufacturers In Mind
Consumer eCommerce platforms lack many of the features that B2B buyers expect. B2B sales relationships are more complex, with workflows that are expensive or impossible to support on consumer-focused digital sales platforms.
Five years ago, it would have been hard to argue against these challenges and blockers. But, in recent years, eCommerce platform developers have responded with incredible innovation. B2B-focused platforms like the Episerver Commerce Cloud natively support the sales requirements of manufacturers and distributors.
Why 2021 Is the Year to Think Different?
Adopting eCommerce is not a decision that manufacturers make lightly. There are substantial benefits, as we'll discuss in a moment, but there are also costs and drawbacks. Is 2021 the year that the benefits of eCommerce outweigh the challenges for the majority of manufacturers?
Evolving Buyer Behavior
The best reason for manufacturers to embrace eCommerce is that it’s what buyers want. As we said earlier, B2B eCommerce revenue in 2018 accounted for $1.2 trillion. Much of that revenue is generated by end-user-facing B2B suppliers, but eCommerce is making its way through the channel to distributors and manufacturers, primarily driven by evolving buyer expectations.
Modern B2B buyers want self-serve options. They are familiar with the benefits of consumer eCommerce and expect a similar experience when buying at work. That’s true even of distributors, many of whom do not want to pick up a phone every time they place a repeat order with a manufacturer.
In 2018, Digital Commerce 360 reported that 50 percent of buyers preferred to expedite purchases with digital self-service options. 2020’s COVID-19 pandemic pushed many more buyers to digital as field sales became impossible and remote work became the norm.
A recent survey by McKinsey revealed an overwhelming preference for self-serve B2B eCommerce . Ninety-seven percent of B2B buyers said they were happy to make purchases via digital platforms and three-quarters believe that digital sales are at least as effective as pre-COVID-19 sales.
You might be thinking that buyers will revert to traditional buying patterns once the worst effects of COVID-19 pass. But waiting for the clock to turn back is a risky strategy. Ninety percent of B2B decision-makers expect that the move to digital is permanent. Perhaps the most surprising finding is that less than 30 percent of buyers want to interact with in-person reps at all.
Embracing Integration and Automation
Alongside the revolution in B2B eCommerce we have seen rapid innovation in buy-side digital platforms. Throughout the supply chain, buyers are adopting eProcurement spend management software to enhance procurement insight and enforce accountable spending. Eprocurement is the fastest-growing digital sales channel, and the demand for eProcurement software is expected to grow by at least 10 percent per year over the next half-decade.
Automation is a key motivation for eProcurement adoption. Automation empowers B2B buyers to automate data and document exchange, streamline procurement workflows, and eliminate manual data processing. Automation depends on integration. Buyers want to integrate as many suppliers as possible, including manufacturers, to enable features such as PunchOut catalogs, sales order automation, and electronic invoicing. The ability to offer eProcurement integration has become a critical factor in vendor selection.
Without eCommerce, integration options are limited to older technology like Electronic Document Interchange (EDI), which provides a fraction of the convenience and flexibility of integrated eCommerce .
eCommerce empowers manufacturers to offer the integration and automation that buyers demand. However, there is one integration problem that eCommerce can’t solve without help. Buyers use dozens of different eProcurement and ERP platforms, each with incompatible integration protocols and APIs. That once made integration an expensive proposition. But, with a modern Integration Platform as a Service, manufacturers can quickly and inexpensively integrate their eCommerce store with any buyer eProcurement or ERP platforms.
A decade ago, manufacturers had a strong case against eCommerce adoption: it was technically challenging and expensive, the technology wasn’t ready for complex B2B sales, and buyers were happy with traditional phone and field sales. In 2021, technology and buyer behavior has evolved. B2B eCommerce platforms are mature and feature-rich. Buyers prefer to self serve, and they expect manufacturers to cooperate with their digitization and automation strategies. Manufacturers that ignore eCommerce risk being left behind.