Manufacturers, with the advent of the internet and digital transformation, are looking for new opportunities. They aim to boost revenue, drive down costs, improve growth, and create more "Amazon-like" experiences. As such, they are slowly deviating from legacy solutions and embracing new-age practices.
Manufacturers are looking to adapt their supply chains to be more flexible, agile, scalable, quicker, and global. They are shifting their business and commercial activities online. Their digitally-aware clients are demanding a more seamless channel while trading with them. Today's buyers would like the full spectrum of services and support hosted online.
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eCommerce is being adopted steadily by manufacturers in various sectors. Manufacturers, whether they are novice, intermediate, or innovators, are leveraging eCommerce capabilities. Such is being done to create unique value propositions in the industry. The eCommerce maturity (novice, intermediate, or innovators) may vary. But, the future roadmap will integrate digital solutions on various levels. Recently, we are seeing a noticeable shift by manufacturers to adopt a D2C approach and diversify from their typical B2B operations.
Manufacturers are investing in eCommerce platforms for a variety of reasons. Achieving operational excellence and enhancing buyer experience are just some of them. Furthermore, they even wish to decrease costs in their supply chain. To diversify sales channels too, manufacturers need a robust eCommerce build. To adopt a direct-to-customer (D2C) model, manufacturers need advanced eCommerce capabilities, and there is escaping it.
However, some manufacturers are yet to adopt any eCommerce technology at all. They fail to see the benefits of an online offering. Such brands don't have a clearly defined digital strategy. Their business model still revolves around legacy practices, and are unaware of the potential profit they are missing out on. They are yet to build an understanding of how their business can gain anything from eCommerce technologies.
Such manufacturers rely on their traditional practices to stimulate sales. Phone, fax, expos, face-to-face meets, seminars, etc. are the optimum channels to initiate deals. Physical mailing of brochures, pamphlets, and samples is the standard route for engaging and grabbing more contracts. All this went smoothly, albeit with disappointing results. But, then an unprecedented event disrupted everything.
Pandemic - The New Normal
Historically, manufacturers have never had an incentive big enough to get out of their comfort zone and go digital. Offline-traditional practices served them well. Since business processes weren't broken, there was nothing to fix. COVID-19 changed all that. Sales reps encountered friction in doing their jobs remotely. For such brands, the pandemic exacerbated the pain of non-integrated eCommerce.
The pandemic introduced new challenges to the supply chains. Some manufacturers faced increased demands and shortages while others faced partial or complete collapse. When the containment measures were imposed, it impacted the suppliers heavily. Manufacturers that were prepared for demand spikes and logistical challenges fared the best in meeting buyer expectations.
Many, if not most, manufacturing businesses were pushed into the unknown with very little idea about what to do next. B2B markets disappeared overnight to some companies, and they had neither eCommerce nor D2C capabilities to keep their business afloat. It is when faced with an unprecedented situation like this, manufacturers finally accepted that the new normal warrants a presence on the internet.
All manufacturers soon began evaluating digital commerce solutions. A fluid eCommerce portal with the right functionalities will assist your business. You could successfully plan, coordinate, and maintain production, sales, distribution, and fulfilment. A merger of eCommerce and supply chains is necessary. The merger will help to capture leads, build relationships, and grow sales.
The pandemic validated that many manufacturers were woefully unprepared for the disruption. As of now, the pandemic shows no sign of slowing down. Thus, manufacturers must start adapting at the earliest. This can mean embracing eCommerce technologies and moving towards non-traditional selling channels. Selling through an eCommerce website, marketplace, social media, etc. is the way to go.
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The ability to interact and engage with end-users is changing how manufacturers develop and advertise their products. Years of overbuilding and disruptions have them focused on adjusting their strategies. Investing in direct-to-consumer is the new mantra of modern manufacturers.
A close connection with consumers will help the brand to create better products. Manufacturers are shifting from their overreliance on distributor networks. They are uneasy about relying solely on traditional distribution channels. Instead, they are looking to expand their options to higher-margin direct sales.
Manufacturers are focusing on creating digital strategies. This sees them shifting their selling experiences online. They are looking for ways to centralize their offline and online sales. Not just focus on offline growth, but also create openings in the digital landscape. The digital approach will let them reach their end customers seamlessly. An omnichannel model will help them to target customers better.
Social commerce, eCommerce sites, and marketplaces are some of the paths brands take to enhance their connection with consumers. Buy Online, Pickup in Store (BOPUS), Manufacture online, Pickup in Store (MOPUS) and Customize online, Pickup in Store (COPUS) are the three models assisting manufacturers. Here, manufacturers allow their customers to buy products online and collect them from one of their retail stores.
It gives shoppers the convenience to pick their online purchases from a nearby store. Manufacturers can utilize this opportunity to create further sales. It also helps to deepen customer ties and provide interactions that keep customers coming back. Customers don't need to pay for delivery charges and find returns to be much simpler. The idea is to make shopping as frictionless as possible. Following this will undoubtedly improve the Customer Lifetime Value (CLV).
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Benefits of Adapting a Direct-to-customer (D2C) Model for Manufacturing Companies
1. Improved Profit Margins
A direct-to-customer sales model involves bypassing the middlemen. As such, any expenses, issues associated with managing supplier and distributor activities stand suspended. There is no need to worry about warehouses, freight transport, inventory insurance, and contracts. Manufacturers are in a better position to modify rates.
Even profit sharing with wholesalers and distributors gets removed from the equation. As a result, manufacturers get to keep a more significant cut. The lenient prices they were initially quoting to suppliers had to account for their profits as well. Reaching directly to the consumers means manufacturers no longer need to compromise on rates. And still, be able to realize gains for customers.
2. Customer Relationship
Manufacturers that develop a D2C system will grow closer to their customers. Close contact with consumers will enable a better understanding of their buying patterns. Their in-house team is now managing all the queries, complaints, and reviews. Manufacturers no longer need to go through intermediaries.
Often the feedback from customers was filtered through multiple in-between touchpoints before it reached them. This led to wrong forecasts and estimations of consumer interests. Misinterpreting customer feedback caused product failures. The same even led to overstocking of certain products. In the end, manufacturers suffered heavy losses. Direct engagement will mitigate these issues. Hear from your customers directly!
3. Minimize Risk
Brands can also use direct channels to test new products in the market. There is always a risk of the products going unsold after various distributors and wholesalers have bought them. Mitigate the risk by testing the products with consumers. Measure the sales of different products before finalizing any deal with partners. Gauging interest among different buyers helps to minimize risk for their distributors.
Testing the feedback from consumers helps to create better products. Manufacturers need the ability to perform an extensive analysis of the oversold and unsold products. Then study which products are more in demand and have steady sales. Also, identify the weaker products and eliminate them from your inventory. Thus, manufacturers can help distributors and retailers reap the benefits of improvised products. Doing so will lead to more sales and fewer returns.
The integration of business systems and other automation tools provide marked efficiencies for B2B organizations looking to adopt a D2C model. Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and other software simplify the way you handle your internal processes. Employees can focus on business management activities, customer acquisition, marketing, and conversions. They worry less about handling data manually.
Leverage centralized data to create flexible reporting and dashboards. Then study these reports to understand buyer behavior, business dynamics, and product demands. Access to real-time data and user-friendly analytical tools give manufacturers a better insight into their business. They are improving their ability to make informed decisions. Manufacturers prevent overstocking and understocking issues.
Analytical tools help manufacturers to gauge their performance. Such tools assist in deriving metrics. These metrics then help to detect and improve various areas of their business. The best part, you don't need to spend a ton of time searching, compiling, and analyzing data. All you need to do is deploy tools that accomplish the same for you.
Thus, it allows more time to build strategies for business growth. The most sophisticated manufacturers drive real value for their businesses by utilizing technologies. The technologies would come to include artificial intelligence, machine learning algorithms, big data analytics, and business intelligence insights. The analytical approach is especially useful for manufacturers that follow a D2C model.
With a D2C model, you get the feedback directly from the end-users. This means you can access the most accurate information about your product and fine-tune it, just the way your end consumers need it to be. It helps them to gauge the buying patterns of their consumers. Analytics also helps to improve the accuracy of demand planning and forecasting.
eCommerce allows manufacturers to realize their true Omnichannel potential. Connecting with buyers on every touchpoint is essential. Today, even for a B2B purchase, the millennial procurement officer will likely use a mobile phone to find the right product. Manufacturers could unify their sales and improve their revenue and even fulfil orders from anywhere. Adopting D2C could be your first step to adopting an omnichannel approach for your business.
You can either create a responsive website or opt for a native mobile app; ideally, you'll need both. The interconnected ecosystem means you can track customers anywhere. Plus, the data you collect from different devices gives you better insights into how buyers are interacting with your brand. You could also deflect buyers from one touchpoint to another with lucrative offers. Give your buyers a seamless, integrated, and consistent experience.
7. Payment Solutions
Manufacturers, when they sell to other businesses, the payment is most likely in the form of credit sales. But, D2C sales are different, and it must be flexible and diverse enough to handle multiple payment gateways, including all the major ones like PayPal and Visa. This can be easily implemented on your eCommerce website. However, you should also keep an open-mind about enabling B2B purchase capability on it as well.
In the case of B2B or wholesale sales, buyers receive dynamic pricing. This is because of the significantly high volumes and complex nature of transactions. This includes a multi-level approval process, negotiations, and so on. In terms of budget, manufacturers transact in higher values with other businesses. Complex pricing, substantial negotiations, and varied payment processes are pretty standard while dealing with distributors and wholesalers.
In B2B, manufacturers offer different prices to their customers. The rates are based on volume, contract, loyalty, promotions, and numerous other factors. Thus, it is impossible to list a single price on the product page. An eCommerce portal can easily support all such fluctuating prices. Most websites will have pre-defined rules. Such rules allow you to determine rates at different logical levels.
Customers want personalized solutions. Manufacturers must aim to serve the same through a customer portal. The portal's customization is adjusted around parameters like order history, relationship, price brackets, geographical location, and more. Such portals even allow clients to request for unique quotes for bulk orders. Besides, offering more clarity around potential hidden costs in the transaction. The hidden fees could be taxes and customs charges.
Not only that, but the cognitive capabilities within the platform can anticipate future behaviors of customers. This then allows it to suggest offers, product configuration, shipping options, and more. The recommendations help to personalize the experience of customers. The featured suggestions are made after identifying patterns in the buyer's account. In many instances, buyers can also customize the final configuration of purchased products.
Online presence favors marketing opportunities. Inbound marketing sees a whole nother level of scope online. Attracting customers to your website won't seem so cumbersome anymore. Cost-effective and impactful SEO solutions help to increase your visibility. Offline marketing, on the other hand, is tiring and rarely gives a good return on investment.
The procurement officers are browsing social media at length. Look to captivate them on one of the social platforms. Creating an immersive experience will change the perception of your brand. It could go on to overhaul your status in the industry. No doubt, your business certifications are essential. But, an impactful video could also go a long way in persuading your customers to consider you. This holds true not just for your D2C venture but also for your B2B transaction should you decide to integrate it into your online store.
Marketing through social media will redirect customers to your store. Use the collective reach of Facebook, Pinterest, Instagram, etc. to showcase your products. Even use PPC and other paid search engine tactics to elevate your status and reinforce your brand. Marketing is suddenly more simplified and useful now. The industry seminars and expo presentations do very little to push your brand value.
10. New Territories
eCommerce goes hand-in-hand with digital marketing. An online presence makes entering new territories easier. Increased brand awareness will improve your reach. Suddenly, you are accessing regions that were otherwise alien to your brand. The new regions will then create more sales opportunities. If you wish to sell directly to customers, then not having an eCommerce presence will affect your accessibility.
An eCommerce website filled with informative content and fuelled by SEO goes a long way in improving your position on search engines. A higher rank on SERP will get your brand more attention and credibility. Due to being placed higher, the chances of increased clicks are also high. More clicks mean more traffic to your store. The increased traffic will increase the likelihood of sales.
11. Increased Visibility
Manufacturers would often have to deal with very high inventory numbers. Such an increase puts more demands on warehouse management processes. They want to avoid increased order time, costs, and trapped capital on a particular SKU. Also, they want to have up to date knowledge about the products in hand. And when you adopt a D2C approach, there will be even more things for you to factor in. However, eCommerce is also equipped to handle this challenge.
Whenever an item goes OOS, you want to know in advance about the status of the product. Increased visibility helps the manufacturer to inform customers about Out of Stock (OOS) items. This builds trust and prevents unnecessary conflicts. Businesses can improve visibility by integrating supply chain data into their eCommerce store.
12. Purchasing Efficiency
One of the best things about adopting a D2C approach for manufacturers is that they can enable a self-service portal for their customers. This means that their customer can easily make a purchase on their eCommerce store all him/herself with ease. What's even more attractive is that you can enable the same for your B2B customers as well to encourage large scale B2B sales from all parts of the world.
A self-service portal gives procurement officers more efficiency. It lets them have online support without the need to interact with a human. The portal allows them to find answers to their queries, submit support tickets, download resources, and more. Customers use the self-service portal to generate quotes or check the status of their orders. RFQ, invoices, tracking, and past orders can also be accessed with ease.
By providing a self-service portal, you have digitized and automated your entire ordering process. A self-service portal also vastly increases the customer experience. It gives them faster access to all the information they seek. There is no need to go through constant phone chats and mail chains with customer support.
Content, be it textual or visual, can't be ignored in both D2C and B2B transactions. Search engines play a significant role in how customers find you. Customers conduct web searches to look for information, solutions, and suppliers. The content in place, fuelled by high-volume keywords and accurate SEO, will direct the traffic to your eCommerce store. Having a strong content strategy optimized for search engines is key to reaching new prospects.
The long-winding nature of the B2B sales cycle goes through multiple key personnel before approval. Nothing is ever authorized instantly in B2B. Thus, content plays an essential role in B2B. Spec sheets, brochures, pamphlets, certifications, images, videos, etc. are reviewed before finalizing a deal. Optimize the content on your eCommerce site.
Shipping goods to distributors or even customers is further simplified through eCommerce. Manufacturers can quickly reduce bottlenecks and streamline processes in their supply chain. They keep tabs on SKUs, orders, packing, tracking via an eCommerce system. This gives them complete visibility, and they are always in the know-how well ahead. Managing returns is another headache often encountered by manufacturers.
The inability to tally and establish the correct serial or part number of the product or package being returned leads to discrepancies. Further, the corresponding amount of the returned order must also be refunded. Consumers want the ease of handling returns online. Thus, businesses must act quickly in case a product comes out defective. Manufacturers can easily manage return order flow between the ERP and eCommerce systems.
Logistics is much easier to handle in a D2C model as compared to the B2B or wholesale model. Furthermore, you can even implement real-time tracking of the orders for the customers in D2C. B2B is more complex but, with the right eCommerce partner like Virtina, all you'd have to do is sit back and relax. With the help of eCommerce, B2B can automate even the most complex of tasks to save you time and effort.
Today, as we know, the world has changed, and if your manufacturing business is to stay relevant, you need to change with the times too. D2C is perhaps the best way to diversify your manufacturing business. It lets you sell directly to your customers and get the most accurate feedback from the end consumers. Furthermore, enabling a D2C model via an eCommerce store is the first step towards a true omnichannel business.
In the future, it will be more and more inevitable to have an omnichannel approach for manufacturers. We have already seen business crumble when faced with unprecedented global events. It has made it clear that it is quintessential for manufacturers. They need to have an alternative mode of business to keep them afloat during similar situations.
Hence, manufacturers are currently evaluating eCommerce strategies. The new normal has made them realize the worth of agility, scalability, and faster time-to-market. They also want to cut heavy labor, costly investments, and inaccuracies in their legacy systems. An eCommerce platform interlinked with backend processes helps to adapt faster and access new regions.