B2B digital commerce sales of physical goods are predicted to exceed US$300bn (£260bn) by 2025, amounting to growth of 61% over 2021 figures. A healthy slice of that pie will be taken by a manufacturing sector that is increasingly warming to online sales.
Along with adjacent verticals like engineering, construction and factory/warehouse management, it has seen a significant shift in customer behaviour since the pandemic. What was once a face-to-face industry is increasingly going digital.
In fact, UK data from 2020 found that, across multiple verticals, only 15-25% of B2B buyers wanted to interact with sales reps in person post-pandemic. That might explain why 88% of business decision makers said they expect remote and digital models to be the long-term trend. Most also claimed the new way of selling is as effective or more so than pre-COVID models. The challenge for manufacturers will be to move beyond a simple digital storefront to give buyers what they’re asking for. That requires a keen insight into market dynamics, and an understanding of the composable technology platforms that will underpin successful digital commerce.
Buffeted by uncertainty in the manufacturing sector
The need for a future-proof digital commerce strategy has never been more important to manufacturers as the economic outlook worsens. Sluggish demand from key markets like China and the US in August exacerbated existing supply chain challenges caused by Brexit and the pandemic. It led to the biggest drop in the UK Manufacturing Purchasing Managers' Index (PMI) in two years, according to reports. Insolvencies are said to have surged by more than 60% in the past year. With manufacturing accounting for nearly 10% of GDP and over 7% of jobs, the long-term health of the sector has important consequences for the country as a whole.
Digital is not a cure-all, especially in an industry with highly sophisticated transactional business models. But with intelligent use of emerging models and technologies, manufacturers can cushion the blow of labour shortages and inflation, and navigate a landscape heading for recession. A key priority in doing so must be to focus on customer experience. In the digital commerce sphere, it means being able to satisfy demand from buyers who increasingly expect the same exceptional experiences they are used to getting in the B2C world. Developing the agility to support these goals is where composable commerce comes in.
What’s coming next for the manufacturing sector?
Composable commerce is about offering businesses flexible, API-driven platforms to deliver a best-of-breed approach, rather than rigid, monolithic architectures where innovation moves at the speed of the platform provider, rather than the market. Composable platforms are “headless”, meaning the front and back end are decoupled. This enables providers to offer limitless composability, allowing manufacturers to customise with new modules based on the needs of their customers. So where is the B2B commerce space heading, and how can manufacturers make the most of evolving trends? We’re seeing four key areas of digital transformation.
The first is about simplifying the ordering process. Economic downturns put extra pressure on businesses to retain the customers they have, which means enhancing the purchasing experience to make it faster and more streamlined. Composability can support these end goals by enabling manufacturers to personalise their digital offerings to each buyer. Ordering is more complex in a B2B than B2C world, so the more work that can be done to let customers place orders easily and empower sellers to manage those orders effectively, the better. The right technology should support this without adding extra costs or delivery time.
New digital commerce models are emerging all the time. And with tough economic headwinds already buffeting the industry, manufacturers need new ways to adapt and overcome. Pay per use is one such model. As the name suggests, it’s a payment model in which the customer pays for using a product rather than buying it. It really can be a win-win for manufacturers and their customers. The B2B buyer has lower up-front costs to foot and only pays for what they use. But for the B2B seller it means that, rather than have equipment like heavy welding machines sitting idle, they can at least monetise existing inventory.
Manufacturers could also consider adding smarter logistics solutions to their B2B digital commerce proposition. Parcel lockers and custom “click-and-collect” models could facilitate more streamlined delivery directly to customers, reducing wait times and again enhancing the overall experience. For larger shipments, manufacturers could consider customisable software to rent space in third-party providers’ delivery trucks. That would not only speed up delivery times but also provide a more sustainable and fuel-efficient way of running logistics—by, for example, ensuring truck loads are always optimised.
Finally, it’s always a good idea to keep an eye on what’s happening in the B2C space, and which ideas may cross over into B2B digital commerce. Product demos shared via online videos and live streaming are set to make a splash, for example. They could even help to encourage buyers from global markets to complete purchases.
Agility and scale in manufacturing
Manufacturers are not alone in facing mounting business uncertainty today. But they can do much to mitigate its worst effects, by leveraging the power of digital commerce to trim costs, manage labour shortages and drive sales. Composable commerce is the key to unlocking value from this space. It allows B2B sellers to seamlessly embed new models and channels into their digital proposition. The alternative is being tied to a monolithic architecture, unable to innovate until the platform vendor decides to. Composability means flexibility, agility and customisation. It provides the foundation on which businesses can evolve and scale at their own pace—while driving lower total-cost-of-ownership and higher return-on-investment. What business wouldn’t want that today?