The digital commerce sector has seen outstanding growth since 2020. The B2B sector (including manufacturing) is no exception, with sales across digital commerce sites, log-in portals and marketplaces surging by 18% between 2020 and 2021, to top $1.6 trillion last year . Moreover, two-thirds of corporate buyers including those in the manufacturing sector now offer online sales capabilities.
Yet while manufacturing companies have responded to the digital shift with their digital commerce investments, there are still challenges that remain. Manufacturing businesses need to move beyond merely providing an online store. They need to think about what customers really want, and how quickly they can deliver and adapt to these changing market demands. That requires a composable commerce model.
The State of the Market
Digital B2B commerce grew 1.17 times faster than total sales growth across US manufacturing and distribution, which edged past $13 trillion last year. Why? Because both corporate buyers and sellers have come to view digital as a “more efficient and effective” way to research and buy goods and services, according to one analysis.
This certainly seems to be the case. Replacing in-person sales with videoconferencing, chat tools and online research is quick and easier for both buyers and sellers in the manufacturing world. It’s especially beneficial for sales staff, saving them time and expense on travel to face-to-face meetings and demos. What’s more, research shows that the digital sales model is extremely effective.
All of which helps to explain the zeal with which manufacturing sector businesses have responded to the macro trends that emerged during the pandemic. Sellers now operate digital commerce channels for everything from drill bits to electric motors and hydraulic components. But caution should be taken before embarking on the next wave of digital transformation. That’s because monolithic digital commerce offerings could actually restrict long-term growth, by typing companies to a single provider with relatively limited functionality.
The truth is that vendor lock-in is a very real concern in B2B digital commerce. Providers like SAP and Salesforce demand manufacturing users work in very specific ways, with limited options for customization. Why wait around for new features from a provider when you could be shopping around for best-of-breed functionality from a whole marketplace of software developers? The truth is that digital commerce in manufacturing is more sophisticated than the single vendor model acknowledges. It requires a more adaptable approach built around composability.
Adaptability and Customer Engagement
Composable commerce enables manufacturing businesses to pick and choose packaged business capabilities from a range of vendors. This lets them build engaging and intuitive customer experiences quickly and easily without help from a developer. Flexibility is the name of the game: it’s about empowering manufacturing firms with the freedom to adapt, scale and rapidly go to market with minimal complexity and maximum control. Crucially, there’s no vendor lock-in, making it easier for manufacturing sellers to future-proof their business and retain control of customer relationships.
From a single platform, manufacturers can simplify purchasing, boost the bottom line and expand internationally. Take purchasing for example. With the right provider, manufacturers can configure their complex, multifaceted products as “bundles” to make life easier for customers. Making the full gamut of products available online increases the portfolio for purchasers, enabling them to build the best solutions for their needs.
With volume prices, manufacturers can add further value for customers by driving cost optimization via bulk orders while increasing their own profits. “Company accounts” functionality works to enhance customer convenience and optimize procurement. Then there’s global expansion. With the flexibility to offer different storefronts according to country-specific needs, sellers can attract international buyers via customized language, costs, content and store features.
The Future’s Composable
With composability, more manufacturers can follow in the footsteps of firms like multibillion-dollar manufacturer Hilti, which was able to expand into Africa with multi-store functionality enabled by the best-of-breed approach. Or intralogistics firm Jungheinrich, which created digital access to over 800,000 spare parts for customers in 40 countries. Or hydraulic components manufacturer STAUFF, which replaced its legacy commerce technology to deliver a seamless experience for customers. Buyers on the STAUFF site can search easily for products, set up complex access management to fulfill internal procurement requirements, import spare parts lists for ordering, place recurring orders and much more.
According to McKinsey, “overwhelming customer demand” is the reason for the recent surge in digital commerce. It’s why the channel now accounts for more than 18% of total revenue for the average B2B company. It’s also why manufacturers focused on these ever-changing demands will seek out a composable, best-of-breed way to deliver digital commerce.
As the Co-founder and CEO of Spryker, Boris Lokschin is interested in the potential of technology to enable companies to build digital transactional capabilities beyond traditional thinking and to transform businesses and whole industries. Since its founding in 2014, Spryker has empowered 150+ companies such as Aldi, Toyota, Siemens, HILTI and RICOH through B2B, enterprise marketplaces, IoT and unified commerce in more than 200 countries worldwide.