Skip to Main Content

May 16, 2019 | 4 minute read

Commerce Pulse: What’s keeping manufacturers and distributors up at night?

written by Ana Milevskaja

Getting your B2B business ready for the digital era is no small feat. It takes determination and perseverance to keep the rock rolling up the hill. And just when you think you are done…you have to roll up your sleeves and get going all over again as business needs change and customer expectations evolve. This feeling of pushing a rock up a hill doesn’t only refer to businesses that just got started with commerce, but commerce veterans feel it too. 

As distributors and manufacturers of all makes and sizes convened in Chicago for the annual B2B Online conference they were determined to solve for their most pressing challenge - how to transform their organizations for the digital era. It was also clear that the basics, such as a well-functioning website are still a priority for many, while keeping an eye towards the future of commerce and leveraging data and the internet of things (IoT) are also top concerns. 

So, what are the top issues and challenges keeping manufacturers and distributors up at night?

Change management across organization is a big topic. Once you bring in a commerce platform, it’s only one piece of the organizational puzzle. You need to transform your processes and people for the digital age. How will you be marketing products? What tools and skills does your marketing team need? How do you get your sales team to buy into the digital commerce strategy and then shift them from order-taking to being brand advocates? How do your customer service reps help a customer when they get stuck in the middle of placing an online order? It’s all about thinking through what digital presence means for your business and what you need to do to drive adoption of digital culture in your company.

Solving channel conflict is top of mind for many manufacturers. How do you go direct to the consumer without alienating your distribution channel? Many turn to a marketplace model and invite their distributors to sell there. Some manufacturers say that the promise of capturing additional orders of distributors who can then dropship to the customer is a compelling value proposition that allows them to keep the channel engaged while going direct-to-consumer (DTC). Being a distributor today is tougher than ever, since in this scenario, a manufacturer owns the customer data and it is easier than ever to cut out the “middle man” at any point of time.

Pay-per-use for large expensive products is becoming the new norm. For example, Rolls-Royce is selling jet engines to airlines on a pay-per-use model. It means that airlines pay for the engine only when it is used in flight. In such cases, Rolls-Royce is still able to make money while also getting better equipped to predict technical issues with the engines. This model is attractive to many businesses as it allows for continuous stream of revenue well after the product was sold. In many cases, this revenue will exceed the margin from the sale of the product itself. Imagine what you can do if a fraction of your products can be sold through a subscription model?

B2B personalization is moving beyond serving relevant content, product, and pricing information to the user. It is becoming all about collaboration while purchasing on behalf of your organization. In this scenario, the users are able to build multiple carts based on the roles assigned to them and order under one account. Gone are the workflows and approvals that are by-products of the bastardized B2C platforms made work for B2B use cases.

Global expansion isn’t about setting a full-blown global presence with a multi-million-dollar budget. It is a crawl, walk, run approach in order to build the case for expansion overtime. It starts with finding the right partner to explore the potential of a new geography. For example, it can start with leveraging a third party provider for a merchant of record and supplychain services, such as Digital River, or leveraging third party marketplaces, such as TMall and Alibaba. Partnering with a local expert to understand regulations for your products is a must. Learning from this experience and adapting to local laws and customs will help build a sustainable global business. 

Data and AI are the new kings for B2B commerce practitioners, especially for those that have their commerce presence established and looking for ways to optimize the investment. However, leveraging your data for insights has a prerequisite many companies do not have yet. Lego Negul, a super-savvy head of development at Elastic Path with a black belt in all things commerce, talks about how data is only as good as your APIs. It’s the fastest way to put data to good use and add business value.