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Quick Guide to Digital Commerce for Manufacturers & Distributors 

Robert Irwin< Robert Irwin April 12, 2023

As manufacturers and distributors navigate the ever-changing landscape of digital commerce, it can be overwhelming to know where to start. With so many channels, tools, and strategies available, it’s easy to get lost in the noise. However, embracing digital commerce can be a game-changer for businesses, opening up new revenue streams and opportunities for growth. In this article, Robert Irwin provides a quick guide to digital commerce for manufacturers and distributors, exploring the key considerations and best practices to help you get started on your digital journey.

When the world shut down amid a global pandemic a few years ago, manufacturers and distributors that had digital transformation ‘in their three-to-five-year plans’ suddenly had an urgent need to maintain business continuity and jumped all-in on digitizing their businesses. The ensuing economic uncertainty, changing customer expectations, and new work-from-anywhere models only added fuel to the digital fire and today’s savvy enterprises are transforming their customer experiences with smart digital strategies.  

The Evolution of B2B Digital Commerce

The evolution of digital commerce has come a long way since the early days of the internet. Let’s use The March of Progress as an analogy for just how far digital commerce has come. Originally titled The Road to Homo Sapiens, The March of Progress is an illustration drawn by Rudolph Zallinger that presents 25 million years of human evolution. Today, it’s one of the most widely recognized scientific images, and it’s instantly recognizable shorthand for evolutionary progress. Here are six key steps in the evolution of digital commerce for manufacturers and distributors: 

  1. Online Catalogue – The first step in digital commerce was simply publishing a catalog online. This allowed customers to browse products and place orders, but it was still a manual process. 
  1. Online eOrdering – Next came the ability to place orders online, which made the ordering process faster and more convenient for customers. 
  1. Digital Cross-Sell Recommendations – With the advent of data analytics, companies could start to make product recommendations to customers based on their purchase history, leading to increased sales. 
  1. Negotiation Triggered Online – The ability to negotiate pricing and terms online was a major step forward, but it still required human intervention to trigger the negotiation. 
  1. Simple Trade-Offs Available in Online Negotiation – As negotiation algorithms became more sophisticated, companies could offer customers simple trade-offs to reach a mutually beneficial agreement. 
  1. Fully Automated Digital Negotiation – Today, many manufacturers and distributors are using fully automated negotiation algorithms that can handle complex negotiations without human intervention. This allows companies to scale their business and reduce costs while improving customer satisfaction. 

These six steps represent the progression from basic online catalogs to fully automated digital negotiations, marking a significant evolution in the way manufacturers and distributors conduct their business online.  

Going forward, remember that digital commerce and digital transformation is a marathon not a sprint. You have to prepare your teams and culture for a bit of a shock. Any company developing a digital commerce strategy requires a crawl, walk, run mindset. You need to move at your own pace and select the right sequence for your unique pricing transformation journey.  

What is Digital Commerce? 

Key to digital transformation for many manufacturers and distributors is the addition of digital commerce capabilities. Light years beyond adding a simple shopping cart to your website, digital commerce, as defined by Gartner, enables customers to purchase goods and services through an interactive and self-service experience. It includes the people, processes, and technologies to execute the offering of development content, analytics, promotion, pricing, customer acquisition and retention, and customer experience at all touchpoints throughout the customer buying journey. 

Without digital commerce, your customer experience will suffer and that’s a mistake you can’t afford to make. A recent McKinsey analysis shows that across industries, companies that are leaders of customer experience achieved more than double the revenue growth of “CX laggards” between 2016 and 2021.  

The Benefits of Digital Commerce for Manufacturers and Distributors 

Implementing digital commerce brings many benefits. For the organization offering it, transactions can be done 24/7 with low-cost and high reach. But it runs much deeper than those surface level value-adds. 

Higher Levels of Customer Satisfaction 

At Vendavo, we frequently discuss the importance of knowing your customers at a deep level. One important piece to understand is how they prefer to purchase. Today’s younger B2B buyers favor digital purchasing.  

In their new report, Younger Buyers Have Changed the Business Buying Landscape, Forrester found Millennials and Gen Z buyers now constitute 64 percent of business buyers. Given their digital savviness, they are more likely to use digital, self-serve transaction channels than older buyers who relied on more traditional, in-person methods. 35% of younger buyers said they will use an enterprise app to make corporate purchases. 24% of older B2B buyers prefer placing orders with an inside sales representative but just 19% of Millennial and Generation Z buyers said the same. 

Increased Sales 

Most organizations launch digital commerce initiatives to complement existing go-to-market channels, not replace existing sales, channel, or partner programs. And for good reason. Gartner forecasts 80% of B2B sales interactions between suppliers and buyers will occur in digital channels by 2025. Gartner’s 2020 B2B Digital Commerce Survey shows B2B sales increases more through websites than salespeople. It was up 8% vs. a decrease of 2% respectively in 2020-2023. 

Improved Efficiency and Productivity 

Leveraging digital commerce can bring significant efficiencies to manufacturers and distributors. By enabling your customers to place orders online at their convenience, your sellers can devote more attention on adding value rather than just acting as order takers. Moreover, automated ordering and workflows reduce the chances of data reconfiguration errors in separate systems. This streamlined approach leads to greater efficiency in the shipping process and allows for increased sales. 

Cautions of Digital Commerce for Manufacturers and Distributors 

Before you launch any digital commerce initiative however, it’s important to carefully consider the impact online commerce will have on your existing sales channels. Negative repercussions can be common if the proper alignments aren’t in place first.  

  • Sales teams may consider digital commerce a threat because direct selling can seemingly take orders away from them. 
  • Partners may view digital commerce as directly competitive to their programs. 
  • Existing distribution channels may feel threatened by the implementation of digital commerce. 
  • Customers may expect lower prices and faster shipping times, putting pressure on margins and fulfillment capabilities. 
  • Implementing digital commerce requires significant investments in technology, infrastructure, and talent. 
  • Managing online orders, payments, and inventory can be complex and may require additional resources to handle the increased volume.  
  • Security and data privacy concerns are crucial considerations when it comes to managing customer data and transactions online.  
  • Cultural resistance to change may impede adoption and successful implementation of digital commerce initiatives. 

Don’t let these cautions dissuade you, however. Digital commerce is a necessity today. As long as you have a strategy that includes considerations for these cautions, you’ll be in good shape. For digital commerce to be successful, it should complement your sales efforts – not compete with or replace them. Gartner outlines ways to do this in their report, 5 Ways to Align Sales with B2B Digital Commerce, including communicating the value of selling direct in areas where there is no sales representation, engaging partners when orders come in from direct online sales, and enabling partners to sell to end consumers.  

Equipping your Sales Team 

To meet customer expectations, create winning experiences, and boost sales rather than alienate your existing go-to-market teams, equip them! Along with aligning your online and in-person strategies, ensure your sales teams have the digital selling tools they need for success. A few sales enablement tools to consider include: 

  • A Configure, Price, Quote (CPQ) solution will streamline the quote-to-cash process. The ability to quickly generate accurate, optimized quotes for your sales team (and through digital commerce channels) meets customer expectation for a seamless experience. It also empowers your sales team to deliver the right product, at the right price, for the right customers, at the right time. Win rates climb. Check out Vendavo Intelligent CPQ
  • Provide your sales team with precise pricing guidance based on your customers’ known willingness-to-pay. This insight goes a long way toward meeting your customers’ expectations and maximizing your sales team’s efforts. Strategic pricing insights work best when they are integrated with your CPQ solution. Check out Deal Price Optimizer.  
  • Increase your sales basket size with highly personalized cross-sell recommendations that are based on your similar customers’ purchase history. Your sales team can close higher value deals by recommending the products your customer is most likely to buy and your customers will appreciate the spot-on suggestions. Check out Sales Optimizer.  

To learn more about how to implement strong digital systems and prioritize customer experience, read our case study, “Leading Electrical Distributor Improves Sales and Margin with Vendavo.”