From Traditional To Digital: The Imperative Shift To E-commerce In Manufacturing

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Who was it again that said you can't keep doing things the same way and expect a different outcome?

Yeah, the great Einstein. Likewise, you can’t expect business growth and still use the traditional manufacturing method. Technology waits for no one. You either keep up with it or be left behind.

So, if you’re feeling left behind in your manufacturing business, perhaps it’s because you’re yet to go digital in your operations.

If you’ve been able to make the shift from traditional to digital manufacturing methods or working at it, good for you. However, if you’re struggling to even make sense of the whole digital transformation shebang, help is here.

By the time you’re done with this article, you’d have learned:

  • The limitations of traditional manufacturing
  • The rise of e-commerce in manufacturing
  • The key drivers of the shift to e-commerce 
  • The importance of e-commerce for manufacturing

The limitations of traditional manufacturing

We all love our comfort zones and are always hesitant to step into the unknown and untested.

The limitations of traditional manufacturing

Valid as this attitude is, it’s not always the best. We won't know how limiting our present status is until we see how it can be better. Though efficient in its own way, traditional manufacturing has its limitations. Some of them are listed below.

Costly operational overheads

Overhead costs in traditional manufacturing are a huge source of concern for manufacturers. 

The costs of maintaining physical storefronts, conducting manual and labor-intensive procedures, manually managing inventory, among other costs, add up in the long run and affect their bottom line. 

Geographical constraints

Traditional manufacturing’s mode of operation requires stakeholders to be in close physical proximity. This requirement is a major limitation to manufacturers as they can only do business with and for those in their immediate environment. 

Global markets are out of their reach and expansion is pegged at a certain level. If they attempt to take their business beyond their regional boundaries, they have to deal with time issues and exorbitant transportation costs. 

Delayed reaction to market demands

Due to the long processes involved in traditional manufacturing, it is difficult for manufacturers to respond quickly to market demands.

We’re in a fast-paced world where people want products delivered to them yesterday. Unfortunately, traditional manufacturing has a slow response rate; therefore, manufacturers struggle to meet customers' expectations

Lack of data-based decision-making

Decisions in traditional manufacturing are made based on day-to-day experiences and little or no attention is paid to data. This is a big minus for this model as the world is now run on data.

Manufacturers can't recognize patterns, improve processes, and make realistic decisions without comprehensive data and analytics. This results in low efficiency, poor customer service and lack of innovation.

The rise of e-commerce in manufacturing

E-commerce has gone beyond just buying and selling. It has transformed the entire landscape of business-to-consumer (B2C) and business-to-business (B2B) commerce, altering the way businesses operate and interact with customers. 

The rise of e-commerce in manufacturing

This transformation has  various aspects of manufacturing, including ERP supply chain management, pricing strategies, product availability, inventory management, logistics, and consumer behavior in developed economies worldwide. Manufacturing is not left behind in this digital takeover. 

E-commerce is doing a good job of reshaping the industry by empowering manufacturers to harness digital technologies and platforms for processes like supply, sales and customer engagement.

With this enablement, manufacturers all over the world can launch e-commerce empires.

With e-commerce technologies, manufacturers can sell directly to end-users through their websites or e-commerce platforms like Amazon and Alibaba.

The manufacturing value chain also gets some juice from this innovation. Manufacturers can now connect online with suppliers, distributors, partners and others in the value chain. 

Today, China is the largest manufacturing company globally and it is embracing e-commerce so rapidly that the market is set to double by 2025.

Europe and the United States are also coming steadily behind. This shift holds great promise and every manufacturer should be on board.

3 key drivers of the shift to e-commerce 

There’s no smoke without fire. This e-commerce buzz in manufacturing isn’t just happening.

It came about as a result of certain factors. Manufacturers (who love their comfort zones) aren't just on their toes trying to keep up with the trends; there are factors driving this wind of change. Let’s learn 3 of them.

1. Digital transformation and technological advancements 

In every industry, there’s a general move from analog to digital mode of operation.

3 key drivers of the shift to e-commerce

This process is called digital transformation. It involves using digital technologies to either create new business processes and cultures or improve existing ones to meet evolving business and market demands.

We also mustn't forget that digital transformation is only possible through technological advancements.

These technological innovations have made it easier for manufacturers to adopt e-commerce. Innovations like the internet, online platforms and secure digital payment systems paved the way for e-commerce. 

2. Evolving purchasing behavior and customer preferences 

Over the years, what consumers prefer and the way they make purchases have changed drastically.

A few decades ago, you would have to get to the store to get groceries. Now, with a few clicks on your phone, you can have your groceries delivered to your doorsteps. 

You can even automate your purchase and have the same set of groceries delivered to you at the same time every month. That’s not all; you can place an order from a part of the world and have it delivered to someone at the other end, all without leaving your room.

3. Covid-19 pandemic 

It won't be fair to talk about the drivers of the shift to e-commerce in manufacturing and not mention the Covid-19 pandemic. It was one massive game-changer. The pandemic necessitated online buying and selling because movement was restricted globally.

Guess what? After the pandemic, people said why the freaking not! They realized they had no business going to the mall when they could order almost anything online.

This period changed the way people did businesses and many companies started operating fully remotely.

E-commerce stakeholders had to buckle their shoes and take on the challenge, and frankly, they’ve not done badly at all. Everyday, there’s one new improvement in the technology and processes to enable better efficiency.

E-commerce fraud prevention best practices

As manufacturers embrace the shift to e-commerce, it is essential to address the potential risks associated with online transactions.

From Traditional to Digital The Imperative Shift to E-commerce in Manufacturing

Implementing effective fraud prevention measures can safeguard your business and protect your customers. Consider the following best practices to mitigate e-commerce fraud:

  • Secure Payment Gateways and Encryption: Utilize trusted payment gateways that offer robust security features such as encryption and tokenization. This ensures that sensitive customer information is protected during online transactions.
  • Multi-Factor Authentication: Implement multi-factor authentication measures to verify the identity of customers and reduce the risk of fraudulent activities. This can include methods such as SMS verification, biometrics, or security questions.
  • Fraud Monitoring Tools: Employ advanced fraud monitoring tools that utilize machine learning algorithms to detect suspicious patterns and anomalies in customer behavior. These tools can help identify potential fraudulent activities in real-time.
  • Regular Security Audits: Conduct regular security audits to assess vulnerabilities in your e-commerce systems and infrastructure. This includes reviewing your website's security protocols, implementing strong password policies, and keeping software up to date.
  • Education and Training: Train your staff and educate your customers about common e-commerce fraud techniques and how to recognize and report suspicious activities. By raising awareness, you can empower both employees and customers to remain vigilant against fraudulent attempts.
  • Order Verification Procedures: Implement thorough order verification processes, especially for high-value transactions. This may include verifying customer details, cross-referencing billing and shipping addresses, and conducting manual reviews when necessary.
  • Customer Support and Dispute Resolution: Provide reliable customer support channels to address concerns and resolve disputes promptly. Offering a responsive and transparent customer service experience can help build trust and prevent potential fraud incidents.

By incorporating these ecommerce fraud prevention best practices into your manufacturing e-commerce operations, you can safeguard your business, protect your customers' interests, and ensure a secure online shopping experience.

The importance of e-commerce for manufacturing

Finally, we get to the importance of e-commerce for manufacturing. The law of sowing and reaping is one of the most potent laws in the universe.

If you put an effort into a venture, all things being equal, you’ll get the rewards. Likewise, if you invest in e-commerce as a manufacturer, you will reap bounty harvests like the ones listed below:

More efficient supply chain 

With e-commerce, manufacturers can better manage their supply chain.

Inventory management, order fulfillment automation and logistics optimization are seamless when you integrate e-commerce into your business. This improves productivity and boosts sales.

Increased market access 

There’s an adage that says you’ll think your farm is the largest ever until you get to someone else’s farm.

Traditional manufacturing can trick you into believing you’re doing well until you see the numbers other manufacturers are doing as a result of e-commerce. Then, you’ll know you’ve not even scratched the surface. 

E-commerce opens you to the world and opens the world to you. You become more visible to many more prospects and the demand for your products increases astronomically. You penetrate a larger market and subsequently experience huge revenue growth. 

Improved customer experience  

Today’s consumer has many options. They value convenience and speed.They're also technologically savvy. To connect with them, you'll have to speak their language. Their language? Electronic commerce! 

Integrating e-commerce into your manufacturing business lets you connect with buyers easily. You improve their experiences with seamless product browsing, customization options, live inventory updates and smooth order processing. 

Reduced operational costs  

Say bye to physical storefronts and hi to digital shops. E-commerce helps you shave off expenses related to running a physical store, like rent, utilities, wages, etc.

The importance of e-commerce for manufacturing

That’s not all; with the improved inventory management and reduced logistics cost benefits you get from e-commerce, you’ll be smiling to the bank more than before. 

Data-based decision-making

Data drives decision-making in the modern business world. Without it, you’ll be operating in a cocoon and your business will suffer.

Electronic commerce gives you access to every data you’ll ever need. You’ll be able to monitor your inventory as well as analyze customers’ buying behaviors and market trends.

E-commerce in manufacturing is the perfect alliance – make that shift!

You can’t complain about a decision made in your absence if you decide to be absent. If your competitors are making the shift to e-commerce in manufacturing, then you can't complain if your customers are going to them.

Digital transformation in manufacturing has come to stay; you either fall in line or fall to the side. Your choice! If you’re taking the leap, you’re making the best decision for your business.

You’ll have a more efficient supply chain, improved market access, enhanced customer experience, reduced operational costs, data-driven decision-making and a competitive edge in the marketplace. 

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

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