Does digital belong in the physical world of manufacturing?
Does digital have a place in the physical world of manufacturing?
The manufacturing industry is, by its nature, a physical world where business has historically been done face-to-face, buoyed by the need to execute multiple bulk orders quickly and customise products which require direct, detailed communication with customers.
As a result adoption of digital commerce channels has, by and large, been slow. However this pace has not hindered investment and in recent years digital as a sales channel has moved up the manufacturing agenda.
The driver behind this investment is likely linked to the fact four in five manufacturers feel the digital boom has had a positive impact on their organisation – the main benefits being that digital sales channels have helped to grow their business internationally (26%), improved the customer experience (22%) and allowed them to expand their product portfolio (17%) whilst helping to increase brand awareness (17%).
However the reality is that many are struggling to embrace these channels. 86% of manufacturers have faced challenges developing digital commerce, with common issues including the process of integrating ecommerce with traditional sales (44%) and lack of board/senior management buy-in (32%).
So whilst manufacturing is unlikely to move away from physical business completely – 75% of sales will still be attributed to traditional channels such as face-to-face and phone in 2020 – there is confidence that digital can deliver more for manufacturers. Close to half (45%) of manufacturers believe that over the next five years the revenue coming from ecommerce, mcommerce and social commerce will represent between 10% and 20%. This is a significant increase on the current average annual revenue driven by these channels (5%).
When implemented well digital commerce delivers an engaging online experience that facilitates manufacturers to reduce admin costs, increase sales and improve brand loyalty. Moreover, with 97% of manufactures having a team or individual within the business who is responsible for digital commerce, it emphasises a clear belief that digital channels fit within the industry’s future. But it is unlikely they will overtake traditional channels completely, instead leaning towards being truly multifaceted – a mix of digital technologies sitting alongside traditional channels. Only time will tell.
Salmon’s, a Wunderman Commerce Company, report, ‘ British Business in the Digital Age’, explores the current and future state of digital commerce in Britain across five key sectors, including retail grocery, retail non-grocery, retail luxury, manufacturing and wholesale.