Three Levels of Maturity for Manufacturers in Omnichannel Commerce

January 24, 2014

Posted by Ranga Bodla(opens in new tab), Director of Industry Marketing, Manufacturing & Wholesale Distribution

Online reviews, price comparisons, online product videos and feedback via social media – all available instantly, in-store from a smartphone – have profoundly changed the consumer purchasing process. Add in same-day shipping and expectations around a seamless, consistent experience across channels and both ordering and return processes and many manufacturers are struggling to adapt.

To maximize the chance of sustaining long-term growth and profitability, forward thinking manufacturers are realizing the need to expand their channels. Omnichannel commerce is a way to achieve these goals by functioning more intelligently, efficiently and collaboratively to meet the growing expectations of connected and empowered customers.

In a recent webinar, "Enabled Commerce: Dealing with Manufacturing E-Commerce from Business to Business" Raj Kumar, a partner at global strategic consulting company A.T. Kearney, observed that not every manufacturer is keeping up with the move to omnichannel commerce. Different industries and manufacturers vary greatly in their level of omnichannel development.

At the lowest level of maturity, manufacturers stick to the traditional model of selling through resellers. They might provide product information on their websites, but they don't support online commerce.

Manufacturers at the mid level of omnichannel maturity might offer a very limited number of products for consumers to buy online. But they're more likely to create private portals for their reseller partners or large volume business customers to enable them to order online. These manufacturers are also more likely to provide basic online services such as product information and documentation, reseller locators, and customer tech support forums.

At the highest level of maturity, manufacturers have full ecommerce capabilities for both B2B and B2C buyers, though they may funnel these orders through to local retailers or distributors for fulfillment. They are more likely to offer popular customer amenities such as free in-store pickup and global shipping for a small fee. These fully omnichannel companies also have a full range of support services, from online documentation and user communities to live Web chat with customer service.

How can a manufacturer who's still at the beginner stage move up? It requires researching customer feedback and buying habits and rethinking reseller agreements and incentive plans to identify the best opportunities for maximizing sales while avoiding channel conflict. For instance, pricing is a common conundrum. No manufacturer wants to lose loyal resellers by undercutting their prices. But a thoughtfully structure pricing agreement can avoid conflict and benefit both manufacturers and resellers.

For example, a manufacturer can promise resellers certain categories of customers or types of sales. In addition, resellers can create bundled packages to generate extra profits. Or all resellers could get extra funds or bonuses from the manufacturer when overall sales rise.

Finally, manufacturers must focus on application integration to ensure that transactions and data flow seamlessly between ecommerce, CRM, ERP and manufacturing applications. That will provide better insight into how to optimize inventory and order management, forecast demand more accurately, reduce costs, and provide data to help reseller partners understand how changes are improving their own bottom lines.

The main goals of the omnichannel model, notes Kumar, are to increase sales across the board while providing the customer more options. By integrating systems across all channels and working with resellers to create equitable policies, every party in the value chain can increase their sales and profits.

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