How to drive manufacturing commerce success

Manufacturing is a sector facing more challenges than most right now. An aging workforce leading to talent shortages, political and economic instability causing global supply chain issues, ongoing struggles with digital transformation – the list is extensive and could go on and on.

Each and every one of these challenges contributes in its own way to putting additional pressure on profit margins and restricting growth in manufacturing. This has meant that manufacturers all over the world are turning to other revenue streams, embracing direct commerce in ways that they haven’t really done in the past.

One of the main elements of this increase in manufacturing commerce is the use of marketplaces. Smart manufacturers have realized that launching their own marketplace is a highly effective way of growing additional revenue streams, supercharging their way of doing business, and creating wider ecosystems of commerce.

These can potentially be transformative for any manufacturer, but it’s definitely not a question of replicating a B2C marketplace and hoping for success. Manufacturer-driven marketplaces are far more complex than B2C marketplaces, with different requirements to make them work. For any manufacturer using marketplaces to drive commerce, there are a number of elements they should prioritize to ensure success.

A configurable product

Manufacturing transactions are rarely simple, especially when compared with traditional retail transaction, which is usually very straightforward. A customer buys the product, and an exact version of it arrives with them shortly afterward. Manufacturing sales, however, usually take place on a made-to-order basis. Sometimes this can mean a manufacturer will only start making the product when an order has been made, often with strong specifications. At other times, it can mean there is a significant element of customization to the order.

Different countries use different measurement models. In the US, the imperial system is still prevalent, whereas in Europe and other parts of the world, the metric system is used. Any European manufacturer selling to customers in the US (and vice versa) must be mindful of this and those customers must be able to order in the system that suits them best. Ultimately customers want the product to be configurable – and manufacturer marketplaces must be able to accommodate this.

The ability to manage non-standard pricing

Pricing is another issue in manufacturing commerce that simply does not arise in traditional retail models. When a consumer buys something online, the price is the price. There is no negotiation, no discount for bulk buying, and no bespoke pricing. This is known as a request to quote and is very common in manufacturing, where standard pricing rarely applies.

In manufacturing commerce, a customer will ask for a company’s best quote based on a whole range of different variables – quantity, quality, location, previous order frequency, and much more. It’s a highly sophisticated feature that does not even come up in a retail or a B2C marketplace but is essential in manufacturing.

Interconnected systems

Some manufacturers build products that are built almost exclusively using one or two core materials that they hold already. But other products are much more complex, and a manufacturer cannot deliver a finished product without bringing in other products or materials from many other manufacturers.

This supply chain complexity requires even more sophistication in the manufacturer’s commerce marketplace. One substantial order can trigger a significant supply chain requirement, so it’s essential for the manufacturer’s systems to be interconnected so supply can keep up with demand.

Utilize headless commerce

One of a manufacturer’s biggest customers will likely order from a whole range of different places across the business. An order could come automatically from a company’s ERP system, it might come from HQ or a specific location elsewhere in the organization’s particular location. An order could be made directly from procurement or from another department.

Any marketplace must be able to facilitate orders from multiple different interfaces, and it must meet each customer’s preferences. If you dictate to a customer how and where they order from you, they may find another manufacturer that is more accommodating. The answer lies in Headless Commerce architecture, which separates the front-end and back-end of a commerce application.

Headless Commerce relies on the use of an application programming interface (API) to connect multiple platforms on the front end. It’s easier for developers to then create personalized experiences without having to make alterations to the back-end system. This allows customers to purchase products on their platform of choice and helps businesses approve orders using smart devices such as wearables or voice assistants.

Embrace change management

Embracing commerce in this way can be a major shift for some manufacturers, and they will need to be mindful of the need for change management programs to help address any concerns. Most manufacturers are very sales-driven and may struggle to get their sales teams to accept that there might be components in a deal that they don’t control.

Or there might be a sale made over the marketplace, where the sales team did not have a call with the customer, so they don’t earn a commission. It’s essential to address this shift with employees, as a successful marketplace project can benefit the business as a whole.

Manufacturer marketplaces are rich in potential but bringing them to fruition is not simply a question of copying one of the many B2C marketplaces that exist. B2B marketplaces are highly sophisticated with many requirements, but if a manufacturer can accommodate this complexity, then commerce success beckons.

Alexander Graf

Alexander Graf is Co-Founder & Co-CEO of Berlin-based marketplace experts Spryker and author of the bestselling book, The E-Commerce Book.

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Ahsan Zafeer covers topics related to tech and digital marketing and tweets @AhsanZafeer. Here he explains people’s fears as to why machines are taking over their jobs.