Does digital belong in the physical world of manufacturing?
Does digital have a place in the physical world of manufacturing?
By Martin Girdlestone, Head of Consultancy, Salmon
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 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.