February 2021 | Commentary | E_Commerce

It's Time to Upgrade Your Tech Capability

Tags: E-commerce, Technology

Many manufacturers and business-to-business (B2B) companies are built around large volumes, making them traditionally slower to adopt e-commerce; yet, it's becoming imperative to do so. Customer expectations are evolving, and the pandemic highlights the need for more supply chain flexibility and visibility.

Jamin Dick, Head of Supply Chain, North America, Alibaba Group, 973-301-8434

Here are some considerations as you contemplate the transition to e-commerce:

Take a customer-centric approach. Business-to-consumer (B2C) purchasing has significantly evolved in recent years. As a result, customers expect as much from their B2B purchases at work as they do from their B2C purchases at home.

Customers expect to make purchases online, track shipments, and have products delivered same-day. These expectations apply to B2B buyers domestically and internationally as well.

Amazon first raised the bar by offering next-day shipping, and then same-day shipping, both at no extra cost to the consumer. That has quickly become the industry standard for consumer expectations.

This increased B2B customer demand for shorter shipping times raises the stakes on the volatility of profit margins, both on the expense side and its effects on demand elasticity. Companies need to take as much care as possible in managing the various expenses, putting an increased priority on transparency and visibility—both of which are built into e-commerce platforms.

Among those and other benefits, e-commerce allows you to focus on cash-flow management and more closely match expenses with income, shorten cash conversion cycles, and possibly adjust payment terms. This allows manufacturers to more fully focus on the needs of their customers, while staying true to traditional B2B best practices, such as goods being delivered not early, but on schedule.

Digitize as much of the logistics chain and processes as possible. Otherwise, you run the risk of acquiring partial visibility, effectively taking half measures that incur expenses. Companies that shift to an e-commerce or multichannel approach will distinguish themselves and fare better in the future.

Implications for the industry. While digitizing cross-border freight reduces complexity, it is not yet a turnkey solution. Rather, the incremental rollout shines a light on preexisting issues throughout the supply chain that were previously unmanaged or glossed over.

With increased transparency comes heightened awareness and scrutiny. While this transition period to e-commerce can be somewhat uncomfortable, it is crucial.

Why? Because today's B2B buyer has a higher standard of execution and wants answers: Where exactly are my goods? Who currently has ownership of them? What are the taxes and duties? What's the current situation with customs?

And while supply chains run best when change happens slowly, the pandemic has revealed the virtue of moving to an e-commerce platform more rapidly.

Pricing is still uncertain, air rates are up, and capacity utilization is down on ocean freight, increasing the likelihood of your shipment being deprioritized. The upstream supply chain from China is backlogged, and Customs is struggling to keep up.

E-commerce tools help you manage through these uncertain times. After this significant adoption event, e-commerce will quickly become the industry standard, as B2B participants increasingly demand these services from their counterparties.

Smart manufacturers will use the pandemic as a catalyst to accelerate the adoption of an e-commerce platform, and demand their counterparties throughout the supply chain do the same. The network effect of increased adoption will begin to kick in and the system will reap key efficiency benefits, such as flexibility, transparency, and predictability.






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