Who buys your product? If you’re like most manufacturers, you probably fall into one of two camps. You may be part of an established supply chain for a very large manufacturing company like Ford or Hewlett-Packard. Or you may be selling to a number of different companies, most of whom you probably know well. In either case, the universe of possible additional sales can seem painfully finite.
But there is a way you can expand the number of sales prospects exponentially. The United States Department of Commerce reported that e-commerce sales reached $36.2 billion in the fourth quarter of 2007, an increase of 18 percent over the same quarter a year earlier. You can be part of this.
What E-Commerce Can Do for You
E-commerce aimed at consumers (also called business-to-consumer, or B2C, e-commerce) is a way for you to experiment with the world of retail without risking a significant upfront investment. Instead of spending time and money setting up bricks-and-mortar stores and training salespeople, you can get started with nothing more than an e-commerce Web site and some inventory to sell. Since much of your e-commerce site will be handling standard online shopping transactions, you’ll find e-commerce templates are readily available. Or you can use a complete solution like eBay, which requires no online expertise at all.
With an e-commerce site, you’ll have:
- Direct access to customers. Sales without middlemen deliver a much higher profit margin on each transaction. And since you’ll be interacting with your customers, you’ll have the chance to learn from them, and fine-tune your product offerings.
- A bigger group of sales prospects. If you have distributors now, e-commerce lets you extend your reach. A larger arena yields more sales possibilities, although you have to be cognizant of existing channel relationships. Potential problems can often be sidestepped by offering your products to a different market, so you’re not competing with your current distributor/retailer network.
- Opportunities to innovate. Finding customers outside your existing relationships also frees you from the specs you have to adhere to now. If you have an idea for a better product, you can act on it.
How Business-to-Business E-Commerce Could Change the Way You Do Business
E-commerce in the business-to-business (B2B) arena shares many characteristics with B2C online marketing, and also offers other new opportunities for the savvy business person. Researchers at the University of Chicago Graduate School of Business studied these changes in the business environment and detailed the following trends in companies using e-commerce between businesses:
More production outsourced. The Internet reduces the cost of finding buyers and sellers by making the search and evaluation process easier and faster. Thus, manufacturers can reach more potential customers at a lower cost, which enables sales that otherwise could not have occurred. And as the costs associated with purchasing are driven down, classic “make or buy” decisions are changing, and more and more production capability is being outsourced. So the entire universe of possible sales for manufacturers increases.
- New buyers with different needs. Creating an e-commerce presence makes you part of the global market, and there are many ramifications to this. For example, buyers in the Southern hemisphere may need goods that are out-of-season in your area. Or manufacturers in developing countries may be seeking parts that would be considered out-of-date in Western countries. These could be excellent opportunities to move old inventory.
- Streamlined internal processes. B2B e-commerce improves efficiencies by reducing the costs of many business processes. For example, changing the way you process a purchase order, using an automated online system instead of a human being with a telephone, will result in a permanent cost savings.
The best practices suggested by these trends include: (1) making sure you’re part of the group that buyers find when they go online looking for suppliers, so you’re in the consideration set, and (2) automating whenever possible, and saving your expensive human capital for back-up.
Driving Traffic to Your E-Commerce Site
Putting up a Web site is just the first step. Here are some additional steps to take in order to promote your site:
- Put your URL everywhere. Incorporate your web address into all your advertising.
- Use coordinated email and direct mail campaigns. As many marketers have discovered, some people will only respond to a physical piece of mail, others will only respond to e-mail. Using both media in your direct marketing efforts will avoid shutting out entire groups of potential customers.
- Target your Web advertising. You can buy banner space on the specific Web sites your target audience tends to visit. You can also choose to have your banners appear only to users in a certain geographical area. And you can use marketing tools like Google’s AdSense to place your display and text ads on sites related to any search terms you choose. (See the tips below for more on search engine marketing.)
- Go viral. Short movies or games that people like enough to pass from person to person are called “viral.” While challenging to create, these can be a very inexpensive way to drive visitors to your e-commerce site.