It’s no stretch to suggest that e-commerce is creating profound disruption across the retail landscape, with 44% of the world’s online business channelled through Amazon alone. As smart technology collides with vastly efficient supply chains, this evolution is playing out at an unprecedented pace – a pace that has altered consumer expectations in virtually every industry.
Yet while we tend to assume that B2C companies are primarily feeling the effects of this retail shift, it’s actually B2B companies that are facing a more profound evolution. Research shows that B2B e-commerce sales are expected to top U.S. $1.1 trillion by 2020, outpacing B2C growth twice over, with manufacturers and wholesalers set for a combined 30% of spending on e-commerce technology by this year alone, up 20% from 2013.
Given that consumers have embraced the ease of buying goods online, it’s no surprise that these same people are looking for similar convenience for their business needs too. This simple fact winds up significantly changing logistics for industrial wholesale and distribution companies who must cater to a new reality: staying competitive by embracing B2B e-commerce.
Industry executives in this sector know this – yet there is still a gap to close between aspirations and adoption. McKinsey data cited at a Conference Board of Canada presentation last year on e-commerce strategies for industrial and manufacturing markets show that 80% of manufacturing executives agree that digital operations are a critical driver of competitiveness – but only 37% have a strategy in place to address this.
Opportunity knocks for Northern Ontario
Embracing e-commerce is imperative regardless of a company’s location, but it presents an acutely important opportunity for those situated in the northern most regions of Canada.
Northern Ontario, for instance, is a key economic corridor for the province. In 2011, commercial vehicles represented 10% of trips using the Northern Ontario highway network, a number that is expected to increase to 14% of trips by 2041. The region’s economy is also diversifying: historically dependent on resource-based industries like mining, forestry and steel, other sectors such as healthcare, government, tourism and agriculture continue to emerge as significant drivers of employment.
Source: McKinsey Quarterly, March 2015. “Digitizing the Value Chain.” McKinsey online survey of 83 industry members of the Digital Manufacturing and Design Innovation Institute.
Such opportunities for advancement are getting noticed. Federal funding through FedNor, the Government of Canada’s economic development organization for Northern Ontario, has provided capital for businesses to adopt new technologies and grow their operations.
For example, Innovation Initiatives Ontario North (IION) received an investment to help more than 40 northern Ontario entrepreneurs adopt new technologies, enhance productivity and increase their global competitiveness. E-commerce strategies are certainly a natural fit and part of such growth.
Distinct challenges for the industrial and manufacturing sector
It’s certainly easy to talk the talk and another story to walk the walk. Despite clear benefits within an e-commerce strategy, there remain distinct challenges for the industrial and manufacturing sector,
Those are magnified in northern communities. From dangerous goods handling and warehousing concerns to U.S. exports and speed-to-market – never mind that job sites are often massive and have no fixed address for deliveries – e-commerce for manufacturers must be focused less on relationship building with customers and more on realizing efficiencies that impact the bottom line.
This is where an omni-channel solution can help. Being efficient across the supply chain can reduce waste and costs while boosting the speed to market. Not only that, but 60% of B2B companies report that customers who purchase from multiple channels actually purchase more – and more frequently – than single-channel offline buyers.
Digital and omni-channel are the next generation for manufacturers, but most don’t have the capacity to align with these needs just yet. Indeed, Forrester research cited at the Conference Board of Canada presentation indicated that there is currently a gap between omni-channel offerings customers want and retailers’ capabilities.
For example, while 71% of customers expect to view in-store inventory online and 50% of customers will purchase online products with the expectation of in-store pickup, only one-third of retailers have operationalized the basics of omni-channel marketing. These are elements such as store pick up, cross-channel inventory visibility, and store-based fulfillment.
Operational effectiveness, time to market and customer responsiveness are key to enabling current markets to grow, and to allow new markets previously beyond the north’s reach to come into focus, both from a cost and geographical perspective.
Forrester Research (2014). “Customer desires vs. retailer capabilities: Minding the omni-channel commerce gap.”
Shipping logistics: A key consideration for a solid e-commerce strategy
E-commerce strategies often focus on the nuts and bolts of getting started, everything from web presence and email marketing to search engine optimization and other digital tactics. That’s all well and good, but shipping logistics – particularly to remote regions – are an important factor for any e-commerce strategy.
Here are some key considerations when choosing a shipping partner to meet your business needs:
They offer a robust network:
Northern markets have specific needs and considerations when it comes to integrated freight and parcel solutions, and many remote locations can prove difficult to access. Timely delivery of critical shipments to both urban and rural markets is essential to customer retention. Ensure your shipping provider has a robust transportation and logistics network, including multimodal capabilities such as sea, air, road and rail to deliver an end-to-end solution for your business. Next-day can be a reality for more than 98% of Canada, northern Ontario included.
They know your industry well:
As mentioned earlier, hazardous and fragile goods are a unique shipment consideration for the industrial sector, and ensuring that products arrive at their destination safely and damage-free is a top priority. Market expertise is needed when shipping dangerous goods or specially-handled goods. Look for a shipping partner with a range of specialized solutions, specifically including the delivery of such products. They should also allow you to maintain worry-free compliance by staying on top of evolving government regulations specific to your industry.
They offer direct-to-site deliveries:
Delivery sites often have no fixed address or cover large parcels of land, particularly in the north. Late or missed shipments can halt site production or construction, making on-time deliveries critical to maximizing profitability – for both your customers, and your own production needs. Often, there’s also a need for direct-to-site deliveries in order to finish a job. Ensure your shipping partner offers flexible supply chain solutions that can improve your speed to market, thereby minimizing risk and opportunity cost.
They have strong inventory management capabilities:
Carrying too much inventory is a problem – but so is not enough. An inability to keep merchandise in stock can lead to lost sales and stalled market growth. Information system mapping, e-ship web services, direct-to-market distribution and peak-demand warehousing can all help streamline your supply chain, reduce warehousing demands and deliver on your customers’ needs faster,
They offer data driven analytics:
Data is crucial when it comes to allowing your company to make evidence-based decisions, forecast accurately, and obtain real-time shipment visibility – no matter where you’re shipping to from coast-to-coast. Ensure your shipping partner offers robust analytics capabilities to uncover new, measurable efficiencies.
The future is now for e-commerce
There’s no question that the time is now to embrace e-commerce solutions in order to realize efficiencies and remain relevant to customers. People demand products virtually the instant they order them, with the click of a few buttons, off their computer screen or mobile devices. With the right solutions in place, Northern Ontario will be well-equipped to meet the evolution of e-commerce head on – and reap newfound business growth in return.