E-Commerce for Manufacturers – The Ultimate Guide

E-commerce is a great equalizer for manufacturers because it allows smaller businesses to compete on the same level as larger companies. However, setting up an effective e-commerce platform can be tricky. This guide will walk you through the key strategies to succeed in the online marketplace.

What is e-commerce?

E-commerce, at its core, is about selling products online. For small manufacturers, it means more than just putting up a website and hoping customers will come. The goal is to create a digital storefront that showcases your products and connects you with customers who may have never found you otherwise.

E-commerce is a virtual extension of your business. It’s like having a 24/7 open shop where customers can browse, learn about your products, and make purchases from anywhere with an internet connection. 

Why does e-commerce matter for small manufacturers?

Entering the e-commerce world isn’t just a “nice to have” anymore—it’s becoming a necessity. As more businesses go online, those that don’t risk being left behind. Here’s why it’s important:

Expand your market reach

E-commerce opens the door to a larger market than you currently have. In fact, it’s a global market. Unlike a physical store that limits you to customers within a specific geographic area, an online presence allows you to reach potential buyers across the country or even around the world. And because you will have an expanded reach, you have more chances to find customers who are looking for exactly what you offer.

Cut out the middleman

One of the biggest advantages of e-commerce is the ability to sell directly to your customers. By cutting out the middlemen (i.e. distributors, wholesalers, and retailers), you can increase your profit margins. 

Selling directly to consumers also allows you to build stronger and more direct relationships with your customers. You get their feedback and have a chance to learn more about their needs and preferences. Armed with this knowledge, you can improve your product and the way that you offer it to align with what your customers are truly looking for.

Maintain control over your brand

When you sell through third parties, you lose some control over how your products are marketed. As a result, you also lose control over how your customers perceive and experience your brand. 

E-commerce allows you to retain complete control over your brand image. You can map out the customer journey from their very first visit on your website to the final delivery of the product. This allows you to convey the right impression of your brand from start to finish.

Increase your cost efficiency

Operating an e-commerce store is much more cost-effective than maintaining a physical storefront. Overhead costs like rent, utilities, and in-store staff, are all part of a physical storefront that aren’t necessary with an online store. An e-commerce store can also complement your physical point of sale while costing you less to maintain.

Respond to the times

It’s a digital-first world. Before heading to a physical store, modern consumers often start looking at items online. Online shopping allows customers to browse product offerings, compare them, read reviews, and make purchases without leaving their homes or offices. 

By establishing an e-commerce presence, small manufacturers can meet customers where they are: online. If you wish to remain relevant and competitive, you must embrace e-commerce or be left behind.

Improve your flexibility

One key lesson from the COVID-19 pandemic was the value of a flexible business model. Manufacturers with an e-commerce presence were better equipped to handle disruptions to traditional retail channels because they could continue selling directly to their customers. This flexibility allowed them to maintain sales, adapt quickly to changing circumstances, and stay connected with their audience, even when physical stores were closed or supply chains were disrupted. 

An adaptable e-commerce strategy not only helps in times of crisis but also allows manufacturers to respond swiftly to market shifts, seasonal demand changes, and evolving customer preferences.

Setting up an e-commerce platform

1. Choose the right e-commerce platform

Your first step is to select an e-commerce platform that fits your needs. The big three options are Shopify, WooCommerce, and BigCommerce. All of these platforms provide user-friendly features and good support. Ultimately, the right platform for you will depend on its ability to integrate with your current systems and be a fit for your budget.

2. Set up your online store

Once you’ve chosen an e-commerce platform, it’s time to create your online store. The good news is that you can do this in a matter of clicks. Most platforms provide easy-to-use templates so you don’t need to know how to actually build a website from scratch.

You will need to have a general idea of what style and tone you wish for your website to convey. It’s a best practice to match your website with the rest of your brand. For example, if your brand’s core message is transparency, your website should echo that at every turn—from the colors you choose to the messaging you write.

3. Add your products  

List all the products you wish to sell online. Then, take high-quality photos and write up clear descriptions for each item. In your descriptions, focus on how the product will benefit the customer instead of just rattling off a list of features. This will immediately highlight your value instead of asking customers to connect the dots.

4. Set up payment options

The best way to ensure customer satisfaction regarding payments is to get out of the way. Set up payment gateways like PayPal or Stripe to securely handle payments. Also, provide a variety of payment options so that customers don’t feel limited when it’s time to check out.

5. Set your shipping  

Shipping is a critical factor that can impact whether customers complete their purchases. If shipping costs are unclear or seem too high, customers may leave your site and buy from a competitor.

Decide on your shipping methods and rates in advance. Will you offer free shipping, flat rates, or use real-time shipping calculations? Clearly display your shipping options to provide a smooth delivery process and improve the customer experience.

6. Test your store  

Always, always, always test your store to make sure everything works before you decide to go live. Verify that the checkout process works and use real cards to check your payment gateways. Also, check your e-commerce site on both desktop and mobile devices to be sure that everything looks good no matter how your visitors arrive.

7. Market your store

Marketing is essential to attract customers to your new e-commerce store. There are many options so it’s a matter of finding the right channels to reach your target customers. For example, manufacturers might use social media advertising, industrial publications, or Google Ads to target their niche. If you have demographic data on your target audience, you can use resources such as Pew Research to narrow down which platforms may be more effective to target.

Integrating your business processes with e-commerce

Integrating your e-commerce platform with your existing business processes is a must, but to do that, you’ll need the right tools. For starters, you’ll need an MRP system. These tools connect to your online store and keep everything in sync. Here’s a peek into how it works:

Take customer orders

When a customer places an order on your e-commerce site, your MRP/ERP system can automatically create a customer order in your internal system. This helps you manage stock more effectively by either booking items from existing inventory or creating new manufacturing orders if needed while also providing accurate delivery dates based on real-time production timelines.

Sync inventory in real time

If you wish to avoid over-selling and stockouts, it’s crucial that you keep inventory updated across all platforms. When new products are manufactured or items are booked, your MRP/ERP system will automatically update the stock levels on your e-commerce site. 

Enable product customization with matrix BOMs

If your business offers customizable products, integration with MRP/ERP systems can make this process much simpler. Matrix BOM (Bill of Materials) functionality allows customers to choose from different options, like colors or sizes, when ordering. These orders are then converted to manufacturing orders, making sure that an item with the correct parameters is produced. Learn how to manage product variants in manufacturing with this guide.

Enhance B2B sales with a customer portal

If you sell to other businesses, it’s a good idea to integrate a customer portal into your e-commerce site. This allows you to streamline B2B transactions. A customer portal enables your business customers to browse your catalog, place orders, and track shipments online. Check out why it’s good to have a B2B customer portal in your ERP system.

Automate accounting and financial reporting

Your software infrastructure should also include accounting software. This way, sales data, production costs, and other financial metrics can be automatically synchronized betweeen the MRP software and the accounting solution. Removing manual calculations will reduce labor, minimize human errors, and ensure that your financial records are always up-to-date.

How to streamline inventory and order management?

Efficient order fulfillment and inventory management are the keys to your success in e-commerce. For small manufacturers, getting these processes right can make the difference between happy, repeat customers and a backlog of unsold products. Implement these strategies to streamline your operations:

Automate order processing

Use automation tools to handle order processing from start to finish. When an order comes in, the system should automatically check inventory, process payments, and trigger fulfillment steps. 

Optimize inventory management

Implement inventory management practices that keep your stock at optimal levels. This includes regular inventory audits, using historical data to forecast demand, and setting reorder points to prevent stockouts. 

Improve warehouse efficiency

A well-organized warehouse is crucial for fast and accurate order fulfillment. Optimize your warehouse layout by placing fast-moving items in easily accessible locations. Use barcode scanners and digital inventory systems to keep track of stock, reduce picking errors, and speed up the packing process. 

Use drop shipping or third-party logistics (3PL) providers

In some cases, using dropshippers or partnering with a 3PL provider can be a cost-effective way to manage inventory and fulfillment. Dropshipping allows you to sell products through dropshippers, leveraging their marketing skills and audience in exchange for paying a commission, while 3PLs handle warehousing, picking, packing, and shipping for you. Use these options to save time, marketing spend, and other resources when it makes sense to do so.

Keep customers informed

Your customers should know what’s happening throughout the order process, and you can do this with automated updates. Notify them when their order is received, processed, shipped, and delivered. In addition to improving the customer’s experience with your business, your transparent communication will also reduce the number of customer service inquiries about order status.

Implement a return and exchange management system

A clear, streamlined process for handling returns and exchanges is essential for customer satisfaction. Make it easy for customers to return items, and use an RMA system to quickly process refunds or replacements. 

By implementing these strategies, you can reduce costs, improve customer satisfaction, and streamline order fulfillment and inventory management processes.

Key takeaways

• E-commerce is essential for growth. For small manufacturers, embracing e-commerce is crucial to reaching new markets, boosting sales, and maintaining a competitive advantage in our now digital-first world.
• Set up your online store effectively. Choose the right e-commerce platform, create a user-friendly store, and offer clear communication to provide the best user experience for your customers.
• Integrate e-commerce with business operations. Use MRP/ERP systems to automate order processing, synchronize inventory, and streamline operations.
• Streamline order fulfillment. Optimize your warehouse layout, use automation tools, and consider third-party logistics to speed up order processing and improve customer satisfaction.
• Focus on customer experience. Provide clear communication, manage returns efficiently, and use data analytics to understand what your customer needs. Continuing to improve your customer experience is the best way to encourage customer loyalty.

Frequently asked questions

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