NetSuite Study Shows Manufacturers, Distributors Lag in E-Commerce Adoption

New research, sponsored by NetSuite and conducted by Frost & Sullivan in September this year, reveals that Australian manufacturing and wholesale distribution sectors are dragging their feet when it comes to adopting e-commerce. Only 10 percent of companies in these sectors are currently able to receive orders directly via online.

NetSuite, one of the world’s leading provider of cloud-based financials, ERP and omnichannel commerce solutions, commissioned the research into these integral industry sectors with a view to gauge the importance of the internet as a channel for future business success. Despite 75 percent of businesses in manufacturing and wholesale distribution displaying strong optimism regarding their prospects in growing the e-commerce channel, the Frost & Sullivan study indicates how unprepared many of them really are.

“For manufacturing and wholesale businesses, e-commerce is both an opportunity and a challenge,” said Mark Dougan, Managing Director for Frost & Sullivan Australia and New Zealand. “It offers a way to build closer and more direct relationships with the end customer, the ultimate consumers of their products, but also presents both strategic and operational challenges. The strategic challenge largely lies in the risk of bypassing long-established distribution channels. Our research identified that the main operational challenge is in linking the e-commerce front-end to existing internal business systems.”

The research company surveyed 102 Australian businesses in September this year. While many of the benefits of having an online channel were clear and desirable for the surveyed businesses – particularly in terms of offering customers convenience, reducing distribution costs and linking customer orders directly with business systems – most are still receiving and handling orders via email.

The surveyed businesses also identified a number of challenges that continue to stall their progress in e-commerce, including the loss of direct relationships with B2B customers, system integrations issues and feeling that they need to offer lower prices online.

According to Frost & Sullivan, while only a small percentage of B2C consumers are able to order directly from wholesalers or manufacturers online, more than half of Australian manufacturing and wholesale businesses are already placing orders with their own suppliers online. Three quarters of surveyed businesses also said they intend to increase their current online spend with suppliers that offer it.

Other Highlights of the Report:

  • Social media as a communications channel is increasing, with 30% of surveyed businesses now using social
  • In manufacturing specifically, social has doubled in the past three years to nearly 15%
  • A major stumbling block for many businesses is digital integration, with 20% admitting they lacked automated linkage between their web front-end and internal back-end

“Manufacturers and wholesale distributors have, in general, been unfairly portrayed as having a fundamentally conservative approach; however, what we are now seeing is that thriving and successful businesses have embraced change and understand the generational shifts in process and technology they need to make to remain relevant, competitive and grow profitably,” said Mark Troselj, Managing Director for NetSuite APAC and Japan.

“As the online environment accounts for an increasing proportion of overall sales, getting an omnichannel strategy right can deliver substantial and tangible results, but it can take years to develop. This is where cloud computing really opens doors, offering the opportunity for a lower cost and much lower risk rollout of the software needed to support an omnichannel strategy. Now they can unify separate channels to provide a single view of the customer, sales and revenue.”

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