Construction Suppliers Making Industry-wide Shift to E-commerce
By Michiel Schipperus, Construction Executive
These are transitional times for the construction industry. With global revenue projections expected to exceed $1 trillion by 2020, the construction materials industry is facing even greater pressure from increases in material prices combined with steeper wages necessary to attract and retain workers with appropriate skill levels. Construction suppliers may be thinking how they can futureproof their strategies to help offset incremental market shifts that could impact their businesses.
Behind the scenes, the construction materials industry is adopting new technologies to alleviate these economic pressures and remain competitive in this increasingly lean market. Specifically, they are turning to e-commerce, with 84 percent of construction supply companies expecting to sell their inventory online in the future, more than any other B2B sector (72 percent average). Given that only 29 percent of construction companies do this now, e-commerce stands to be a monumental change for the industry overall.
This shift is indicative of what will likely be a sea-change for the industry. Strategies are changing rapidly: while two years ago these companies relied on physical stores, call centers and sales reps to move product, tactics are shifting with channels like social and mobile taking on a greater role. For example, 18 percent of construction suppliers in the U.S. sell through mobile today but 34 percent said they will sell products via mobile applications in two years’ time. And, while only 22 percent sold products through social media two years ago, 39 percent expect to sell products through social media in two years.
This is not to say that e-commerce will replace other channels. Rather, suppliers see the future as omnichannel, and e-commerce as a way to increase sales volume (45 percent) and to facilitate 24/7 transactions. Eighty-three percent said they’ve had clients ask to buy their products online, with ease of purchase being the primary reason. Of those who have already implemented an e-commerce strategy, 50 percent have seen their total sales increase by 30 percent or more. Of those who have implemented e-commerce, 67 percent have an omnichannel strategy in place and 53 percent say that it has completely changed the way they sell, the majority receiving an increase in sales volume and some directly attributing it to customer retention.
However, there are a number of issues that construction companies need to overcome if they’re to successfully implement a B2B webstore. Ensuring that they have the right (and complete) client data in one system for the e-commerce platform to access was a test for nearly all (94 percent) respondents. This trend was mirrored across all B2B sectors. But it’s the existing IT environment and infrastructure that is causing construction companies (more so than in other sectors) pain with 90 percent citing it as a serious challenge to success.
Construction companies are also looking at technology to improve the order process.
Eighty percent of respondents agree that B2B companies will use the internet of things and Machine2Machine technology to enable automated and/or predictive ordering. This is much higher than the cross sector average of 69 percent.
The bottom line is that ecommerce has proven its potential for growth. Construction suppliers who augment their existing sales channels with ecommerce, be that mobile, their own web store or social, are seeing increases in sales volumes and better servicing of their customers.