ECommerce platforms are becoming an influential tool for increasing profit margins for UK manufacturers, a recent report from the inventory management software company Unleashed has highlighted.
The report, which was published in Q4 of 2021, uses data collected by Unleashed from small-medium (SMB) size UK manufacturers using their inventory management software continuously between the months of January 2020 and September 2021.
In this article, we’ll highlight some of the key findings from the report and look at how the pandemic and eCommerce integrations have altered the landscape of UK manufacturing.
Profit margins eroded for UK businesses during the pandemic
The pandemic saw many UK businesses have their profit margins eroded as they were forced to close their stores and become involved in a scramble to quickly implement eCommerce channels in order to keep their business afloat.
The additional admin and logistics burdens, not to mention increased marketing and advertising costs, meant a significant drop in profit margins for the businesses who had previously operated in a more conventional fashion.
However the data captured in Unleashed’s report tells a different story when it comes to manufacturing.
ECommerce integrations boosting profit margins for UK manufacturers
The data collected by Unleashed looks at UK manufacturers using either a B2B eCommerce store, a B2C eCommerce plugin (such as Shopify/Amazon/Vend/Magento), or some combination of the two, and compares the profit margins against manufacturers with no eCommerce capabilities.
Conventional wisdom would suggest that manufacturers are more likely to enjoy higher profit margins when selling wholesale business to business (B2B).
However, Unleashed’s data showed that across all manufacturing sectors, the trend was consistent – firms with an eCommerce channel enjoyed profit margins of 57%, whilst firms without eCommerce channels saw average profit margins of 46%.
Whilst manufacturing businesses who are eCommerce enabled experienced higher profit margins on average, the data also showed that the more eCommerce integrations that you have, the higher the profit margin is.
Whilst just a single eCommerce integration yielded a 57% gross profit margin on average, companies with 2 integrations experienced over 60% and companies with four integrations enjoyed profit margins of over 70%.
One of the more surprising pieces of data that the report revealed was the apparent disconnect between eCommerce being beneficial to the profit margins of UK manufacturers, and the number of UK manufacturers who are eCommerce enabled.
Despite higher average gross profit margins being achieved by companies with eCommerce integrations, only 38% of UK manufacturers are eCommerce enabled.
If you’re interested in diving deeper into the data captured in Unleashed’s UK Manufacturing report, you can download the full report here.
Why use eCommerce for manufacturing?
The move towards digital eCommerce platforms for manufacturers is being driven by the habits we create as consumers.
Today’s B2B customers want to be in control of their online experience, where they can track order statuses, manage payment options and make transactions in exactly the same way that they do outside of the work environment.
Companies who choose to stick to the more conventional methods of B2B transactions risk losing customers to competitors who have quick and easy eCommerce alternatives.
eCommerce in manufacturing brings a whole range of benefits to both your business and your customers, from providing personalised buying experiences and account-specific pricing information, through to the availability of spare parts and the ease of attracting new customers who find you via online searches.
If you can provide convenient online buying processes and give customers access to the information they need exactly when they need it, then you’ll quickly become their go-to supplier.
Businesses worldwide are using our Stream platform to support their eCommerce platforms in order to do just that.
Stream helps businesses provide an exceptional customer experience by providing real time tracking information about the status of orders and deliveries, from the moment the order is processed, right through to the goods arriving on their doorstep.
And what’s more, Stream has a whole host of integrations enabled (including Unleashed), meaning that if you’re using an omni-channel retail platform such as Brightpearl, or letting consumers make purchases through the likes Shopify, you can keep full control of your transport management, logistics and delivery management operation.
Interested in seeing how Stream can help you take control of your delivery and logistics in order to provide exceptional customer service?
You can read more here.