Since 2020, we have been in a state of disruption, which has impacted businesses across all industries and left economic uncertainty in its wake.
The response to this disruption? A need to be agile and embrace digital and e-commerce.
This is critical for the construction industry in particular, especially as the sector falls further behind others in its digital maturity, and construction professionals must rethink their strategies to keep their business successful.
So what does this transformation look like for the construction industry? What are the challenges that e-commerce in construction faces? Let’s dive in together to make sure you’re 2023 ready.
Digital transformation and construction e-commerce in 2023
Not surprisingly, as many as 75% of professionals in the construction sector plan to increase their investment in digital transformation as a result of the disruption they’ve faced this year. The industry leads all others when it comes to disruption-driven digital investments, and at the very core of this digitization is e-commerce. This is a result of demand from customers, of a fundamental change in how the industry works, and of the realization that the sector as whole is lagging behind when it comes to digitization (and it’s threatening to deem some of these businesses obsolete). Data from as early as 2019 tells us:
And today, online channels are even more critical to business success, customer relationships, and profitable digital transformation. Here’s how (and why) to embrace digital in the face of change.
Why focus on e-commerce in construction?
$1 trillion. That’s the projected value of the global construction materials market by 2030. And an online sales channel can help you capitalize on a bigger share of those profits. Bonus: The right e-commerce solution can also help you adapt more gracefully to disruption moving forward. Plus, it’s what your customers want and expect from you.
Did you know:
The demand for e-commerce in the construction industry is even higher than the cross-industry average, which is why as many as 84% of companies in the industry predict they will sell 100% of their products online in the future.
If you’re not selling any of your products online yet, it may be time to get started with B2B e-commerce. When you do, you’re going to realize even more business opportunities than just an uptick in revenue from your online channel. Our research shows that these opportunities include expansion into direct-to-consumer (D2C) sales and more.
Boosting efficiency using smart automation and e-commerce: it’s within reach for companies in the construction industry (in fact, see how IHL Canada did it). But achieving this goal isn’t without its challenges, especially now.
The state of e-commerce in the construction industry
Following the ongoing disruption caused by the COVID-19 pandemic, online channels are more crucial than ever to both professional buyers and B2B businesses alike. The digitization of B2B buying and selling has accelerated quickly. Yet supply chains remain disrupted, and buyers grow increasingly demanding — and frustrated.
Recent data commissioned by Sana Commerce shows that the majority of B2B companies in the construction industry are not just squandering their budgets on ineffective digital investments, but also losing touch with the needs of their own buyers.
The industry is lagging behind in its digitization — but its buyers and their preferences are not. The pace of digital transformation has threatened to deem traditional construction businesses obsolete for years.
What are the challenges associated with digitization in the sector?
As early as 2019, 70% of companies in the industry believed those not adopting digital ways of working would go out of business, while another 60% agreed the sector was already behind others in adopting digital technology.
By 2021, 3 in 4 construction companies were forced to increase their investment in digital transformation because of COVID-19 disruption. Now there’s another problem; they’re also lagging behind in customer experience.
Customer experience is lacking
On average, 49% of B2B buyers in the construction industry report that their expectations of suppliers’ websites are met to a great extent, with the other half reporting expectations are only somewhat, very little, or not at all met.
Data, tracking, and ordering are subpar
The biggest issues identified were usability and misinformation challenges, including lack of data, inaccurate data, and overly complicated re-ordering and checkout processes.
Buyers’ challenges with delivery and tracking, as well as payment terms, were more pervasive than in any other industry (including food and beverage, electronics, medical supplies, etc.).
The key customer complaints
- When asked which customer experience challenges still plague B2B purchasing in the construction industry, only 5% of buyers cited no notable issues.
- 43% even rank their supplier relationships among their top CX challenges.
- 80% consider them so important that they would buy from a supplier they had a strong relationship with, even if it meant less favorable business terms
- The biggest issues identified were usability and misinformation challenges, including lack of data, inaccurate data, and overly complicated re-ordering and checkout processes.
- Buyers’ challenges with delivery and tracking, as well as payment terms, were more pervasive than in any other industry (including food and beverage, electronics, medical supplies, etc.).
In addition to the uncertainty around the market and the economy, businesses’ data (especially when it is poorly or ineffectively managed), can pose a big threat to the success of your digital transformation. In fact, two of the three biggest e-commerce project challenges, according to construction industry professionals, are related to data management and maintenance.
Curious to dive deeper? Here are a few more of the top industry-specific findings from our latest research report, “The Power of Buying Relationships in an Evolving B2B World.”
Addressing digital transformation: a smart solution
To address these issues, we strongly recommend mastering the challenge of setting up a single source of truth within your company. Having all your key business data available in a single system, such as your SAP or Microsoft Dynamics ERP, makes it easier to keep your product, pricing and client data correct and current across all sales channels.
And why is choosing the right solution so important? According to data from Information Age:
“Failed [digital transformation] projects can cost an average of $655,000 to the bottom line, yet despite this, almost all (86%) construction organizations overlook the importance of a good technology partner as an enabler of an effective digital transformation.”
With that in mind, be sure to approach your digital and e-commerce projects in a smart way, with both your choice of partner and the online customer experience top of mind.
The top 3 B2B requirements for e-commerce in construction and building materials
When it comes to e-commerce in construction, your customers know exactly what they want. And we have those insights. In our own research , we asked respondents which e-commerce solution characteristics were most important for them. We found that this aspirational e-commerce wishlist aligns with the challenges these businesses are facing; they want a solution to their data problem so they can leverage e-commerce hassle-free and:
- Reduce manual data errors (95%)
- Lower system administration requirements (92%)
- Minimize order handling for inside sales (90%)
Reducing manual data errors is a top priority for many of the other industries surveyed for our research report.
This strong focus on streamlining operations and saving time makes sense with the current growth the construction sector is experiencing. A B2B web store can provide the level of automation necessary to achieve these goals, but only if it fits in well with the rest of the construction company’s IT landscape. Effective integration between the ERP and the web store is particularly important.
Drawing a line between construction e-commerce and digital maturity
Often, we find that an organization’s relative level of digital maturity impacts how quickly, successfully, and gracefully they can complete their digital transformation – while still remaining agile and poised to handle change.
Research by the Boston Consulting Group highlights this correlation and found that there are three distinct phases of maturity, but notes that it is primarily distributors in the construction sector who are achieving an advanced stage of digital maturity:
While most organizations in the industry are in early or middle stages, many distributors sit in the advanced stage of digital maturity. It’s possible that the urgency around embracing innovation for distributors lies in the cross-industry shift toward direct-to-consumer sales. Perhaps, with a threat to their livelihood as manufacturers and wholesalers sell to consumers, distributors are being more quickly pushed to digitize. However, BCG notes, “even digitally advanced companies in the construction sector are far from keeping up with organizations in other sectors, such as media and retail.”
According to Deloitte, the opportunity in embracing a mature digital approach is the ability to use that to transform your business, even after you’ve perhaps launched and optimized a web store. In fact, it’s even made Building Information Management (BIM) go from a nice-to-have for on-site productivity to a digital model sitting at the core of organizations’ digitization plans: one that building materials businesses will increasingly rely on to succeed. BIM adoption has grown 4x in the last decade.
“The greater opportunity is not to merely improve existing building processes, but to explore new and radically different approaches to building as an activity. Rather than simply digitizing existing building practices—swapping analog measures and tasks for digital ones to make them more precise and effective—we need to digitalize building by shifting the foundation of our operating model to a wholly different premise.”
Ready for online sales in 2023?
Read the latest trends and how to prepare for selling construction materials online in 2023.