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2021-Ready? Disruption, digital transformation, and e-commerce in construction

E-commerce by industry

Denise Castillo August 19, 2020

2020 has been a year full of disruption, impacting businesses across all industries and leaving economic uncertainty in its wake. But this need to be agile and embrace digital and e-commerce in construction is particularly crucial, especially as the sector falls further behind others in its digital maturity, and construction professionals must rethink their strategies to keep their business successful.

Digital transformation and construction e-commerce in 2021

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):

Source: visualcapitalist.com

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. And 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 (per our 2019 Digital Transformation and B2B E-Commerce Report).

If you’re not selling any of your products online yet, it may be time to get started. And when you do, you’re likely 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.

What are the challenges associated with digitization in the sector?

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:

  1. Getting the right (and complete) client data in one system (94%)
  2. IT environment/infrastructure needs to be upgraded (90%)
  3. Working with one business system (single source of truth) (88%)

The first two challenges were universal across the industries we surveyed; this is to be expected, as digital transformation and introducing e-commerce is an essential part of any modern business strategy, but that doesn’t necessarily make it plain sailing. The third point, however, is much less of a challenge outside the construction industry.

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 digital transformation 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:

  1. Reduce manual data errors (95%)
  2. Lower system administration requirements (92%)
  3. 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. The other two points, however, aren’t as popular across sectors.

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 since 2011.

“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.”

For more insight into the trends to look out for in construction e-commerce, download our white paper: Beyond Digital Transformation: Construction Industry Trend Report.

 

 

 

Beyond digital transformation

What’s next for the construction industry as big disruptors loom.

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