Small Manufacturers Surprise With Accelerated Digitization

Pre-pandemic, the digital transformation was a struggle — particularly for the manufacturing sector. It’s a challenge that can be exacerbated even further among smaller manufacturers struggling to modernize without the resources of their larger industry peers.

The pandemic threw wrenches in businesses’ growth and expansion plans, added unprecedented levels of volatility into the market, and caught virtually everyone off-guard.

Yet Alibaba.com‘s latest research found something surprising: small U.S. manufacturers have actually ramped up their digitization efforts the most out of any other category of businesses, and this game of catch-up will yield rising levels of B2B eCommerce adoption.

In Alibaba.com’s latest report, the U.S. B2B Small and Medium Business (SMB) Survey, released today (Oct. 20), researchers explored the ongoing impact of the pandemic on U.S. small businesses six months into the crisis. The report is a follow-up to Alibaba.com’s inaugural survey, published in January, and allows for a snapshot view of just how much operations have changed for small businesses in the country.

According to analysts, the findings are far from doom-and-gloom, and they reflect the current market landscape that is now the backdrop for Alibaba.com’s newest initiative, its Digitization Sprint for U.S. Manufacturers program.

Ramping Up Digitization

Overall, U.S. small- and medium-sized businesses have actually elevated the pace at which they are digitizing as a result of the pandemic.

In December, 90 percent of U.S. SMBs said they conduct some portion of their business online. Alibaba.com’s latest research, conducted in September, saw that figure rise to 93 percent.

Buying and selling is an increasingly important component of SMBs’ digitization efforts, with more SMBs adopting B2B eCommerce channels to conduct trade. Despite supply chain disruptions, more B2B companies surveyed said they are sourcing products online, receiving sales volumes via eCommerce channels, and either maintaining or actually growing trade volume over the last six months. Indeed, 42 percent of SMBs surveyed saw their online transaction volume rise during the pandemic compared to the same period in 2019.

This expansion isn’t limited within the confines of national borders, either. Alibaba.com’s report revealed the desire to grow globally as a key driver of digitization and B2B eCommerce adoption efforts, with the percentage of SMBs surveyed that are seeking to go global more than doubling over the last nine months.

“Getting digital for U.S. manufacturers is actually all about empowering and enabling U.S. small businesses to go global,” said John Caplan, Alibaba.com’s President in North America and Europe, during a conference call announcing the results of the survey. “We see that they’re really trying to turn into the new channels to catch up. This huge leap is happening.”

Empowering SMBs

The accelerated digitization push is good news for many kinds of small businesses. But Alibaba.com’s report found that manufacturers, in particular, are benefitting from the shift more than others.

In 2019, Alibaba.com researchers found manufacturers to be among the slowest types of businesses to digitize — second only to the construction industry. Today’s report revealed that manufacturers reported the highest percentage increase in the adoption of digital trade tools compared to other sectors while tying with the retail industry for most digital growth.

According to Caplan, however, there remains a key barrier for U.S. small manufacturers to continue the momentum.

“It’s clear that manufacturers actually want to digitize,” he said. “What I keep hearing is that they want to digitize, but they actually don’t know how to get started.”

That’s the conundrum Alibaba.com hopes to help solve with the launch of the Alibaba.com Digitization Sprint for U.S. Manufacturers. The initiative is made up of three components: Curriculum, which provides small business leaders with resources to understand how to build their own eCommerce strategies, including pricing and advertising; Coaching, which connects these small businesses to experts in B2B eCommerce for the manufacturing world; and Community, which comes in the form of a private LinkedIn group for small manufacturing business executives to connect and collaborate online.

According to Caplan, Alibaba.com’s latest initiative aims to strengthen the platform’s position as an “ally to small businesses.” Helping SMBs trade digitally is one part of that puzzle. Another part, he explained, is to help these businesses carry themselves into the digital age.

“Sometimes that’s about facilitating the transactions between small businesses,” he said, “and sometimes it’s just facilitating the learning that small businesses need so they can thrive on their own.”