Is B2C Manufacturing All It’s Cracked Up To Be? Could Stepping Outside Your Comfort Zone Actually Benefit Your Business?

What is B2B > B2C manufacturing?

In today’s post pandemic world where businesses are pressed to manage costs, streamline their operations and reduce dependency on resellers, many organisations who have traditionally sold into businesses (B2B) are considering a move to retail operations, or selling direct to the consumer (B2C).

With a rise in consumer pricing across the board, an increasing number of manufacturers are cutting out the middle man, in this case their resellers or distributors, and setting up e-commerce platforms to reach their end users. Other businesses are approaching this issue from the opposite end and working to set up their own manufacturing facilities in-house to create a complete end to end service for consumers.

Whilst these approaches may sound logical, it is a huge undertaking for both types of operation as it requires skill sets and equipment not hitherto present in the business. Alongside the obvious associated costs there is a steep learning curve involved which may present a heavy drain on existing resources.

Notwithstanding this, we at Morgan chose to launch our own e-commerce platform earlier this year to sell our first ever B2C product, having previously been an exclusively B2B manufacturing company for over three decades.

Is B2C a level playing field?

To undertake B2C operations successfully, an organisation needs to have a solid grasp of consumer marketing strategies which differ enormously from those used in B2B sales. Selling direct to consumers requires a much more emotive approach to marketing communications, whereas B2B sales have traditionally involved a more logical approach, presenting a solution to an individual customer’s needs. Companies wishing to succeed in the B2C market have to consider SEO, PPC, social media and brand presence; these are unlikely to have been focus areas for their previous sales into other businesses.

If companies have the capacity, cash flow and capabilities to manufacture their own products and have complete control, and the expertise in house, then they are in a very fortunate position. This is a situation more typically found in bigger businesses for certain product lines. Smaller organisations may find the investment required to bring new skills in house prohibitive and may instead work in partnership with marketing agencies to create the same end to end service.

Interestingly, even the biggest multinationals often utilise manufacturers such as Morgan who have specialist expertise and recognise the benefit of having an expert partner to take on a certain role enabling them to concentrate on doing what they do best.

What challenges do organisations face in moving towards this model?

As touched on briefly above, businesses face a considerable if they try and capture everything in house as the skills and expertise for B2C are so very different. A proper end to end service covers everything research and development, sourcing components, manufacturing products and the ability to manage the logistics involved in that process, to marketing – which in itself includes market research, communications and data protection considerations – sales and dealing with an immense amount of customer service and consumer feedback. This presents a huge number of skills under one roof and is generally impractical for a small / medium business.

Traditionally as a B2B manufacturer, we have always partnered with organisations who complement our skills as a 13485 FDA registered manufacturing facility and whose in house expertise is the commercialisation and marketing of the device. This enables us to offer that all important complete service to our customers. Often new companies starting up have the expertise in the sales and marketing of a product and knowing the market to sell their product. They lack the expertise in manufacturing of it. It’s logical for them to find a good partner who will work with them to implement changes quickly as a reaction to customer feedback.

Is there a benefit to the end user in working with a B2C manufacturer?

The benefit to the end user lies in a company’s agility to respond swiftly to consumer feedback, changing and updating a product so that the consumer has access to the best solution for their needs. Additionally, if a manufacturer is able to cut out the middle man they are generally able to pass on those cost savings to the market; this is especially powerful if allied with reshoring (see previous article).

However, this closer link with the end user presents its own challenges as handling and coordinating feedback is very resource heavy. We have, in the past, seen and experienced larger organisations being so disjointed internally that despite having huge resources they lose that agility which should give them an advantage over smaller firms. Sometimes small is beautiful!

What is Morgan doing in this area?

Here at Morgan we recognise our strength lies not only in manufacturing products but also in R&D, developing new products to bring to market. We thus still prefer to partner with organisations whose expertise equals and complements ours in working with individual customers. Their presence on the ground is invaluable and allows us to focus on what we do best. This has been especially the case with our first B2C product, Zeus, which is designed to stop snoring (and hopefully save millions of marriages!)

Zeus has a huge worldwide appeal as we all suffer from poor sleep, either directly or indirectly, and we are currently seeking links into larger retail distribution partners with experience of the B2C market to completement us as we continue to develop and manufacture in the UK.