Online industrial equipment sales set to rocket as end-users demand an e-commerce revolution

Citation

(2001), "Online industrial equipment sales set to rocket as end-users demand an e-commerce revolution", Assembly Automation, Vol. 21 No. 2. https://doi.org/10.1108/aa.2001.03321bab.002

Online industrial equipment sales set to rocket as end-users demand an e-commerce revolution

Online industrial equipment sales set to rocket as end-users demand an e-commerce revolution

Keywords Sales, E-commerce, Supply chain

As the Internet continues to rewrite the supply chain rulebook, product distribution within the industrial equipment markets is on the verge of a fundamental shift. A new study by Frost & Sullivan forecasts a dramatic increase for online industrial equipment sales. As the industry's e-commerce market is set to move on from its developmental stage, end-users continue to further their demands for increased e-commerce solutions.

Frost & Sullivan project online sales to rise from US$78.9 million in 2000 to US$9.73 billion by 2005. Indeed, by the end of the forecast period (2000-2005) online sales will account for 20 per cent of sales in the total industrial equipment market (see Tables I and II).

Frost & Sullivan industry analyst, Victoria Whiting, comments:

Online sales of industrial equipment are forecast to grow dramatically over the coming years, as customers further utilise this new and efficient sales channel. Manufacturers need to adopt e-commerce in order to stay ahead or keep up with the competition in this global marketplace.

Customer power is the key factor driving the e-commerce market forward. The advantages of a speedy and efficient service are being immediately realised by end-users. In turn, the increase in process efficiency highlights the clear advantages that market participants can obtain via the implementation of e-commerce strategies.

Investment and reorganisation considerations will pose a significant challenge for manufacturers. Coupled with the omnipresent issue of security, these factors will do much to determine the long-term success of industrial equipment e-commerce.

In 2000 the process control and factory automation equipment markets accounted for the greatest number of online sales. This sector comprised nearly 40 per cent of the total market, with a large number of manufacturers set to go online within the imminent future. The strongest growth is forecast for the hydraulic and pneumatic equipment market, with an impressive compound annual growth rate of 172.8 per cent.

Cost advantages and new market opportunities will immediately benefit smaller companies; however, larger market players will ultimately derive the greatest benefits. Manufacturers such as ABB, Fisher Rosemount and Siemens are expected to retain their prominent positions within the overall industrial equipment market, despite the onset of e-commerce.

The major issue among the larger companies will be whether to adopt a universal e-commerce strategy or, as shown by Honeywell and Invensys, to provide tailored solutions for their individual divisions. The ability to encompass the wide spectrum of corporate operations into one solution has already been shown to be a significant challenge.

A number of general issues are likely to impact market participants' e-commerce strategies, irrespective of size. Victoria Whiting comments:

The quality of the Web site and the importance of brand will be key competitive factors. Prices are expected to continue to play a key role in the future competitive structure of the industrial online market, as a number of manufacturers introduce discounted products in order to encourage customers to use e-commerce.

In conclusion, by the end of the forecast period no sector of the industrial equipment market will be left untouched by the effects of e-commerce. End-users are placing an increasing amount of pressure upon manufacturers, as they demand the benefits that e-commerce has brought to other industries.

As the online market takes a substantial step forward, the entire industry is set to experience fundamental transformations in a relatively short space of time. Manufacturers need to monitor developments in great detail, as e-commerce will be a major factor in determining future competitiveness within the industry.

For further information, contact: Frost & Sullivan, An International Marketing Consulting & Training Company, Sullivan House, 4 Grosvenor Gardens, London SW1W 0DH, UK. Tel. +44 (0)20 7915 7882; Fax: +44 (0)20 7730 3343; e-mail: Benjamin.Barwick@fs-europe.com; Web site: http://www.frost.com (report code: 3862-12, price: E5,000, published: September 2000).