New trade models for a new world order

Worldwide
Published:  17 September, 2020
Credit: Rupixen

In the ILM Tanner Business Confidence Survey 2019, just 28% of tanners who responded stated that their company is set up to sell leather via e-commerce channels against an overwhelming 71% majority who were not. A year later, in the 2020 edition of the same annual survey, that number had barely edged up, with just 31% of tanners selling leather through online channels, while still a staggering 69% are not.

On the one hand, this is not surprising. The leather industry, and tanneries in particular, are not known to be the fastest to embrace change and leather is a component material of another product. And yet, it does seem astonishing that in a digital age, where most aspects of society, culture and indeed trade have migrated at least to some degree online, and way before digitisation was accelerated due to the coronavirus, that the leather sector would be so dramatically behind. But even more so since the pandemic hit, not having an online presence is a substantial disadvantage and exposes a real weakness in the resilience of many businesses. As Covid-19 continues to linger and a ‘second wave’ across the world looks increasingly likely - posing a question mark over when and how the industry will return to ‘normal’ modes of trade -, having a digital strategy will be key to the survival of many companies.

Businesses have to be agile

As a direct-to-consumer model, e-commerce has been a natural extension of sales channels for almost two decades now, with ever evolving concepts, sophisticated technology and customer-focused execution, but the b2b sector has been much slower to adapt. That said, virtual b2b trade formats have been around for a decade or so. In the fashion industry, for instance, amid waning significance of large-scale trade shows and a trend towards smaller, localised and more curated events, many brands have been experimenting with virtual showrooms, with wholesale buying and marketing being conducted via b2b sites; only, these never really hit the mainstream. This may now change, and not just for the fashion industry.

With the cancellation of leather industry trade shows such as ACLE in Shanghai or Premier Vision in Paris in the wake of the pandemic, the sector’s traditional meeting and business platforms have been disrupted. Premier Vision was quick to pivot and to launch its fully online Premier Vision Marketplace, which replaced the physical edition of PV, originally scheduled for September 15-17. Over in Milan, while Lineapelle is still going ahead from September 22-23, the physical showcase has also seen the introduction of a digital ‘smart event’, A New Point of View, with a host of digital initiatives and a 365 Showroom in addition to its Corona-adapted physical incarnation. While undoubtedly, nothing can replace real, human interaction and face-to-face relationships, it is clear that these hybrid formats will become increasingly commonplace – physical trade shows, where and when possible, but sustained by a digital strategy.  

Embracing technology and innovation

Just like consumer-facing brands have evolved and modified their sales channels, suppliers must also adapt and align their business models with the new reality and world order we are facing. E-commerce, transactional websites and digital communication will continue to shape how industries are conducting business, and the leather industry, first and foremost tanners, have to wake up to this fact. There are already positive examples: Mexican tanning group LeFarc launched its online shop three years ago, and what begun with just 500 sq ft of leather being sold per month has now increased to 20,000 sq ft per month and growing (you can read more about this in the September / October edition of ILM in print and via the ILM App). Or in Brazil, Cortume Krumenauer recently launched its transactional arm, Sculp Leather Store, which reportedly has also had a positive uptake in a short space of time.

Many of us would have never thought that we would be buying clothing, food, luxury goods and even cars online, but the reality is, that we do and that this is not going to go away. Translate this from consumer level to trade, and this will follow a similar pattern. Those who are still sceptical of whether they need an online presence are likely to be left behind in an increasingly fast-paced environment. Of course, being successfully set-up for e-commerce and remote trading requires investment and resources, which may seem counter-intuitive during these difficult times. The whole user experience needs to be instinctive and easy, transactions have to be safe, access has to be established to verified trade partners, and as online takes away the opportunity of touch and smell compared to a face to face sales meeting, you need good representation of the product via professional photography, videos and detailed information, as well as a healthy stock level of samples that can be shipped when requested. All of this will require a fundamental rethinking and adapting of the status quo. But it is a necessary step. Just waiting and riding out the corona wave could be more damaging for businesses long-term. The leather industry needs innovation, not just in the products it creates, but also in the ways it markets and sells them. And having a digital strategy ultimately makes good business sense.

Isabella Griffiths

Isabella Griffiths,  ILM Editor

*Have you recently set up an e-commerce channel or have you been successfully trading b2b online? Have you seen sales growth during the coronavirus pandemic from online channels? I would love to hear from you. Please email: isabella@edifydigitalmedia.com