B2B E-commerce: It's a Journey, Not a Destination
Interest in B2B E-commerce, the business model of introducing E-commerce and “omni channel” processes into B2B sales, is increasing rapidly. I find that manufacturers, wholesalers and distributors within our customer community are showing a keen interest in streamlining their salesforce, order desks, supply chain and back-office support functions to prepare for a digital commerce world. A few have already embarked on this journey, updating their legacy “dealer portals” for a more modern solution. Others are busy readying their plans, but the majority don’t know where to begin. Several are stuck in long IT execution cycles that don’t seem to be going anywhere.
An E-commerce model brings efficiencies into the world of B2B sales by reducing the total cost-to-sell-and-service customers. This model also lifts the top line as it helps firms acquire new customers and increase the average order size from current customers. It helps with reducing the time it takes customers to find products, improves order accuracy, eliminates payment friction and reduces customer service issues. A bonus for buyers and for sellers is that customers can order products 24x7, make repeat purchases and go paperless to a great degree.
More ambitious wholesalers and industry associations are seeking to own and operate “industry marketplaces” where several new suppliers can register and participate in an endless aisle/drop ship program a la Amazon and Alibaba.
It is also just as easy not to go down the route of E-commerce – and wait for your competition to streamline your business for you! Retail stores that order products from several distributors will quickly gravitate towards a handful of e-distributors that offer a superior B2B customer experience. In fact, independent or small franchise retail stores (the customers of B2B wholesalers) have ambitions to operate their own commerce microsites and have the wholesaler accept their web orders and drop ship on their behalf. It is a handful of digitally savvy wholesalers and brands who will win this battle. The age of digital monopolies is very much here.
Amazon Business, Amazon’s revamped push into B2B E-commerce already threatens a number wholesale businesses, such as those in industrial products sector. Amazon Business is ranked 104 in the B2B 300…and rising fast.
Distribution companies (wholesalers and brands) who have embarked on this journey find themselves in varying stages of maturity and adoption. For those already on this bus, I am seeing a problem of adoption within the customer community. There are many reasons why adoption is low including:
- Poor site experience: this can include several issues that challenge the user experience including navigation, poor search and compare, shallow content and a generally incomplete set of functionality.
- Lack of system integrations: without backend integration capabilities (both at the seller and buyer’s end), overall adoption will be low. Standalone sites rarely deliver adoption. A well functioning site should be fully integrated with backend systems at the seller (ERP, EDI, shipping, catalogs, credit cards, analytics etc.) in order to deliver benefits. Some level of integration must be available to the slightly larger buyers. This can be a tough nut to crack without a carefully planned integration management strategy.
- Sales channel push back: the existing, traditional sales organization is an important driver in coaching customers to adopt, but sales reps can feel threatened. While there is no doubt that certain order taking tasks will be reduced, a B2B site frees up time for salespeople to become marketers. Wholesale organizations can continue to commission a sales rep for orders no matter how they come in.
We'd love to set up a phone call to see how SPICE TG can help with the journey of E-commerce.
About the Author
Neel has held senior roles at various technology firms and is currently a Partner at SPICE Technology Group, Inc. Neel is a well recognized technologist within the North American Manufacturing, Retail & Distribution sectors. Amongst the early pioneers in the “cloud” computing market, Neel has been working since the nineties with customers across the globe to achieve technology-driven, quick-time-to-market capabilities for modern commerce and complex supply chains. He brings expertise in digital commerce, supply chain, analytics and in emerging information technologies that are propelling organizations towards new business models. Some of these technologies and their modern applications include “Internet of Things (IoT),” “The API Economy,” “The Sharing Economy” and collectively: “Industry 4.0”
Neel is the Program Chair & Board Member of the Council of Supply Chain Management Professionals (CSCMP – Toronto Roundtable). He is also the Chairperson of the Program Advisory Committee for Business Process Management at Sheridan Institute of Technology and Advanced Learning.