Forrester Research estimated 2013 B-to-B ecommerce at the U.S. to reach $559 billion and B-to-C ecommerce to reach $252 billion. B-to-B, in other words, is approximately twice the size as B-to-C. Moreover, only a small proportion of B-to-B providers currently use ecommerce — which makes the chance very large.
Many small-to-medium manufacturers and distributors don’t have an ecommerce presence in any respect. If they have an online store, it’s probably a first-generation variation from 7 to 10 years back. Its performance is probably far behind what buyers now expect in online retail shops. Larger B-to-B operations probably have online shops, but most service just a small fraction of buyers. Others sell just a small part of their merchandise online.
B-to-B businesses that invested early in ecommerce improved their earnings and reduced operating costs. Their customer satisfaction ratings enhanced, resulting in higher customer retention. Gain and market share increased.
There are notable B-to-B businesses which are now increasing their revenue and profit by investing in ecommerce. W.W. Grainger, a provider of industrial components and equipment, is one of them. It ranks 15 in Internet Retailer’s 2013 Top 500 Guide with over $3.11 billion in online revenue. That is more than one third of W.W. Grainger’s total. Moreover, ecommerce is allegedly the business’s most profitable channel. Grainger has targeted it to be 40 to 50 percent of total earnings within the upcoming few years.
W.W. Grainger is using ecommerce to change its organization.
Obstacles to B-to-B Ecommerce
Many B-to-B businesses have long thought that ecommerce would create channel conflicts between sales personnel, suppliers, and other stations. But in fact, B-to-B sales channels are already disrupted by ecommerce. Producers are selling directly to customers. Manufacturers and vendors are selling goods on AmazonSupply.com, Alibaba.com, and other portals to other companies. Wholesalers are consolidating rapidly since they’re caught in the station chaos.
Businesses with direct sales organizations want to control the sales process through their sales staffs and present stations, where they have made huge investments. In fact, companies that aggressively drive their clients online often find their earnings increase and their cost each purchase goes down significantly. That is because inside and outside sales teams can concentrate on more strategic tasks and less on transactional ones.
Beyond channel conflict, there are additional obstacles to success in B-to-B ecommerce. Here are a number of them.
- Products are highly intricate and customized. Kits, assemblies, and design options need configurators tied to backend resource systems to make valid assemblies.
- Clients have many places for ship to, bill to, and several buyers.
- Shipping is very complex. There are numerous warehouses and drop shipping requirements — all with many carriers. Orders are often split to multiple destinations.
- Entry is Crucial. It’s also lively. Customers have to be sure of availability and timelines before they order.
- Payments are generally”net 30″ instead of via credit card. There are credit limitations and purchase order procedures that add to the complexity.
- System integration is Crucial. Unlike B-to-C businesses, most B-to-B businesses have separate systems to handle (a) goods, pricing, and orders, (b) clients, (c) content, and (d) product info. These must all be incorporated together with the ecommerce platform.
- Complicated pricing. B-to-B commerce typically includes many tiers of pricing (in addition to custom pricing) by client, rebates, and other things.
- Differing roles and authority. Some B-to-B clients demand support for their purchasing process with unique functions and authority defined for buyers buyers, and administrators.
- Order history. Customers want access to their order history, status, and budgets. Customers also wish to pay online.
- Merchandise restrictions are common. There are geographical restrictions, specific goods by client, and hazardous substances.
- Tax problems are complicated.
Beyond those obstacles, B-to-B businesses must deliver a sophisticated online shopping experience (like what customers experience at Amazon) with cutting-edge website search, merchandising, product info, and testimonials — all accessible from multiple devices.
It’s complex and expensive. To spread our your investment and mitigate risk, start small and grow. Involve all of your business operations.
B-to-B Ecommerce Coming
Ecommerce will be increasingly common for B-to-B businesses going forward. Many companies that have adopted ecommerce are trying to get 100 percent of the orders online. Some are leveraging their investment to enter international markets that they never would have managed to enter with conventional channels.
B-to-B companies will probably change customer service resources to other tasks, as service needs will decrease. Companies will probably add employees to marketing departments and also to online operations. Sales staffs will be more effective and more tactical. Some will reduce the amount of brick-and-mortar stores. Some will require larger or more supply facilities to take care of fulfillment.
If you’re a manufacturer, you might drop ship directly to customers to support both your online retail store in addition to your distribution partners. This will affect your fulfillment operations.
This doesn’t happen every day or even a year. Ecommerce is an investment in the future of a firm. It is going to probably impact every part of a B-to-B organization.