Retail Lessons for a B2B E-Commerce World
by David Levy
Where e-commerce was once solely the domain of retail and e-tail businesses, more and more B2B enterprises are jumping into the space.
As e-commerce came into vogue, there was a great deal of optimism about the opportunities for B2B. But despite massive opportunity, B2B e-commerce has grown at a much slower pace than once predicted. In 2000, Goldman Sachs estimated B2B e-commerce sales would reach $4.5 trillion by 2005. Not to be out-predicted, The Gartner Group pegged that number at $7.3 trillion by 2005. Both firms grossly overestimated. U.S. Census data released in May 2012 put B2B revenue transacted online—not including EDI—to be at $300 billion in 2010. Fast-forward a few years, and Forrester is reporting that number to grow to $559 billion in 2013.
Part of the explanation for the overestimates is the lack of context for all things Internet back in 1999 and 2000. The rest is that there are significant hurdles that still need to be overcome. For instance, the biggest challenge for B2B e-commerce is not technology; it is the business rules, especially when compared to B2C e-commerce. In relative terms, placing an order on Amazon.com and entering in your credentials, credit-card information, and shipping address is child’s play compared to the complexities in transactions between manufacturers, wholesalers, dealers, and retailers.
Even if accounting, inventory, and order-fulfillment systems were integrated, there can be endless rules around each customer’s account with regard to pricing, inventory, and shipping. Unlike the shirt on Gap.com, B2B pricing is dependent upon any number of different factors—how much you purchase and when, whether you have an existing direct-sales relationship, and your shipping and logistics needs, to name a few.
And where retailers are dealing with just one person, oftentimes in B2B there is more than just one decision-maker. According to Endeca (purchased by Oracle in 2012), most B2B e-commerce transactions involve more than two decision makers and, “28 percent have five or more decision makers involved in the process.” According to the same survey, only 25 percent of the B2B companies represented had an e-commerce site and significantly less than that have one that is considered current.
Higher Expectations
While the successful implementation of B2B e-commerce platforms relies on the integration of systems and accounting for the often-complex rules of engagement, even these accomplishments alone are no longer enough. There is a growing demand for B2B sites to look and feel like B2C sites. Because business purchasers are also online retail customers, the expectations for B2B e-commerce sites are becoming very similar to B2C sites.
This means that it is no longer enough to simply put a product catalog online. Business customers are now looking for more and better content, personalization, dynamic on-site searching, user reviews, social integration, video, and even mobile apps. Of the participants surveyed by Endeca, “80 percent agreed, or strongly agreed, that their customers’ expectations mirror at-home practices.” In a recent report by Forrester, Key Trends in B2B E-Commerce in 2013, noted e-business analyst Andy Hoar outlines three trends in B2B e-commerce, the first of which is, “an ever-growing demand for B2C-like B2B E-Commerce experiences.”
Lessons to be Learned
At DEG we have the good fortune of working with big brands to craft smart e-commerce strategies. It is our experience that a number of them come to the engagement with a huge degree of sophistication in the digital space. However, there are just as many who, while they may have mastered the art of delivering truckloads of their products to the right place at the right time, struggle with the idea of putting one widget in the hands of a customer. This is not a failing, certainly. It’s just not a challenge they’ve had to face.
Whether you’re selling t-shirts out of your basement or putting 1000 different SKUs in front of your customer base, you need to remember that e-commerce is more than just a great looking Web site. That’s definitely a good start, but you also need to think carefully about your business processes. How are you going to manage your data? How do you streamline shipping? What about your back-office functions?
B2B e-commerce is nothing like B2C e-commerce—and yet it is. There are definitely common elements. Both have to allow customers to easily find the products they want. Both need to provide customers with secure, online transactions with the correct pricing and delivery expectations. But while B2C e-commerce sites can focus more on the front-end user experience, successful B2B e-commerce platforms require far more attention on the rules of engagement with customers and effective integrations across the enterprise. And while this may sound like more trouble than it’s worth, I’d say that despite the trouble, it is worth an awful lot.
David Levy is an e-Commerce strategist for DEG, a full service digital consultancy based in Overland Park.
P | 913.498.9988
E | dlevy@degdigital.com