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B2B eCommerce in 2017: The Time is Now

Christian Blaum • February 27, 2017

It’s no secret that digital is transforming retail. Fortune magazine reports that 2016 online holiday sales (November 1 to December 31) grew 11% over the prior year to $91.7 Billion.

At the same time, these eCommerce opportunities have introduced significant disruption to the retail sector, leading to store closings, bankruptcies, and workforce reductions. For example, a half-occupied, foreclosed mall in Pennsylvania, once valued at $190 million, was recently sold for just $100.

eCommerce and the B2B Market

If you’re a B2B organization, you may not be as affected by the dramatic shift taking place in retail. Sure, the manufacturing and distribution challenges brought about by the great recession have been difficult, but successful firms differentiated themselves based on top-notch service, loyal and satisfied clients, and experienced sales teams.

Certainly, the challenges faced by retail will not translate into the B2B sphere, right? Guess again.

The same disruptions taking place at the local mall are rapidly heading towards the B2B market. Between changing B2B buyer behaviors, enhancements to eCommerce platforms that support B2B business models, and emerging competitive threats of all sizes, the disruptive force of eCommerce is edging into the industrial park, warehouse, or factory.

Disruptive eCommerce: a B2B Opportunity

According to Forrester Research, the US B2B eCommerce market will grow to $1.13 trillion by 2020 [1]. Surprisingly, the market is already twice the size of the consumer eCommerce market and growing twice as fast. Early eCommerce adopters have seen success in their early eCommerce initiatives.

W.W. Grainger reported that 46% of their sales in Q216 were via online channels (up from 40% for 2015 full year results).

MSC Industrial Supply saw an even greater percentage of business – 58% of their Q2 2016 sales – came through their website.

Even firms not ordinarily thought of as online merchants are engaging with eCommerce. A Midwestern-based steel and pipe supply firm reported 20% of their customers placing orders from their eCommerce portal within just a few weeks of launch. With 9% of their online orders placed after business hours, the opportunities afforded firms who engage in eCommerce are apparent.

As of now, 40% of B2B companies have yet to launch an eCommerce presence. Of the rest, many either built a site with limited functionality that doesn’t meet customer demand or launched sites years ago that are now in dire need of upgrades. In fact, according to WBR Research, only 19% of firms assessed themselves as being ready to meet the eCommerce wave.

The Era of Customer Self-Service

Current B2B websites are designed to serve the self-service needs of investigative buyers by providing ways to help them easily find the content they seek while moving them toward a purchase.

Companies need to effectively leverage content to support the buyer’s journey. A Forrester Research survey recently demonstrated that 62% of B2B buyers say they can now develop selection criteria or finalize a vendor list based solely on digital content [2].

B2B eCommerce

This same survey shows that 74% of B2B buyers say that buying from a website is more convenient than buying from a sales representative [3].

This makes sense: people have become comfortable with online shopping for their personal purchasing – why wouldn’t they prefer the same when it comes to buying from their business suppliers?

While sales representatives offer unique value during the sales cycle, that does not mean that customers should be forced to go through your sales team by default.

If you need further convincing, Forrester offers one more stat: 93% of B2B buyers prefer to buy online once they’ve decided what they want to buy [4]!

In other words, your sales team can be effective in helping prospects decide what they need. Once that is complete, however, your prospective customers would rather handle the ordering on their own, and they need an effective eCommerce site to do this.

Can B2B Business Be Conducted Online?

Increasingly, the answer is “yes.” The question now is how much of the business can be moved?

It varies by industry, but consider this statistic from Frank Lynn & Associates for the National Association of Electrical Distributors. They report that 68% of purchases in that industry are either simple or transactional in nature, and beg for a self-service purchasing environment.

More than two-thirds of the time, the desired brand is already specified, the customer knows the product, and there is no value-added required (such as a sales incentive to close the deal), or the transaction is a simple reorder.

B2B eCommerce

If you look at this and think about your organization, consider whether there is an imbalance between the way you sell and the way customers want to buy. If two-thirds of purchases are easy and could be best facilitated within a self-service environment, why then aren’t companies building that infrastructure, forcing customers to talk to a human to make a simple purchase?

Six B2B eCommerce Drivers

Now that the size of the B2B eCommerce market is defined, what exactly is driving the growth? It is too simple to attribute this growth to buyers’ familiarity with online shopping in their personal lives—although that surely is one factor.

Here are six key drivers behind the growth of B2B eCommerce:

  1. The Changing Business Cycle: Business buyers are 57% through their purchase decision before they are willing to speak with a supplier sales person. Other research organizations, including Forrester and Sirius Decisions, have published directionally similar research—with some experts suggesting that buyers could be as much as 90% through their decision process before contacting suppliers. Clearly, buyers are shifting online for research (and purchase).
  2. A Changing Business Landscape: There is a long-term movement underway from purchasing departments and purchase orders to company-issued credit cards. The purchasing authority is being pushed lower into the organization, and decisions are increasingly left to down-the-line staffers who have been issued stored value or corporate cards with the freedom to go online and purchase products and supplies.
  3. Increased eCommerce Comfort: Widespread consumer adoption of online purchasing provides a level of comfort with process and demand for similar ease and simplicity in the corporate order process. If people are comfortable with an eCommerce model for their personal purchases, they are certainly going to be comfortable using eCommerce in the business world—and indeed frustrated if they cannot go online for their purchases.
  4. Need for Cost Savings: Companies are looking to capture the cost savings from a reduction in printed catalogs, collateral and price sheets. This is related to the shifting buying cycle—as buyers delay their engagement with vendors, vendors have to put their product and service information out where the searching takes place. That means shifting from a personally delivered sales brochure or catalog to an online store with limited friction should a purchase decision be made while looking at that online store.
  5. Marketing Personalization: B2B firms have led the implementation of personalized marketing via automation tools such as Marketo or Eloqua. eCommerce platforms and tools are also incorporating a host of personalization capabilities and will find a ready market in the B2B space. Personalization is in line with typical B2B approaches on negotiated or differentiated pricing, more refined or advanced approaches on segmentation, and personalized content.
  6. Increased Utilization of Mobile: The business workplace now reflects that workers are increasingly mobile—and that has led to the proliferation of firms that have adopted bring-your-own-device policies. That means there is growth in custom app development throughout the enterprise, including purchase capabilities via mobile apps.

The Competitive Threat

One of the most effective drivers of change in the B2B world is responding to the actions of your competition.

According to Internet Retailer magazine, Amazon’s B2B portal hit $1 Billion in sales within the first year of its launch and is growing 20% month-to-month. That supports the observation that business buyers are seeking that “Amazon-like” experience when they buy on behalf of their employer.

This impressive growth is driven in part by the perceived superior customer experience delivered by Amazon.

In a survey of B2B eCommerce professionals, 87% felt that their website experience was comparable or better than their direct B2B competition, but a full 48% thought their experience was worse than Amazon’s. A tenuous position in which a firm can be when 56% of buyers expect to make half or more of their purchase online in 3 years.

That means that the website of the B2B firm needs to evolve from a basic communication and information channel to an all-encompassing transactional channel, with the terms of engagement dictated by the buyer.

What Should B2B Organizations Do Now?

Whether a company is intrigued by the $1.3 trillion that will be spent online or meeting online customer expectations before they decide to take their business to a firm that meets their demands, 2017 is the year for action in B2B eCommerce.

A simple first step is to benchmark your competition. Develop a competitive set of your closest competitors and take a look at their online capabilities.

  1. Are they selling online?
  2. Is their full product set visible?
  3. How easy is it to find their products and place an order?

Get to know what best-in-class firms are offering.

You should also speak frankly with your customers. It might be frightening to hear that they want to bypass your highly-compensated direct sales team, but it is far better to hear it now while you still have a chance to build a website that meets their needs.

Finally, at the risk of being promotional, ask for outside help. Firms like LYONSCG are in the business of partnering with B2B organizations to navigate their digital transformations.

In conclusion, 2017 is the year to take B2B eCommerce action. The market potential is there. Customers want it. It is time to take the first step toward realizing your B2B eCommerce potential.

 

[1] US B2B eCommerce Forecast: 2015 To 2020, Forrester Research, Inc., April 2, 2015

[2] How Self-Service Research Changes B2B Marketing, Forrester Research, Inc., May 13, 2016

[3] Death Of A (B2B) Salesman, Forrester Research, Inc., April 13, 2015

[4] Death Of A (B2B) Salesman, Forrester Research, Inc., April 13, 2015


Christian Blaum

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Christian Blaum

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