B2B E-Commerce-The Growing Need In The Digital Economy
e-Commerce as a concept is fairly old and established. It has disrupted the market since its advent with its unique proposition of buying orders online, without having a view or feel of the product before. Skeptics have long been silenced about its ability to change the market and e-Commerce juggernauts like Amazon, eBay, Flipkart etc. are one of the biggest companies today in the geographies they operate.
While B2C e-Commerce has been quite prevalent and accepted throughout the world cutting across every consumer segment, the story of B2B industry has been a little different. B2B industry to a large extent still operates in a traditional way, where buyers and sellers like to talk and negotiate in person before carrying out any transactions.
However, the B2B industry is changing faster with changing buyer demographics. With more and more millennials joining the B2B industry, the obvious effect of e-Commerce acceptance is showing here too. In a 2015 research, Google found that nearly half of B2B buyers are millennials, a 100% growth since 2012. The overall size and growth of B2B e-Commerce is also encouraging, with a phenomenal rate of growth being clocked mainly driven by the Chinese market.
“The B2B market will outgrow the B2C market by 2025, with China taking the lead”- Frost & Sullivan
What has been driving the B2B e-Commerce market and what are going to be the driving features of it?
Source: Verto Analytics, e-Commerce demographics, who shop online
A major reason, as mentioned before, is the changing demographics. The millennials are more comfortable with mobiles, tablets and laptops than their previous generations. They want the same B2C buying experience in their fields too. When the same person can experience the personalized feel of a B2C e-Commerce in his everyday life, the need for similar experience in his workplace leaves no secret code to decipher.
Payment methods are another major driver for e-Commerce. While acceptance of orders through fax is still not uncommon, online payments through the website is becoming more of a norm. About 80% of the B2B companies are more prone to accepting orders through web as opposed to taking orders through phone, email and other options. Increasing appetite for online orders feeds into online payment as well. 94% of people taking online orders are taking payments paid by credit cards while checks, payment terms and purchase orders are still viable and dominant options (51%, 53% and 50% respectively). It’s important to understand that B2B companies accept payments in various forms from their customers. Speed of payments also increase by a good extent for the Companies to encourage more online payments.
Availability of service: B2B companies receive calls and orders only during the operational office hours. That creates a huge gap when a mission critical order needs to be fulfilled. Hours of delay in such cases may incur in huge losses for customers. e-Commerce here can receive the orders 24*7 and process them without manual intervention if automated for odd hour orders, or orders from different time zones.
Wider Reach: With an online store, businesses can grow and reach out to newer geographies and customer base without making huge investments in setting up local infrastructure. Third-party logistics Companies make it easy to fulfill the orders across large geographies. Clients won’t have to bother about visiting your business location. They can place orders online even if they are halfway across the world
Source: Report by Economic Times on demographic shifts, e-Commerce, digital space to reshape FMCG
Lower effort and cost: Traditionally, the sales team would put in a lot of effort either through phone calls or customer site visit just to convince the decision makers and get the orders. Many times, these attempts are futile, costing businesses millions of dollars. Although, it’s required to connect with the clients on a regular basis to maintain interpersonal relationships, the availability for customers to place an order online definitely saves both your and the customer’s time.
Managing customer specific programs with ease: Sales reps visit customer sites today with not only the catalogue, but also specific promotional programs that entices the customer to buy more from you. While, it’s truly personalized, it’s extremely inefficient. e-Commerce can help with the same personalized promotional programs online that is extremely efficient and effective, as the promotions can change frequently as the need arises. Another customer specific program that becomes ineffective is customer loyalty programs. Customers never really know at which stage his loyalty program is and what more can he do to get more from the program. e-Commerce can easily make all this information available and give the customers the option to utilize the loyalty program to the fullest.
Source: DeZyre, How Data Science increased profitability of the e-Commerce industry
Data driven operations: It is said that the data is the new gold. Any organization that is transacting with multiple stakeholders are generating a huge amount of data. The same data can be used for better decision making, developing customer insights, managing operations efficiently, giving the customers personalized experience etc., that is otherwise impossible. e-Commerce can capture and utilize this data and as a result a business can do wonders that is not otherwise achievable.
B2B e-Commerce, if coupled with some simple yet important features, can be a game changer for businesses. Personalized promotions like product offerings, curated prices, native languages and native currencies, automating manual processes like price negotiation for bulk purchases, otherwise known as quote process, recurring orders can make business users life considerably simple. Added to that the ecommerce system must be connected to all the existing IT infrastructure to maximize the effectiveness thorough a thorough data driven approach.
However, there still are a lot of challenges for B2B e-Commerce. The main problem is user adoption. Many businesses still prefer doing it the traditional way due to the personal touch they can give during the whole process. Also, B2B ecommerce process and functionalities are yet to be fully standardized, thus it requires to be built in a more customized way. The rise of ecommerce in B2B industry is proof that it’s going through the right growth path.
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