E-commerce for B2B follows a different logic path than a B2C site, and the logic is far more complex than standard consumer shopping. And while B2C e-commerce has dominated the conversation for years, B2B is starting to see the same principles applied to its sales. Without a solid strategy, a B2B site can be swallowed by its competitors as easily as a B2C site can.
This is the first post in a 3 part intended as a “conversation starter” for managers and a high-level roadmap for B2B professionals working for Brands, industrial Manufacturers and Distributors that are evolving their B2B e-commerce activities. It will focus on:
Part 1 – Defining a B2B E-Commerce Strategy
Part 2 – Defining B2B E-Commerce Requirements & Evaluating Platform Options
Part 3 – Planning The B2B E-Commerce Execution & Getting To Launch
Defining a B2B E-Commerce Strategy
For B2B companies evaluating e-commerce, a strong strategy is required. Strategy is creating a pathway to substantially higher performance. According to Richard Rumelt, author of Good Strategy/Bad Strategy, it is the ability “to exploit some change in your environment—in technology, consumer tastes, laws, resource prices, or competitive behavior—and ride that change with quickness and skill”. In an interview with Rumelt in McKinsey Quarterly, he stressed the importance of seeing the opportunity behind the initial challenges.
Before looking at the tactics of launching (or relaunching) your site, a strategic view is required. You must define the ways in which you will differentiate your offering. Once you understand the events that precipitated the shifts in your industry, you can better connect with an audience on a practical or emotional level. Companies that stay in touch with their customers and remain flexible stand the best chance of meeting customer expectations and preferences.
Asking the Questions
Before getting started, companies need to ask some key questions:
What can you do to differentiate from your competition?
Most businesses can discover an opening in B2B e-commerce, but it depends on the industry and target audience. For example, if you were planning to enter the MRO segment, you’d face stiff competition from both Grainger and Amazon. It wouldn’t be impossible to break into this crowded market, but it would be difficult to gain a foothold between these two juggernauts.
What have we learned from B2C?
B2C has seen some tremendous improvements over the past several years. Customers today can price compare, adjust delivery options, and pay with practically any form of currency. Consumer sites have seen success when they successfully manipulate the technology of the day to serve the needs of their customers.
A business owner will look at a purchase differently than a shopper but that doesn’t mean there’s no overlap. Your customers are influenced by everything from photo quality to categorization to site navigation. The tactics might be more complex, but the underlying principles are similar.
Here are just a few ways Amazon is providing solutions:
- Pricing: Amazon provides discounts to those who purchase in bulk. Customers can buy products for less than retail if they buy the right quantity through an Amazon B2B site.
- Product content: Amazon gives visitors the detailed information they need about the products they’re looking for, including CAD drawings, manufacturer specs, and user guides.
- Coupa Open Buy: Because so many businesses already use this procurement system, Amazon partnered with Coupa to expand their offerings. Now Coupa customers can also access Amazon sellers to supplement their normal purchases.
What happens if you don’t invest in a B2B site?
There are some industries that won’t benefit from a B2B site. Companies that sell convenience merchandise or one-of-a-kind items won’t have to contend with competitors stealing their business (at least not online). However, most companies will face strong consequences if they choose to ignore this trend.
If the failures of Sears, Blockbuster and Toys “R” Us have taught us anything, it’s that people are looking for the path of the least resistance. They want to purchase quality products without the hassle — whether they’re a consumer or not. If you can’t provide this service to your customers, they’ll eventually turn to someone who can.
What are the baselines for a B2B e-commerce site?
All B2B sites have slightly different features based on their industry and target audience. However, there are a few standard elements that all B2B companies should strive to deploy:
- Customer-specific pricing: Your customers have grown accustomed to a certain pricing structure when they purchase from you. When they have their own account, they receive the same benefits whether buying directly or online.
- Lines of credit: Similar to pricing, lines of credit need to be extended in accordance with the client contract. When your customers are getting ready to roll out a new project, they can use their customized credit options to make the purchase on the e-commerce site.
- Quoting tools: From one-time orders to recurring drops, an e-commerce site should provide quotes to customers. This visibility allows customers to assess their budgets whenever they want — even when their sales rep is out of town.
- Order approvals: Sometimes decision makers want full oversight, while others may want to grant one-time authority for a one-time purchase. Order approvals can restrict access without compromising a client’s timeline.
- Order receiving: A site with solid web design and defined strategy will accept, process, and track orders with complete transparency. (It’s also a lifesaver for both internal and external audits.)
- Integration: When your front-end and back-end systems communicate with each other correctly, employees can access real-time information regarding the client’s activity.
Seeing the Opportunity
The success of a B2B e-commerce site isn’t necessarily defined by the strength of its back-end code. The real challenge of B2B sites lies in understanding the new way of doing business. As business roles, responsibilities, and expectations adjust to modern life, your e-commerce site needs to offer real benefits to your customers:
- Automation: More automation means order processing and approvals are less expensive. It also makes it easy for customers to get answers to their questions — without having to send an email or make a phone call.
- Productivity: When your team isn’t tasked with faxing invoices or explaining a charge, they’re free to concentrate on more productive tasks. Sales teams can build stronger relationships rather than just maintain them.
- Efficiency: If you have 1,000 accounts who only order once or twice a year, the right e-commerce site makes it easier to handle these infrequent purchases without investing unnecessary resources.
- Tracking: Once you nail down a customer’s buying and spending pattern, you can use the trend to predict and influence their next move.
- Negotiations: A sales rep is around three times more likely to sell products or services to an existing customer than to a new prospect. Use e-commerce buying patterns to your advantage by negotiating based on individual patterns and needs.
- Management: Whether you want to clarify an invoice or dissect the spending habits of your top customer, the management of your business can become far more specific.
Going Above the Baseline
Once companies have established their baseline for a B2B site, they can start planning how to better refine their strategy. While every company is different, they can start with the following simple framework.
In this grid, you can see that the revenues generated from customers are compared to the cost it takes to serve those customers. If low-volume clients are utilizing too much of your budget, then you need to begin pushing toward the reverse. The Gold Quadrant is the top left corner. This is the quadrant where you are generating the highest revenues, while your costs to serve are low.
In the Golden Quadrant, you’re accomplishing several key objectives:
- Efficient teams: Your sales team has the tools they need to generate high-volume orders. They can spend more time servicing clients rather than filling out paperwork.
- Customer tools: When your customers enjoy a simplified order process, they form a stronger connection to your company.
Grainger has accomplished many of these objectives by offering its Shop Floor vending machines. This multi-channel approach targets a captive audience that is looking for products immediately. They’ve managed to create a system that is fully aware of the inventory and the usage of its customers. Once inventory drops, the system sends an automatic restocking message so there’s no lag.
Another real-world example can be found in the supplements industry with one of Accorin’s customers. When pharmacists want to order premium products, they can access a B2B e-commerce site that displays an approved list of inventory. If pharmacists wish to place additional orders, they’re supported by a variety of the site’s features. This includes credit purchases, volume shipping, and contracted prices. The Average Order Value (AOV) increases because pharmacists have a convenient way to place orders, confirm delivery, and settle invoices (without having to pick up the phone).
Accorin understands how each company faces its own specific set of challenges when breaking into B2B e-commerce. Whether you’ve been doing business for 5 years or 50, the Golden Quadrant can remain elusive. That’s why we work with our clients to understand how to define their B2B e-commerce strategies.
Accorin is always happy to help businesses improve their processes and the e-Commerce options they provide to current and future customers. We especially recommend the features of Magento 2 for companies that are looking to launch a new B2B e-commerce site. We believe that it is the leading mid-tier B2B e-commerce platform and is clearly superior to Shopify or Demandware / Salesforce Commerce Cloud. Need help developing your B2B strategies? Give us a call!