When talking about Ecommerce, most of us picture a customer like you and me ordering something online for personal use. In other words, we think of a B2C online transaction. And just like we think of someone buying an item online for personal use when thinking Ecommerce, people tend to picture sales reps and face-to-face negotiation when talking about B2B sales. However, B2B is happening more and more online. Most people don’t know that B2B Ecommerce is much larger than the B2C Ecommerce market. In fact, the B2B Ecommerce market is valued at close to $15 Trillions, five times the B2C market. Forrester also estimates that online sales will grow to 17% of all B2B sales in the U.S. by 2023, from 9% before the pandemic.
Let’s see why B2B Ecommerce is growing so fast and what companies need to do to be successful in B2B Ecommerce.
Why is B2B Ecommerce booming?
As mentioned in the introduction, B2B sales are happening more and more often online. About two third of companies selling to other businesses now have their offer online, and that number keeps growing. According to a McKinsey & Company’s research, e-commerce now drives more than 18 percent of all revenue for the average B2B company.
The first reason why B2B sales happen a lot more often online is due to demographics. Millennials are being more and more involved in business decisions within organizations, and boomers are retiring. The joke about millennials having “phone anxiety” seems to be true here, as Millenials largely prefer digital channels over talking to suppliers on the phone. Younger generations who experienced the convenience of B2C purchases tend to like that convenience for B2B purchases as well, over traditional channels.
The next reason is the numerous perks of doing B2B sales online. It allows businesses to automate part of the ordering process, so their clients can order directly online instead of dealing with a sales rep or a lengthy ordering process. This allows companies to scale and reach new prospects who would not consider going through the traditional sales process. According to another study, “41% of B2B customers” say that self-service functionality is one of the top three ways B2B companies could make it easier for them to shop online”. It is especially convenient for reorders, when the customers know exactly what they need and in what quantities. Finally, having a strong online presence and ecommerce website allow companies to better educate, communicate with their customers, and provide customer support. I personally would rather watch a video or read a well written documentation before having to call customer support.
In a nutshell, B2B businesses are getting ideas from B2C sales channels to provide an enhanced shopping experience to corporate buyers. This includes things like rich content, videos, testimonials, or the use of social selling. Companies like IBM or Adobe quickly understood the importance of social media in their marketing operation, and are using it heavily and effectively.
It is easy to underestimate the potential for B2B Ecommerce. But the demand is here, and keeps growing. Surprisingly, buyers are also willing to spend large amounts of money on a single online transaction. The same McKinsey study states that “More than one-third (35 percent) now say they are willing to spend $500,000 or more in a single transaction on digital channels (…) and a whopping 15 percent of corporate decision makers are comfortable making purchases worth more than $1 million online.” And with the rise of B2B online transactions, we can also observe increasing customers’ expectations.
The keys to success in the B2B space
Back in the old days of Ecommerce, B2C websites were poorly designed, clunky, and not very user friendly. I remember that ordering something online was almost scary back in the days, it felt like doing something illegal. But that is okay, the technology and customer expectation were very different back then, things improved a lot since. However, B2B websites lagged behind, and it is still common these days to see websites that look like they were designed 20 years ago, with pixelated products pictures and substandard user interfaces. That is now unacceptable, and B2B buyers now expect an experience as good as the one they have when they shop online for their personal items. This includes:
- Appealing, high quality visuals and videos
- Social proof, through reviews, testimonials and social media
- Multiple options for shipping and payment methods
- A mobile optimized website
- An quick and easy navigation and checkout process
- Efficient and easily accessible customer service
- Available items at anytime (by constantly and accurately monitoring inventory)
In addition to these basic requirements that any ecommerce website should meet, B2B buyers have other needs. One of their main needs is personalization. Besides what can be done on any Ecommerce website, it is common that B2B buyers have personalized prices, shipping, and payment terms. It is now easy for companies to set up personalized accounts for each of their B2B customers, so that the ordering process is smooth and quick. This also makes it possible for suppliers to easily create subscription-based offers, to generate recurring revenues.
The prices should be easily accessible, many buyers, especially the younger generation, prefer getting the prices directly without having to talk to a sales rep. However, Ecommerce should supplement, and not replace direct interactions between buyers and sellers, and the company should be able to provide support to their buyers if needed.
Finally, in larger operations, customers will need to integrate the purchase data and create connections between their information systems, ERPs or CRM, and their supplier. While costly, effortless transactions are one of the things companies are looking for when working with new suppliers and vendors.
While challenging, B2B Ecommerce is already huge and keeps getting bigger. More and more buyers are interested in having part of the purchasing or reordering process online, and suppliers are now understanding it. The expectations from customers, who are now okay spending hundreds of thousands of dollars online, are also increasing. A B2B ecommerce offer is becoming more and more a necessity for businesses who want to stay relevant to their customers needs and expectations.