How far away are B2B businesses from adopting ecommerce across the board?
We tend to hear a lot of hype around how B2B should be replicating B2C in terms of customer experience, or adopting direct-consumer (D2C) channels. It depends on the sector. For example, we’ve seen some food wholesalers introduce D2C models since the pandemic. But most B2B buying journeys are so different from B2C. Yes, certain B2B organizations are driving towards being more retail-focused, but it’s still pretty rare.
In manufacturing, for example, it’s a completely different model. Sure, the pandemic has altered things slightly, and businesses are trying to better understand how to adopt a direct-to-consumer (D2C) model, to regain some of their margin from distributors. But realistically most manufacturers are a long way from here. Some are doing fairly well, but overall most are years away from being able to fully embrace D2C.
There are some distributors – particularly in verticals like office products – that are starting to look similar to B2C retailers, but not all. If we consider building product distribution, many of these businesses see less than one percent of their business is online, so they’re still at the beginning of their journey.
Does that mean there’s significant room for growth in B2B ecommerce?
For sure there’s a lot of room for growth. The issue, particularly with certain B2B businesses though, is the speed of change. We are seeing a slow shift, as more and more young, digital natives are present across these businesses, as well as their customers. These decision-makers understand data, and they understand the need to put technology at the center of the business and the customer experience.
Until recently, in these businesses, there was no such thing as a CDO or Digital Transformation Officer. There wouldn’t be a digital marketing or merchandising team like you’d expect in a B2C business in retail or fashion. But this is changing. They’re learning, and a lot of the people in these businesses are coming from B2C. Changing the internal mindset of the business is one thing, but customers need to be brought on the journey too.
How can B2B businesses get started with ecommerce?
Certainly, there’s something to be said for evolution over revolution. We’ve already spoken about how B2B businesses inherently struggle with change, so it might be a case of small, incremental changes, or maximizing the potential of existing platforms – ‘sweating the asset’. Many larger B2B businesses will have made huge investments in their systems, but they don’t maximize these investments, such as knowing where the stock is, when replenishment is expected, etc. . A relatively small change, like the addition of new smart search, personalization, or recommended products, can have significant impacts on the customer experience and revenue, without needing an overhaul of the technology stack.
Likewise, businesses can make small investments in certain geographies or product categories. This way, they can get started quickly without wholesale change, major disruption, or a large amount of risk. There have been successes with businesses who are working in this way, introducing search and merch, or personalization to a handful of applications, proving the value, and expanding across the business over the next two to three years.
What’s the biggest challenge for B2B businesses selling online?
It’s the change of mindset needed, not just within the business itself but also the buyer/customer. This is why it’s so different from B2C. In B2B, there’s a reliance on sales staff to manage the account, offer unique pricing, and maintain the relationship in a way that doesn’t exist in B2C. And this isn’t an efficient way of working for the buyer or the seller.
This isn’t B2C, this isn’t about pleasure or leisurely researching and browsing experience. Yes, the experience needs to be good, but in business, time is money. If the customer can complete the purchase quicker, it saves them money. So, the difficulty is that a lot of these traditional businesses, particularly small businesses, aren’t run efficiently. In order for these businesses to save time and money, it needs to be quicker and more convenient to negotiate prices, purchase from a branch, or pick up products. This will happen as a result of a change of mindset – many B2B buyers are still reliant on their account executives to manage the transaction.
It is also the seller that is suffering in this traditional mindset, just think about the cost of a 20 to 30 minute conversation in branch or over the phone, and multiply that across the day, the cost in terms of time is significant, and the account exec can only deal with one person/group at a time, so this limits the business potential. Buying the same product online, self-serve, with no interaction is a lot more efficient. You can still offer the personal interaction through chat or online calls, but the scale of velocity for purchasing increases significantly. Think about it that way and there’s a real cost to the business, plus the cost of running a brick-and-mortar branch. This is why B2B Businesses have genuine aspirations to move online more and more.
How does personalization in ecommerce help B2B?
If you think about construction or electricals, these types of vertcials have thousands upon thousands of SKUs. If you’re building a huge project and buying many materials and parts, it could be quite difficult to do this offline unless you have a large enough warehouse, especially where you have regional or country differences. Online can significantly help here as you are able to offer an endless list of SKUs, as long as you have the content to support it, but you need to really consider how you surface these products. This is where the importance of search and personalization come into their own, or as it is otherwise known, to “searchandise”. People expect that Amazon experience of it being easy to make a purchase – just because your site is a B2B site, it doesn’t mean you can ignore this. Instead you need to ensure your UX, search, and personalization are comparible to the leading B2C ecommerce sites, so that you build the trust and desire from the purchaser to want to make a purchase on your site. Make it easy to do business with you.
What’s holding B2B buyers back from wanting to self-serve?
It’s an interesting issue in B2B. McKinsey recently showed some research around this issue; before the pandemic, in terms of researching products and services, only 20 percent of B2B customers did this online. This jumped to 50 percent after the pandemic.
However, in terms of actual transactions, this increased from 31 percent to 36 percent. Still a rise, but not as much as the research stage. So, B2B customers are heading online, they’re looking for products to buy, but something is stopping them from committing and transacting. In some cases, this might come back to the issues raised before around relationships with salespeople, negotiating pricing, and other factors. But there has to be more businesses can do to convert these browsers into buyers online.
It’s about understanding and mapping the customer journey and equipping each buyer with what they need to transact. So, if that’s personalized pricing for loyal customers, then this needs to be reflected in their personal online account. If there are typical products, bulk buys, or groups of items the customer purchases often, these should be recommended on their dashboard where the customer has quick access to them.
It’s also not just about the product. If more customers are heading online to conduct research, are they finding the content they need to fully commit to buying online? More information can be provided to help the customer. Search can be optimized, with recommended products or educational content to help complete a project. Personalization pieces and guided selling can be used to ensure they are finding the right items. This is about understanding each customer’s journey and helping them down the pathway, providing better recommendations. It’s also about speed, trying to optimize the basket, get the right products as quickly as possible, so reducing friction, and time spent buying.