Ecommerce is booming in the consumer sector, but where B2C has trodden, should B2B follow? Things are a little more complex in the business space as Claire Weekes discovers
Ecommerce has been on the incline for years, but 2011 has been a significant year for its growth. The UK economy may be stalling, but this merely supports the case for the increasingly popularity of ecommerce, as brands increasingly look for cheaper ways to sell.
The concept of ecommerce has existed (arguably) since 1995 – the year that etail king Amazon launched. Amazon provided a template that now sees some estimated 730,000 people in the UK alone employed within the ecommerce sector. And if you were in any doubt as to its future roadmap, look no further than the second annual IMRG e-Jobs Index, which estimates that by 2015 the ecommerce industry will create 1.5 million jobs in the UK. This is even more astounding when you consider that figure fails to take into account the number of people that could be employed within the mobile or mcommerce sector – itself so intertwined with the online sector – by the same year.
Although to date ecommerce has been more widely adopted by B2C companies, some argue it has even greater value in the B2B sphere. Look at the financial services sector – a number of brands in this space now facilitate a great deal of their transactional business online. Aviva, for example, operates Fast Trade, a portal where customers can do all of their commercial trading online.
Early leaders – such as Dell – and others in the PC technology space have been able to successfully evolve their business into an ecommerce one, blending the supply and retail chains to close the gap between fulfilment and purchase. But for the most part an old-adage rings true – B2C brands got there first and currently ‘own’ the space.
Sales versus order automation
There are fundamental differences in the way that B2C and B2B brands approach ecommerce strategy – so what’s worked so well for the Amazons of this world – to date – is of little use as a blueprint for the average B2B marketer.
“One of the key points to realise in looking at the difference between B2C and B2B ecommerce is that with B2C the issue is primarily about sales automation, while in B2B it is primarily about order automation,” explains Chris Barling, co-founder and chairman of ecommerce supplier, Articnic.
Barling explains B2C ecommerce is generally aimed at amateur buyers. Prospects find retailers, place an order and pay. “Finding the retailer but not being able to place the order generally means that the order is lost,” he says.
But in B2B the parameters are different and take-up has been less. Why? Because the length of time and the complexities behind the B2B purchase process mean that there is much more for a brand to consider besides some clear pricing and an online shopping cart.
“B2B buyers in general have a broader understanding of their market – they are professional rather than amateur buyers. There is much more likely to be a price negotiation and they are also more likely to buy on credit. Their average order value is typically higher than in B2C sales,” says Barling. The result of this being that while discovering new B2B suppliers on the web is important for both parties, the actual ability to place an order is less so. “While B2B online ordering can be more efficient, the relative cost of the ordering part of a B2B transaction is much lower than with B2C. This explains the relative lack of penetration,” adds Barling.
There is also the fact that despite the digital age in which we now live, there is the perception that good B2B selling is still done face-to-face. “Customers may not want to move to online purchasing, many may like and value the personal communication of a call. Also, the up-sell and ability to overcome objections, while still achieved online, may not be as easy and can be seen as a lost opportunity to business,” reckons Ben Staveley, ecommerce manager at solutions and web design company DotCommerce.
Leaders of the pack
But do not read into all of this as doom and gloom for the future of the B2B ecommerce industry. Far from it, a lack of innovation to date in this sector means there is a real opportunity for leaders of the pack to emerge and shine through. Thanks to years of watching consumer-facing brands succeed (or fail) at online selling, the ecommerce path is now a well-trodden one. Plus, as consumers we are now a lot more comfortable purchasing products and services online than we were 10 years ago.
The move from web-presence to fully-functional ecommerce sites might not be as big a leap as you’d imagine. “B2B companies already have well established and smooth running supply chain management systems, most of which were established long before the world of ecommerce took off. The challenge now is extending these back office systems to link up with customer facing websites,” says Christian Bennefeld, CEO at software analytics firm, Etracker.
Bennefeld believes that the key to success in moving from simply a business with a web presence into one that trades fully on the web lies partly in executing a shift in perspective. “Participating in an Internet business is far more than just participating in a B2B marketplace. A mindshift is required within the organisation and new departments and roles need to be established.”
So what are the benefits in developing an ecommerce strategy in the first place? Well many really – from being able to manage inventory more effectively, to being able to adjust much more quickly to customer demand, to getting products to market faster and cutting paperwork costs. According to Staveley, many of the B2B companies approaching DotCommerce for advice are doing so in a bid to reduce sales team costs and overheads, as they fight to compete in an increasingly competitive market.
Executed correctly the move to online selling could reap maximum rewards for minimum effort. But too many organisations see CRM and ecommerce as separate entities. “To get the most out of ecommerce, B2B organisations should definitely be connecting their commerce activities with their existing CRM systems to allow seamless integration across their site,” advises David Bowen, product manager at web content management supplier, Episerver.
“CRM integration will create a better user experience, for example by eliminating the need for customers to login and enter their details every time they make a purchase, and will help organisations track and understand who’s visiting their website, what these potential customers are doing on the site and how the organisation can better serve their needs to improve conversion rates.”
Ecommerce and the EU
There are rumbles from some quarters that the new EU cookie directive, which comes into full force next year and which will penalise any etailer that doesn’t comply with its strict new rules regarding the tracking and storing of customer information, are a risk factor for any brand retailing in the online space. We won’t know the full extent to which this new law will impact upon online retailers until the first penalties are dished out to offenders from next May. However, in the interim there is much talk of the fact that, for etailers, the directive will probably just mean making clearer to customers any intentions they have for monitoring their purchasing behaviours. For honourable etailers, the directive should pose relatively few problems. There are also claims from other quarters that ecommerce is already being overtaken by mcommerce – although the counter argument here is that ecommerce and mcommerce are really one and the same – master one and the other will naturally fall in line.
Yes there is a lot to consider for a B2B brand before entering the ecommerce space, but having weighed up the pros and cons, should we be excited or deterred by the opportunity? Michael Chuma, associate director of product management, global B2B, at ecommerce solutions provider Digital River certainly thinks B2B marketers should be embracing it.
“There are absolutely more opportunities in ecommerce for B2B brands than B2C brands. With worldwide commercial transactions nearing $100 trillion dollars (according to the latest Global Commercial Consumption Expenditure Report), and the recent economic difficulties, there is a greater focus on manufacturing and publishing costs,” he says.
“In 2009, Forrester Research warned that channel sales cycles tend to lengthen in a struggling economy. That assessment is still relevant and can effectively reduce the amount of trepidation and reliance upon the traditional channels for business services, while opening new points for transactions.”
Be willing to stick your neck out and embrace ecommerce, and you might just find yourself a pioneer of your sector.
Case study: Gem Wholesale
Gem Wholesale, a global wholesale trader, has transformed itself over the past decade from a company doing around 10 per cent of its business online to one which is now almost an entirely online company.
A wholesale and export business with a turnover of around £5m per year, the company manages more than 100,000 square feet of warehouse filled with around 1000 pallets of constantly changing stock – ranging from audio to furniture and gifts. B2B customers range from start-up or eBay dealers to the wholesale and export market.
“Initially around 10 per cent of our business came from a simple website showing our stock, but customers couldn’t purchase online. Now, around 85 per cent to 90 per cent of our sales are online. We are moving more and more to online and direct delivery rather than customers visiting the warehouse and selecting the goods and our geographical reach has exploded as a result,” says Ian Marhsall, general manager.
“Our website is updated every 30 minutes with new lines as we add 40–50 pallets a day. As each batch is unique, the site is constantly changing, so we use Twitter and email to alert customers.” Marshall says the website and checkout are kept straightforward so any failures are down to ISP or browser issues.
“The main emphasis with our site is the ease and speed with which a customer can navigate around. We looked at using Flash and other programmes to make the site interesting, but as a B2B wholesaler our customer base is looking at the stock, what he has to pay and how he is going to get it, rather than how nice the site looks.”
