Article Published by LinkedIn Pulse
They say it will be huge. It will be bigger than Amazon and Ali-baba combined, by far. What? Is there a new kid on the block threatening these 2 online retail giants?
No. The analysts are not talking about another site to shop for books, yoga pants, and smartphones. They are talking about B2B Digital Commerce.
Here, from Forrester, are the facts, figures, and forecasts given just last year during a presentation at the Internet Retailer Conference + Exhibition, or IRCE, based on a survey of B2B buyers:
-74% of B2B buyers research half or more of their work purchases online before buying-30% make half or more of their work purchases online today
-30% make half or more of their work purchases online today
-56% expect to make half or more of their work purchases online in 3 years
-93% of B2B buyers prefer to buy online once they’ve made a decision
-By 2019, the B2B e-Commerce market will be worth $1.1T compared to the B2C market at $480B.
That’s $1.1 Trillion with a capital T, spent by B2B buyers, compared to the $480 Billion spent by retail customers – more than 2X!
Let’s focus on how 93% of B2B buyers prefer to buy online once they’ve made a decision. 93%! Compare this with B2C buyer preferences in PwC’s Total Retail Survey, 2016. With the exception of Media (Books, music, movies, video games) and Toys, all categories show the buyer preference for physical in-store purchases to be near 50% or greater, with clothes and groceries topping this list at over 70%. Why?
It’s really common sense. People still like to GO shopping, try on a dress, get fitted for a suit, or a pair of shoes, and no amount of 3D rendering and virtualization software will ever replace the 5 senses of an in-store experience. Virtualization will never simulate when a pair of jeans is a little loose around the hips, too snug in back or if a style of shoe is cramping your little toe.
Should retailers abandon B2C web stores? No. According to that same PwC survey, consumers use the retailer’s online store to decide which store they want to walk into – which means your online user experience, especially in the areas of performance and design, still has to be flawlessly executed. It can definitely be implied that poor website performance leads to less foot traffic in your stores.
Focusing again on 93% of B2B buyers preferring an online transaction, the question is why? Well, when was the last time a B2B buyer stepped into your store? Oh – that’s right, there is no store, maybe just a warehouse 1,000 miles away. There has never been a “5-senses” experience for B2B customers buying parts, or office supplies, or cleaning supplies. Remember this – there is no emotional buy-in B2B.
An old argument against investing in a B2B online store is how your customer has a great relationship with your sales rep. Really? 74% of those B2B buyers in that same Forrester survey said buying from a website is more convenient than buying from a sales representative. Oh – but wait – made-to-engineer parts! Again, no. Not when there are many B2B digital commerce platforms already addressing this.
Here’s the common sense reality – despite the 10-year relationship your customer may have with your sales rep, the B2B buyer will do whatever it takes to cut down on the purchasing process. They have to. They are pressured to quickly but cost-efficiently make the decision, make the purchase, then move on. They have other tasks to do, and you want your sales rep hunting for new business, not helping an already happy customer go through a buying process that can be moved online.
So, 93% of B2B buyers prefer to purchase online, but actual B2B online purchasing is far below this. Again, why? Because most companies (probably including yours) haven’t provided an adequate platform for them yet. And here’s a dirty secret, neither has the software vendor market.
Take SAP Hybris for example: According to Gartner, they, like all digital commerce software vendors, have been B2C focused and haven’t included such B2B necessities as price optimization and configure-price-quote (CPQ) until recently. Despite these late-game offerings, SAP Hybris is well-positioned to be one of the top platforms for B2B because of their deep B2B experience and “ability to support unique localization requirements at the currency and language level, complex product lines, multi-site requirements, and globally-based business models.”
If you think your industry is not going to make the leap into B2B e-commerce anytime soon, consider some more industry forecasts from Gartner about the digital commerce platform market:
-2015 worldwide spending on digital commerce software reached $4.7B, attaining a 15% year-over-year increase.
-The digital commerce platform market will grow at a Compound Annual Growth Rate (CAGR) of over 15% from 2015 through 2020, including revenue from SaaS, licenses, and maintenance.
Someone is investing in B2B digital commerce platforms. It very well could be your competitor. Even so, it’s not about what someone else is doing, it’s about meeting your customer’s preferences and expectations. Those companies that do will thrive, and survive, in this shift in the B2B consumer market.