B2B Commerce is growing
E-Commerce is probably the digital area that has grown most the latest years. No matter what kind of company you are running, it is almost unthinkable not to include digital as a central element of the sales strategy.
The development of e-commerce has for many years been driven by B2C companies, but now this trend is really taking off within B2B as well. In a report by Forrester they predict that in 2121 more than 13 pct. of B2B trade in the US, equivalent to more than 1 trillion dollars, will be driven through B2B e-commerce. And we are not even that far away. By the end of 2017 it was estimated that this number was about 880 billion dollar, equivalent to 11 pct.
The same trend is already a reality in Denmark too, where more and more B2B players within most sectors let e-commerce play an increasing role in the sales strategy, even though e-commerce still represents a big challenge for most B2B businesses.
Taking the step into e-commerce forces B2B to take on more inbound strategies known from B2C, where attracting new clients is focal. But buying processes in B2B are often much more complex than buying a pair of shoes online, just think services like bulk orders, individual pricelists, special contractual conditions, configurations and much more. Thus, besides attracting clients, offering excellent buying experiences is even more important and challenging if you want to succeed within B2B commerce.
At the same time a lot of B2B companies are struggling with outdated ERP systems, economy and fulfilment systems, that do not support the level of automatization and personalisation that a good e-commerce experience demands today.
Never the less, it is clear, that if you as a B2B partner do not choose e-commerce, you will miss out on significant market shares in the future.
Amazon is coming…
Another important e-commerce trend – or event – that will be a reality in Scandinavia, maybe already in 2018, is Amazon’s market entry.
The whole digital market has learned from Amazon who already, several years ago, started setting market leading standards for effective buying experiences and best practices within strong User experience and fulfilment processes. Without a doubt, Amazon has defined important parts of today’s best practises within B2C commerce best practises
But will Amazon’s introduction to the Nordic market also affect B2B businesses’ e-commerce strategies?
The answer is – most definitely! Amazon already has a B2B portal – Amazon Business, developed to handle B2B sales processes, ready to launch.
Amazon Business will, for many B2B companies, be a most welcome and attractive new distributor, who can help reach new customers and increase the companies’ revenue with a powerful sales portal.
But with this comes a lot of other things you need to be aware of as a B2B player, for instance:
- Increased competition – through a lot of international competitors now entering the Nordic market through Amazon.
- Increased transparency – the prices and offers from both local as well as international competitors will now be shown side by side with yours in Amazon’s immense portal. At the same time effective price comparing tools and the like will be available for your buyers. Just as we know from a lot of the B2C platforms today.
Inevitably, this will result in increased price pressure and demands of faster turnover on your services and products in the fight against other players about attractive digital shelf space.
- Channel conflicts – Besides that, relying on a 3. party distributor as strong as Amazon creates a risk of new channel conflicts for your other distributors as well as for your own channels and stores.
There are obvious strategic pitfalls you need to be aware of, before you decide using Amazon Business as your maybe even primary online sales channel. At first glance you as a company will probably be able to save yourself from a significant investment in your own commerce platform. But you have to be aware that with a 3. party strategy like that, you hand over large parts of business control to guys like Amazon, with that cutting yourself off from a long list of opportunities to optimise your digital platform to your business.
Most importantly, you lose control of some of the most valuable assets you as a company have today – customer data. Especially withinB2B companies, data is the most central element to connect relevant and individual omni-channel buying experiences, where your digital services are integrated with all your other customer touch points. Data like your customers online search history, buying history etc. are suddenly not yours but belongs to Amazon.
Besides being one of your most important elements in fuelling digital services and personalised customer experiences, data brings valuable customer insights and forms basis for the foundation of long-term and meaningful brand communication.
In other words, by leaving it all in the hands of Amazon you risk losing your customer in the end.
Take care of your customers
With the arrival of 3. party B2B commerce platforms like Amazon Business, companies are forced to adapt. As a B2B business you have to decide what you want to achieve with your digital strategy. If it is all about boosting SKUs with price as the central competitive parameter, then Amazon Business is probably a great opportunity.
However, if you as a company choose to invest in your own e-commerce platform you should have serious ambitions about creating strong digital customer experiences and integrate these across all your sale channels – digital as well as offline touch points. Put a bit to the extreme, it is only through a holistic digital strategy focusing on building long term customer relations and strong brand loyalty, that an investment in your own individual B2B e-commerce platform can be justified. In return, this is how you stay close to your customers and win in the long run.