Why B2B companies invest in online stores?
B2B e-commerce represents a huge market. Although B2B actors previously depended on their traditional distribution network, many of them are now taking control of it by opening their own online stores.
With the titanic e-traders of this world, such as Coolblue and bol.com in Benelux, it would be easy to forget that there is another facet to the e-commerce landscape, which is B2B. With regard to these business-to-business sales, online commerce has yet to become widespread. Yet despite this, more and more companies are joining their peers on the Internet by launching their own online stores, as is also the case in Belgium. We asked expert Denis Bavay, SQLI's B2B e-commerce specialist and digital transformation advisory how this development occurred.
B2C E-COMMERCE AND B2B E-COMMERCE
Denis Bavay, SQLI: "The most important thing is to clear the first hurdle".
There is a huge difference between B2C e-commerce and B2B e-commerce, according to Denis Bavay."In many respects, B2B e-commerce is showing itself to be more complex. To begin with, the customer's decision process is more complex, the pricing structure more difficult to define, the cost of winning over a new customer is higher, and so on". This is why for a long time, B2B actors abstained from opening stores online. For many of them, it simply wasn't worth tackling the arduous complexity of electronic commerce until they were certain it would be profitable.
But a new development recently became a game-changer."Pure players" (actors only present online) who were previously firmly anchored in B2C have begun appearing on the B2B market. In niche markets, online actors have surmounted all the obstacles to reach businesses, and for a significant amount of them, this approach has been crowned with success. Many B2B traders have suddenly found themselves faced with an unexpected competitor vying with them within their own distribution network.
"Some B2B actors are still firmly convinced that they won't find themselves in such a fix", insists Denis Bavay."Yet, these same actors sometimes find that a pure player has suddenly seized their physical distribution network. I've seen this sort of thing happen within just six months". And very few sectors appear to be unaffected by this competition, whether it be in the construction or pharmaceutical sector."Nowadays, you can find a very wide range of niche products on Alibaba. You'd have no trouble ordering a truckload of chemicals for instance", adds Denis Bavay.
COMPETING WITH PURE PLAYERS
This is how the battle began. Now that the tools required to manage the complexity of B2B e-commerce are available, more and more actors are creating their own online portals. This approach comes with a change of strategy."We've noticed that B2B companies are now concentrating more on creating an experience", adds Denis Bavay."Some actors who didn't even know who their end customers were just a few months ago, are now striving to create a unique experience for them". To compete with pure players, B2B actors feel obliged to offer an added value: the unique user experience, which is something that didn't exist before. The professional term to designate this approach is "B2C2B", says Denis Bavay, in reference to the combined B2B and B2C tactics, both of which are needed to interact with professional customers and end customers.
"We generally witness endless discussions on a wide range of subjects, but as soon as the first hurdle has been cleared, the remaining operations fall into place more easily".
"B2B actors are currently complementing their traditional distribution networks through their own online channels, thus connecting directly with their end customers. For many of them, this is a real challenge, as this approach requires a totally new strategy supported by new digital tools. All of a sudden, they are obliged to understand the customer's journey, provide the right content and contact details, and conduct a major transformation of all their services simultaneously".
As a B2B actor, where do you begin setting up something as new as this? To start off on the right track, you need above all else the right IT infrastructure, explains Denis Bavay. He assists SQLI's B2B actors seeking to make this transition, and has noticed that this first step is often the trickiest."We're attempting to launch a 'minimal viable product' as quickly as possible. This first step is really important. We generally witness endless discussions on a wide range of subjects, but as soon as the first hurdle has been cleared, the remaining operations fall into place more easily".
Does this mean that all B2B companies must now open their own online stores and concentrate on their customers? Absolutely not, assures Denis Bavay. Not all B2B businesses come out of such a transformation unscathed."A few years ago, some companies saw their entire distribution network turn against them because they had failed to manage the whole process properly. This process is very exhaustive, and it would be risky to claim that this operation is the right solution for everyone".
Yet for some B2B actors, this transformation is proving successful. Their online stores enable them to cater for a segment that previously eluded them."Consumers, but also small businesses and independent workers for instance, are added to your portfolio of existing larger company customers. At the end of the day, you become accessible to all your customers 24/7. Not only can they place an order at any time and wherever they are, but they can also visualise their orders, check their delivery dates, print their invoices, and so on. B2B and B2C customers both benefit from this added value".
Article taken from the interview with Denis Bavais, Digital Advisory & E-Commerce, SQLI, by the Twinkle.be website.