Things have changed in the dynamic B2B commerce world. Relentless technological innovation has driven digital transformation in marketing, with B2B at the forefront of this lucrative industry:. Frost & Sullivan predicts that the global B2B eCommerce sales are to reach over $6.6 trillion by 2020, surpassing business-to-consumer (B2C) valued at $3.2 trillion by 2020. The United States alone will generate over $1.9 trillion in sales by that time. And more B2B companies than ever are capitalizing on that growth by prioritizing eCommerce investment.
At the same time, a generational shift has occurred. Millennials are leading the new wave of B2B buyers, where 73% of millennials provide input and 34% act as decision-makers. Such influential roles mean that their different demands cannot be taken lightly. This generation views the B2B purchase process through the lens of a B2C consumer. Used to superior B2C experiences as personal consumers, they arrive at B2B websites with lofty expectations of similarly exceptional customer experience. B2B businesses can expect a few areas where this next generation will make an increasing impact on how eCommerce will be conducted.
Below are the top trends that will shape the B2B eCommerce world of 2020, presenting the greatest opportunities for forward-thinking businesses to ignite their B2B growth.
1. Acceleration of Online B2B Marketplaces
Online marketplaces such as Amazon, eBay, Alibaba.com, Etsy and Catch have dominated the retail B2C industry, accounting for more than 50% of global online retail sales in 2018. On the other hand, B2B eCommerce sales through websites and online marketplaces are accelerating and growth is at an all-time high. Only 6% of B2B buyers do not currently use online marketplaces and 75% of B2B procurement spending is projected to happen via an online marketplace within the next five years. Gartner predicts that the simplicity of doing business this way is likely to “create a butterfly effect on the eCommerce trend”.
This fast accelerating trend is being driven by an increasingly digital-savvy demographic. Millennials in executive positions are changing up the procurement process. 97% of millennials generally buy through marketplaces for their personal needs and this preference carries over into professional spheres. Even now, 26% of B2B buyers already identify marketplaces as their most preferred purchasing channel. In ‘Predictions: B2B Commerce and Marketplaces”, Forrester notes that buyers “will begin to prefer marketplace buying” for a wide range of products, and “many companies will start to expect their tech providers to offer their services through a marketplace approach”.
The time for action is now. In order to keep pace with the evolving demands of buyers, B2B businesses should start thinking about what role they want to play in a marketplace. They can participate in a third-party marketplace, or go one step further and create their own. Both will generate new revenue streams through selling beyond the company’s own web store and accessing new customer pools. For businesses who choose to orchestrate their own, here are some questions to consider:
- What niche will your marketplace be catering to?
- What business model will your marketplace use?
- Who are your target users? And how will you attract them to your platform?
After nailing down the concepts and direction of the marketplace, the next step would be bringing it to life. While developing one from scratch is certainly an option, a faster and low-cost alternative would be to use a B2B marketplace software.
2. Shift towards Lightning Fast Order Fulfilment
As more and more B2B companies cross the digital threshold, the need for fast and efficient fulfilment processes has become increasingly urgent. In a post-Amazon world, millennials are driving this demand. They expect B2B companies to provide fast shipping options on par with those of B2C merchants, with 56% of millennials expecting same-day delivery. “We see across the board increasing demand over the last couple years for same-day delivery, but particularly for millennials,” said Sean Spector, CEO of Dropoff. “And businesses that don’t figure out how to do this will struggle.”
Automation may be the answer — or at least to some companies. In 2018, US supermarket giant Kroger formed a partnership with UK robotics company Ocado to build the first automated robot warehouses to expedite delivery services. In June 2019, Shopify also turned to robots to help expand fulfilment services. It partnered with warehouse automation technology provider 6 River Systems to debut the Shopify Fulfilment Network (SFN).
Automating the warehousing process reduces human error and time taken to store and pick products, making the B2B order fulfilment process more efficient. Robots can also save on costs: in one of Alibaba’s smart warehouses, human labour was reduced by 70% by the deployment of 60 robots. With growing labour costs and customer expectations, those with the financial firepower to keep pace with technological advances may find automating their warehousing a worthy investment to achieve that lightning-fast order fulfilment.
3. Creating Seamless Omnichannel Experience
Omnichannel selling refers to building a strong physical and digital brand presence. This means that customers could be on the web stores, social platforms or even in brick and mortar stores, and the shopping experience would be the same. The average B2B customer uses six different interaction channels throughout the buying process. Forrester reports that B2B buyers are actively shifting their transaction volume from single-channel offline environments to “omnichannel” and online-only environments. Establishing an active and consistent omnichannel presence is thus becoming increasingly important for B2B companies in order to adapt to the changing buyer behaviour.
Grainger is one example of a B2B company with providing an omnichannel customer experience. Customers can browse available products at the closest branch location to them on Grainger’s mobile application. Changes made in the account through a web browser such as purchasing items or adding to the cart are also reflected in the mobile app. Grainger has thus created a seamless omnichannel experience, where content and customer actions are transferred smoothly from platform to platform.
As of now, Frost & Sullivan reports 61% of B2B companies plan to implement omnichannel initiatives soon, while 36% have already taken the first step. In 2020, companies will be working towards engaging customers with effortless transitions between channels. Key questions businesses should consider when deciding which channels to be active on:
- Where are our customers most active? — and where do they expect us to be?
- Which channels can we deliver most value on?
The channels with an overlap between the two factors are those with most returns. Making every touchpoint up-to-date and relevant as well as bridging the gap between online and offline is key in providing customers with a fully-integrated shopping experience.
4. Growing Expectations on Customer Personalization
As the B2B eCommerce world adapts to create a more B2C-like customer experience, the importance of personalization cannot be understated. Research has found that 50% of B2B buyers identified improved personalization as a key feature when searching for online suppliers with whom to build relationships, with consumers spending 48% more when their experience is personalized.
Amazon has already employed these personalization features skilfully — log in to your Amazon account and see categories based on your previous searches, ads tailored to your browser history and recommended products based on past purchases. Amazon Business has also followed the footsteps of its B2C counterpart to replicate success in the B2B market. They did this through personalizing customer content on an individual level: offering detailed specifications, customer reviews and exclusive free shipping on orders over $50.
Gartner Research shows that more than 70% of B2B eCommerce companies will offer personalization features for customers by 2018. The challenge in 2020 is to then ensure effective personalization which has a direct impact on the profit generated. The stakes are high: businesses have lost $756 billion in 2018 alone due to poor personalization, while successful B2B companies with effective personalization are expected to outsell lagging competitors by nearly one-third. Examples of good personalization features include:
- Services based on customer location
- Recommendations based upon historic purchases
- Follow-up emails or personalized newsletters based on customer behaviour
- Recent products sorted by interest level
- Customized product catalogs, navigation experience and checkout processes
5. Customer Loyalty
It is common knowledge that acquiring a new customer is always more costly than retaining an existing one. A study by Bain & Company shows that B2B companies can expect between a 25% to 95% increase in profits with just a 5% boost in their customer retention rate.
Loyalty programmes are all the rage in B2C retail. In B2B, customer loyalty takes on an even more crucial role. Smaller customer pool, higher acquisition costs, longer sales cycle and much higher sales value are all contributing factors. The B2B industry thrives on retention and repeat purchases, where established, steadily-growing companies generate 60% to 80% of their revenues from existing customers. In 2020, companies who successfully convert new customers into steady, recurrent revenues will evade stagnation and come out in front.
However, not all B2C loyalty strategies will work with B2B buyers. Each customer’s business model is different, and you can come up with a set of value-driven loyalty programs that maximise the value to their businesses.
Following are some practices to acquire repeat business:
In contrast to building just a discount that just on volume on an immediate transaction, you can consider also providing a discount for a later purchase. How this will play out is that when a client completes an order, they are offered discounts for the next transaction in a specific time frame. This discount can be tiered according to the spent amount on the current order, for example: if they’ve spent from 1,000 to 1,500, they can get a discount of 15% off the next order as compared to 8.5% if they had spent between 800–1,000. These tend to work very well in B2B e-Commerce and they both encourage repeat purchases as well as sign-ups to a membership program.
This is a simple way of rewarding your client for bringing in other clients in the same industry. How it works is that bringing in a new customer as an existing customer gives them a discount on their next purchase. The difference in a B2B setting would be to examine the rewards a business buyer would prefer in this case and to find out what incentives really work for the success of their business. Would they want to get future discounts? Would they like to have more account bonuses as they invite more clients?
Providing a points accumulation system can be a good way of getting customers wanting to accumulate purchases on your platform. You can be creative in your structure of this — for example, you could make the tiers of benefits depending on the amount of transactions for the previous 6 months or year. This could encourage customers to stick to your platform if they find that the benefits are helpful for them. The best rewards programs reward the behaviour that makes the customer stick to your platform the best while helping the cash flow of your business. An example would be to give customers a percentage off your next order if they pay for your order within 30 days.
This can work as a reward that you give to merchants that chalk up enough behaviour you would like to reward in the previous section on the rewards program, you can provide special services to merchants based on the volumes they transact via the platform — such as a call support team or concierge, or special access to features or customer behavioural trends.
Get your B2B platform users hooked on the content you provide:
Beyond the incentives that help the company save costs, engaging content that is timely and relevant to the industries that your clients are also a major magnet. When you establish yourself as a thought-leader, it raises the trust customers have in your platform, and it also entices customers to come back and hit your site and even share your content in their circles. Put your content on social sources and share it with your partners as well, and you can find that your platform stays in the sight of your customers even when they are not looking directly at web pages on your platform.
Offering extra value to customers by partnering third parties and resellers:
As a marketplace, you can partner fulfilment partners to provide better shipping rates or service based on the tier of the merchant, or even waive some gateway fees based on the amount of trade volume they bring into your site. This works quite well especially when your payment gateway partners and shipping partners are benefitting from the volume on your platform. You can also run co-marketing and support activities with these partners, which usually increases the awareness of your platform, and helps to educate your users on the perks they are getting because of your platform’s partnerships, which for B2B buyers would be seen as an investment.
Setting up personal recommendations and buying experiences for your buyers:
Making things easy for your B2B customers to make their purchases and understand the benefits of using your platform is key. To make things simple for them to achieve what they need to do for their business. Depending on the flow that your customers need to do for their own purchasing processes, you would want to think through the processes. As an example, a major air-conditioning distributor uses customer activity and product purchase information to also recommend engineering and technical advice to their B2B clients.
With these approaches, B2B companies will be better positioned to tap into the unseen ROI of each customer and build a continual business, paving the path to profit in the long run.
Arcadier’s head of Group Strategy and General Manager of North America
With decades of business consulting, strategy development and implementation experience across Technology, Retail and Hospitality, June’s involvement in multiple go-to-market successes now serve to enable enterprises wanting to leverage the next wave of eCommerce growth.