“Maybe next year,” has often been said in reference to B2B e-commerce, and we hear that again and again at conferences. Unlike the intensely developed B2C area, the B2B space has been left behind and in many cases, manufacturers offer buyers no online purchasing option at all for fear of causing conflict across its other sales channels. But also lack of resources is a reason often mentioned in analysis.
It’s not the size of the opportunity that’s keeping companies from developing B2B e-commerce platforms. A wealth of statistics underscore just how large the potential B2B marketplace is and how much demand is going unmet for direct-to-business buyer channels:
B2B is moving online. (figures – we have these from earlier).
Purchasers expect B2B facilities at B2C level. 46% is grown up with the internet.
So the times are changing. Business buyers are increasingly demanding the same quality of experience and sophistication they enjoy as consumers.
Other driving factors: Purchasers prefer online (figures). The need of B2B companies to reduce their costs. Self service automated approach to purchasing.
Many B2B organisations are concerned about channel conflicts and the topic is discussed internally in quit many organisations. I/we have often been involved in these discussions when CEOs and CCOs are working out their channel strategies including online and their use of online marketplaces to reach even wider.
Channel partners understandably have much to protect. For these reasons, there is a strong incentive to stay status quo – despite knowing that customers strongly prefer good e-commerce solution to search and transact. This is an obvious concern for the CEO and CCO.
Staying status quo is doing nothing. This is not a solution; digitalisation and the move to online are not going to stop. We have already seen this 10 years ago in B2C. It is just a matter of time before b2b e-commerce drives significant structural changes in their channel(s). It then becomes a question of “when” it happens and “who” will benefit (besides the end customer). There is not one “right” solution; it totally depends of your situation and strategies. In order to handle the channel conflict issues there are several well-known approaches, which obviously could be combined and adapted your strategies.
Collaborating with your channel partners – either by transferring the order to a channel partner or by sharing revenue on the e-commerce site or marketplace. This strategy fits for your best channel partners. For doing this you need a marketplace that can handle this on product and/or country level depending on your channel partner agreements. Moreover, if you are going to share revenue, be sure that your channel partner helps driving traffic to the e-commerce place.
Choosing marketplaces as channel partner also means that you will get a lot of knowledge about your audience and customers. How they search, buying behaviour including other categories, price level and competitive benchmarking. Online provides you with detailed insights that cannot only boost your sale but also your innovation. By sharing these insights with your trusted partners and taking care that these are used in sales strategies and customer follow-up, you will both be benefitting. Personally I/we believe so much in choosing the right partners and in open collaboration.
If you are about to enter new channel partnerships you should take online in consideration and be sure you are not stopped in developing your business online by inadequate agent agreements, which often do not take this in consideration.
Segmentation – choose new products or enter new markets that don’t currently sell in your channel and sell those through e-commerce.
1. Screw the channel – nobody has said it in those words, but this essentially means that we are doing e-commerce without regard to the channel.
Especially A brands is widely sold on online marketplaces by 2. or 3. link in the sales chain (mittlemen) so thinking that doing noting is a solution just pave the way for dealers and then you as a brand owner are 100% out of control. It is important to include digitalisation and online in your strategies – or someone else will do it for you. You will just become a passive viewer looking at the market development passing by and most likely loose sale to online competitors – and your brand will be sold online at prices you can not control by none-partner dealers.
Pricing – becomes transparent.
Many B-to-B companies have long believed that ecommerce would create channel conflicts between sales personnel, suppliers, and other channels. But in reality, B-to-B sales channels are already disrupted by ecommerce. Manufacturers are selling directly to consumers. Manufacturers and distributors are selling products on AmazonSupply.com, Alibaba.com, and other portals to other businesses. Wholesalers are consolidating rapidly because they are caught in the channel chaos.
Companies with direct sales organizations want to control the sales process through their sales staffs and existing channels, where they have often made huge investments. In reality, companies that aggressively drive their customers online often find that their sales increase and their cost per order goes down significantly. That’s because outside and inside sales teams can focus on more strategic activities and less on transactional ones.
The real question is whether these firms are prepared to proactively disrupt themselves, or are waiting to be disrupted.
External channels are not the only conflict. B2B organizations struggle with balancing their online channels with the Sales channel as well. Sales departments often don’t know how e-commerce is going to affect their bottom line.
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