Many midsized manufacturers and distributors are looking for e-commerce technology, but they often have particular needs in how they interact with online customers and manage product data. B2B e-commerce veteran Scott Benfield offers tips on meeting those needs.

The forecasts this year for business-to-business e-commerce is a market size of $800 billion or so for North American markets. One trillion dollars in online B2B sales will be reached within the next several years as a 7% to 10% annual growth is forecast by research firms. The tech build-out for software and consulting services is expected to be significant, as many companies have software that is less than optimal. Many e-commerce platforms are legacy systems of business-to-consumer platforms hastily adapted to B2B usage or proprietary, programmed offerings from the early days of online sales.

In the current year, two client companies—one a distribution/manufacturing concern with $200 million in sales, and the other a $600 million distributor—needed to upgrade their e-commerce systems. One firm had a proprietary system from the late 1990’s, and the other used a low-cost platform purchased before the recession of 2008. Both platforms had limited functionality, including constrained order-tracking information, databases limited to a small number of SKUs, sub-optimal data integrity, and a limited number of substitute products. Neither client had product information management, or PIM, software; faceted search, or procurement punch-out despite operating in high-transaction environments. Punch-out software lets buyers link from an e-procurement system to make purchases on the e-commerce site of an approved supplier, with any orders placed in the supplier’s online shopping cart automatically transmitted back to the buyer’s financial management system to complete an authorized purchase.

Today, both companies are in a significant build-out mode for e-commerce software. They are what I call mid-market firms—companies with$50 million to $1 billion in sales that are niche powerhouses in the manufacturing sector or regional strongholds in the distribution space. My firm’s research and field consulting finds the need for e-commerce software upgrades is significant in one-half to two-thirds of mid-market companies. To successfully sell e-commerce technology to them, technology firms often have to change their approach. Following are three approaches to consider.

1.       Put less emphasis on new traffic and more on successful online migration of existing accounts 

Increasing a website’s number of hits in B2B e-commerce doesn’t equate to a corresponding increase in sales. 80% or more are from infrequent customers searching for information on product availability, product and application specifications, substitute products, and curiosity about a new supplier. Attempting to find any usable pattern of site activity to turn outliers into customers is often a waste of time. Such customers tend to be small, with small, infrequent orders, and high rates of using warranties and returning products.  

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Instead, mid-market firms want successful migration of large customers online with website functionality to cover unique service needs, such as ordering custom assemblies of low-volume products and arranging for post-sale field service. Most mid-market firms have moved further into the value chain in the last decade, and they want to make absolutely certain these customers will find the move to online ordering as robust and painless as possible.

2.      Data quality and robust SKU databases are key

Many mid-market firms struggle with the quality of their product data, resulting in strong demand for e-commerce technology tied to effective product information management and content management systems. These firms often have not mapped data sources to show how they maintain product content, and don’t have a documented process for upgrading data on inventory stocks and product costs. Additionally, mid-market firms struggle with large SKU counts. For distributors, SKU counts over 100,000 are a minimum for successful e-commerce. Yet, many have SKU counts of 50,000 or less.

In addition, mid-market companies often don’t update product content until they apply an annual price change, leaving products with outdated descriptions of features. Unreliable product information is a quick way to lose online customers.  

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3.       Singles win games

Mid-market firms often don’t have massive budgets and a bench of e-commerce talent. They are geared to efficient implementation of practical solutions. Software firms that break down large tasks into smaller ones, integrate accurately with limited rework, and keep costs within budget win big. They hit singles with well-defined, critical work, and win repeat business with mid-market clients.

A good way for technology providers to carry out that policy is to design and offer e-commerce platforms that integrate more easily with enterprise resource planning, or ERP, systems likely to be deployed by mid-market manufacturers and distributors. Distributors of maintenance, repair and operations, or MRO, products, for example, often prefer using a specific type of ERP platform, while distributors specializing in electronics products often prefer another.

The loyalty factor

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While many large companies are quickly building-out in their e-commerce systems, significant potential exists for sales to the mid-market. Mid-market customers may have smaller budgets, but a bit of patience can win big in the long run. 

Mid-market firms tend to have fewer management changes than their larger brethren, and creditworthiness is seldom an issue. Hence the chance to establish long-term relationships, and benefit from future technology sales is real. 

The mid-market is a burgeoning space for B2B e-commerce software. The engagement rules are different from those for large companies, but the upside potential in terms of customer loyalty and ongoing revenue streams makes the mid-market a good place to be as e-commerce grows.

Scott Benfield is a consultant for B2B supply chains in areas of e-commerce, digital marketing and sales. He can be reached at [email protected].

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