In his forthcoming book, “Billion Dollar B2B Ecommerce,” digital commerce expert Brian Beck draws on the struggles of once-great merchants like Sears, Roebuck and Co. to show the urgency behind the need of manufacturers and distributors to evolve with changing times and get onboard—now—with e-commerce. Following is an excerpt from the book, which in its full form lays out a blueprint for how B2B companies need to address their technology and business operations to thrive in the digital age.
The shopping mall, once a symbol of the vibrancy of American commerce, is now a dated and deteriorating retail model. There is a dramatic discrepancy between retail square footage in the United States and current consumer buying preferences. Analysts predict that 25 percent or more of all malls in the U.S. will be closed by 2022. Retailers—and the entire system that was developed over decades to support them—have been forced to react to these changes. While merchants could see and feel these trends as they arrived, they had no way of knowing the massive scale of impact they would have on their business.
The same cannot be said for B2B companies, including manufacturers, brands, and distributors across all traditional industries. Many B2B companies have not yet had to contend with these changes outright, but they need to study and learn from their B2C counterparts. Disruption is upon our industry and ignorance is not an excuse for inaction. Be warned—change is here. Right now. I’ll say it again. Right. Now. Unless you want to be Sears in 10 years, you need to take action immediately.
Lessons for B2B
B2BecNews—a sister publication of Internet Retailer at Vertical Web Media, the preeminent industry publisher of content on Business to Consumer (B2C) and Business to Business (B2B) Ecommerce—released a study in 2018 indicating that only 40% of manufacturers have Ecommerce web sites.
However, the industry is catching on. That same study found that 70% of companies that did not have Ecommerce web sites planned to launch a site by 2019. The window for action is closing.
The time is now.
B2B leaders across the globe must sit up and pay attention or suffer the fate of companies like Sears. Those that are taking action today are capturing a competitive advantage and driving enterprise value right now. This is across all kinds of industry sectors. Consider these companies:
- illumina: A multi-billion dollar biotechnology manufacturer that has grown Ecommerce sales to a substantial double digit portion of sales in less than two years, with a considerable part of these sales coming from incremental units purchased online, increasing their share of existing customers’ wallets.
- Kelly Paper: One of the largest paper distribution companies in the United States driving higher gross margins from orders placed online, which are over 50 percent of total sales.
- Mountz: A $20 million tool manufacturer finding an entirely new market for its products by using digital marketing to reach new customers its sales force did not have time to get to, adding millions in top-line revenue.
- Henry Schein: A multi-billion dollar dental equipment distributor leveraging Ecommerce to auto-generate subscription renewals with customers, improving renewal rates, making its sales team more effective, and freeing sales associates’ time to engage in more strategic activities with customers.
- Evergreen Enterprises: A large manufacturer of home products that added tens of millions in revenue by seizing control of their marketplace presence on Amazon, and is now investing in further growing the channel.
- Augusta Sportswear: An industry leading manufacturer of sports team apparel driving more than 50 percent of sales, and the vast majority of its growth, from Ecommerce.
These are just a few examples; more are entering the market every day. B2B buyer behavior has shifted fundamentally, just as it did in B2C. And while B2B Ecommerce, as of this writing, remains at least a decade behind B2C Ecommerce in terms of availability of products for sale on the web, the fact of the matter is that B2B Ecommerce is more than twice the size of B2C in terms of absolute revenue. In 2018, U.S. B2B Ecommerce was estimated by Forrester Research to amount to $1.134 trillion in sales, up from $969 billion in 2017, vs. B2C’s $453 billion. Firms that are acting are winning this Ecommerce revenue.
The sell side is what is holding back the sector from even more explosive growth. Forrester Research found in a 2017 study that 38 percent of business buyers make more than half of their work purchases online, and more than 55 percent of buyers will do the same by 2020. Why aren’t more B2B buyers buying online currently? The answer is surprisingly simple: the companies they want to buy from aren’t selling online! B2B sellers are being dragged into Ecommerce by their customers. This will continue to evolve as younger, digitally native buyers come into the workforce. As I noted above, those sellers that are actually listening are reaping the benefits.
The time is now.
Brian Beck is an e-commerce industry expert and author of the upcoming book “Billion Dollar B2B Ecommerce.” Follow him on Twitter @briansalaubeck and @beckecommerce and on LinkedIn.Favorite