The coronavirus is driving more B2B companies to conduct commerce online, a survey of more than 5,000 U.S. small and medium businesses and manufacturers by Alibaba.com reveals. 42% of respondents increased their ecommerce transactions between March and September of this year compared with the same period in 2019. Overall, 93% are conducting some portion of their business online, up from 90% in December, Alibaba.
“The Covid-19 pandemic has accelerated the move to ecommerce for B2B suppliers, taking it from something they hope to have, to something they must have,” says John Caplan, Alibaba.com president of North America and Europe. “For suppliers, the question is no longer why open an ecommerce channel, but how do they go about opening one up.” Alibaba.com is the global B2B ecommerce marketplace of Alibaba Group, which also operates the B2B site 1688.com for sales into China and retail sites including TMall.com and Taobao.com.
Alibaba.com conducted its initial survey of small and midsized business last December. The most recent survey gauges the health and ecommerce activity of SMBs more than six months into the pandemic.
Alibaba.com this week also unveiled its Digitization Sprint program for small and medium-sized manufacturers in the United States. Caplan says the program is intended to help manufacturers accelerate their digital selling and marketing strategies. The program, which is free to qualified manufacturers, will provide resources manufacturers can use to launch a B2B sales channels or expand an existing one.
In the surveys, which covered both buying and selling at respondent companies, Alibaba found that marketplaces and supplier websites are the digital channels seeing the biggest increase in purchasing activity. 35% of respondents were purchasing through marketplaces as of September, up from 21% last December. Concurrently, 34% are purchasing through supplier websites, up from 21% in December.
Marketplaces “deliver on the benefits most important to SMBs with a huge number of buyers and sellers from around the world in one place and the tools for companies to communicate, contract, finance, coordinate shipping and logistics and more, making B2B trade seamless,” says Erica Chan, head of strategy and operations, North America B2B at Alibaba Group.
More mobile and cross-border purchases
In addition to increased activity from B2B buyers on marketplaces and supplier websites, 17% of respondents are making purchases through a supplier’s mobile app, compared to 10% in December, and 14% are placing orders through marketplace mobile apps, compared to 6% in December. Purchases placed through ERP systems are also on the rise, with 16% of those surveyed saying they are doing so, compared with 10% last December.
Cross-border purchases are growing, too, with 63% of respondents saying they buy internationally, up from 59% in December. “Access to demand and higher profit margins remain top reasons for companies to go global,” Chan says.
Among the benefits of selling globally, 40% of respondents cited the ability to reach more customers; 37% cited increased profit margins; 37% revenue growth; 35% increased market diversification; 33% introducing new products faster, and 32% increased purchasing power.
Speed in sourcing and launching new products
“Interestingly, speed—described as the ability to source or introduce new products faster—has grown significantly in importance, doubling from only 16% of businesses saying it’s a key benefit and one of the least compelling reasons in December, to 33% in September, reaching the top five reasons,” says Chan.
On the sourcing side, 43% of respondents say they are sourcing more materials online, up from 14% in December.
When it comes to opening ecommerce channels, small and medium-sized manufacturers surpassed other industries, with online B2B trade increasing 8%, twice the rate of the 4% increase in all industries for the same period. Only the retail sector matched manufacturers’ ecommerce growth rate.
The Digitization Sprint program provides manufacturers with information about key aspects of ecommerce, such as:
- How to photograph products for display online;
- Where and how to market their products and brand to effectively generate sales and sales leads;
- Understanding pricing dynamics; how to evaluate customer acquisition costs;
- How to determine the return on investment from their marketing efforts; and
- Using social media to build their brand and reach new customers.
A master class in going global
In addition, manufacturers can attend a four-week master class detailing how to launch a global, digital sales channel taught by the Brooklyn Chamber of Commerce, Brooklyn Navy Yard, and Curt Anderson, an ecommerce strategy consultant to manufacturers. The curriculum for the class includes twice-weekly modules conducted via webinar, digital office hours with subject matter experts, informal digital meet-up sessions via Zoom video conferencing outside of the webinars, and a LinkedIn Group for peer-to-peer knowledge sharing and support.
“There are about 550,000 manufacturers in the United States and about 75% have 20 or fewer employees, so they don’t necessarily have dedicated personnel to manage ecommerce, yet many are rapidly migrating to ecommerce without a playbook,” says Caplan. “Our program is intended to provide answers and insights about how to get into and manage B2B ecommerce.”
Alibaba.com’s Digitization Sprint for U.S. Manufacturers builds on it’s the online trade shows Alibaba has conducted in recent months, Caplan adds. The marketplace has held 20 trade shows in 180 days.
“The virtual trade shows are an adjacent activity to the Digitization Sprint. Both were launched because businesses needed them,” he says. “Our aim is to help them get over the bridge to the digital commerce future.”
Peter Lucas is a Highland Park, Illinois-based freelance journalist covering business and technology.
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