I’ve heard a lot in recent months about the impact that COVID-19 has had on consumers’ digital appetites. However, the pandemic is having a similarly profound impact on B2B commerce, which I haven’t heard nearly as much about. This is despite the fact the online B2B market in the US was worth more than $6.6 trillion globally last year and is predicted to grow at nearly 19% from 2021 to 2028 as buyers increasingly migrate online.
As they do, they’re demanding more B2C-like experiences. In conversations with my B2B clients, I tell them that this represents both an opportunity and risk. The key to tapping the former and sidestepping the latter is to avoid becoming an invisible cog in a marketplace machine run by a tech giant like Amazon, Google or Facebook. By developing their own composable commerce capabilities, B2B sellers can step out of the big tech shadows and deliver the experiences customers crave.
How B2B has changed
It hasn’t taken long for buyer expectations to shift. I know my own expectations have grown even further in the last 18 months as I conduct even more activity online. Part of the shift is down to broader trends. Today, 73% of millennials are involved in B2B purchasing decisions, according to Forrester. The digital natives like me have come of age, and we’re demanding more seamless online ways to interact with your company. This shift has also been given an almighty shove by the pandemic. According to McKinsey, only around 20% of buyers want a return to in-person sales once the crisis is over. B2B leaders are responding by shifting key processes to remote interactions with salespeople and digital self-service.
Most importantly, nearly three-quarters (73%) of buyers now expect a B2C-type experience, according to IDC. What does this mean in practice? It means friction-free ordering and extensive product catalogs with graphic content and product comparisons. It means integration with corporate procurement and ERP, and other features designed to smooth out B2B complexity. And it means support for new business models, like marketplaces featuring third-party products and direct-to-consumer engagement. IDC reckons that COVID-19 accelerated the adoption of these digital commerce capabilities by three years. There’s no going back now.
Don’t be a cog
The marketplace opportunity is particularly important and is a conversation that increasing numbers of my clients are open to having. If handled right it could open the door to business growth on a whole new level. But it’s also riddled with risk. First the opportunity. Research shows that 40% of B2B buyers from the US, UK and Australia intend to purchase on Amazon Business in the future and a similar number say they regularly use the marketplace as a “starting point” for purchases. That could tempt B2B businesses to grab a piece of the pie by expanding their presence on the platform. But the truth is that Amazon, and its big tech brethren like Google and Facebook, are far too generic for specialized B2B sales. It also sidelines your brand—turning your company into little more than a logistics player for a global behemoth.
Yet buyers still like marketplaces. IDC claims 37% plan to use them more and that, by 2024, over half of all B2B commerce revenue will be transacted there. In fact, it offers plenty of positives for sellers as well as buyers—an alternative revenue stream and opportunity to build relationships direct with customers. Marketplaces also offer more geographic reach and require less capital expenditure for suppliers. For buyers there’s greater product assortment, easier browsing, competitive pricing and greater product transparency. And payments, fulfilment and customer service are all more streamlined. Ignoring buyer demand for online marketplaces therefore isn’t an option. But neither is becoming a passive bit-part player in someone else’s operation. So, what do you do?
If you build it, they will come
The answer is to create your own commerce hub or B2B marketplace. Take global electronics distributor Sourceability, which created a Sourcengine.com marketplace that now features more than half a billion products covering almost the entire global electronic components market. It built a user-friendly online platform that connects global buyers with thousands of merchants, including Sourceability itself. In so doing, the firm has changed the market with innovative capabilities such as allowing customers to order components in batches, and schedule delivery months or years later. It also empowers buyers to seamlessly re-sell any surplus stock.
It achieved this shift by taking a composable commerce approach that has “best-of-breed” at its heart. First coined by Gartner, composable commerce is the idea that organizations should be able to pick and choose the packaged components they need to build a compelling digital business—mixing, matching and integrating seamlessly from different vendors to create an outstanding experience for customers. It’s a fast-track to elevated scalability, accelerated time-to-value and reduced total cost of ownership. In Sourceability’s case, this helped the firm to knit together core functionality such as intuitive search and filtering, lightning-fast data processing, streamlined management of bills of materials (BOM), and enhanced automation.
I know that not every B2B seller will have the ambition to become the Amazon of their respective industry segment. But the example still stands. My advice to B2B sellers is to think big. You don’t want to be an invisible part of someone else’s marketplace. Go out there and own your future with composable commerce.
Boris Lokschin is the CEO of Spryker Systems, a provider of ecommerce technology.Favorite