Now that online B2B buying is the norm, how can businesses promote sustainability as part of an overall e-procurement strategy?
More than two-thirds, or 69%, of B2B buyers work at organizations that require them to make purchases from sellers that follow sustainable practices, according to the second State of Business Procurement Report from Amazon Business.
The report notes that procurement is becoming a crucial part of meeting corporate social responsibility (CSR) goals. And it asked respondents to name their four top CSR-related procurement priorities. Improving sustainability in purchasing practices was cited by the largest percentage of respondents (63%). This was followed by supporting local businesses (39%), supporting remote work for employees (37%), and increasing diversity among suppliers (34%).
In addition, the report says that 68% of B2B buyers said they plan to make at least 40% or more of their purchases online by the end of this year. That is up from 56% in 2021.
Amazon Business surveyed 440 U.S.-based buyers at midsize organizations (fewer than 250 employees) to large enterprises (10,000 or more employees). All commercial organizations involved in the survey made more than $250 million in revenue in 2021. Surveyed buyers worked in sectors including government and nonprofit, education, healthcare, and commercial industries.
Buyers intend to buy more from certified sellers
E-procurement is nearly a $1 trillion annual ecommerce market, based on a projection from Digital Commerce 360. Promoting sustainable practices now will help establish confidence in buyers that want to practice a conscientious business strategy. And being mindful of one’s impact on the environment is increasingly important. 54% of U.S. online adults are concerned about the impact of climate change on society, according to a Forrester Research report “The New Green Consumer,” published in March 2022.
The Amazon Business report highlights that 43% of buyers have an internal goal to spend a certain amount with certified sellers. But it’s not a requirement. A smaller share of 24% indicated they have a required dollar amount to spend with certified sellers per year. 24% said they will try to spend with certified sellers, but not at the cost of dollars or convenience. And 9% said they don’t take certifications into consideration when purchasing.
Sustainability must be affordable and convenient
69% of B2B buyers said their organization had established sustainability-related goals. These goals require them to purchase from sellers that are certified as carrying out ing sustainability practices, such as net-zero carbon emission production or the use of renewable energy. In addition, the buyers identified convenience and affordability in procurement as also top priorities when pursuing products from sellers following sustainable practices.
But more than half of respondents (55%) said it was challenging to fulfill those goals because it is difficult to source sustainable-certified sellers. And 81% of buyers said that the difficulty in sourcing sustainable suppliers hindered their organization from achieving sustainability goals in e-procurement.
That’s a problem since, according to the report, 91% of B2B buyers prefer online purchasing over traditional offline channels. The impact of buying from sellers enforcing sustainable practices will have long-term effects — as will not taking sustainability into account.
More than half of B2B buyers (52%) said insufficient online information about suppliers’ characteristics is why they can’t find suppliers that fit the goals of their business. And 44% cited having trouble finding new suppliers as part of the reason it is difficult to reach sustainability goals.
But 89% of buyers said they would be more likely to make purchases from sellers they can easily identify as sustainably certified.
The sustainability role of B2B marketplaces
To find certified suppliers, buyers should lean on e-procurement channels. This includes e-procurement software and B2B marketplaces. Buyers can find, compare and purchase products in their price range. And suppliers are certified as sustainable or carbon-neutral, the Amazon Business report says. Such e-procurement systems also let purchasing organizations monitor and adjust their spending throughout the year to meet sustainability as well as other CSR goals.
B2B marketplace Circular.co, for example, supports the buying and selling of sustainable commodities like plastic and other materials. By establishing a website where buyers can purchase from certified recycling suppliers, the Circular marketplace frees buyers from the manual practice of calling up a limited number of trusted suppliers and comparing prices. “Circular.co is not just a point or spot marketplace. It facilitates the entire sourcing, vetting and pricing process,” says Ian Arthurs, the founder and CEO.
Amazon Business provides through its Business Prime program APIs, or application programming interfaces, to integrate its B2B marketplace with a participating company’s procurement and accounting software technology. For example, such integration helps healthcare industry buyers “automate time-consuming tasks, find and order supplies, and evaluate suppliers’ certification status within their existing systems,” Todd Heimes, director and general manager of Amazon Business, said in the report.
Refining procurement technology and processes
Still, challenges remain for companies to upgrade their internal technology systems to get the most out of e-procurement. This includes systems for authorizing purchases and managing digital invoices, the report says. “Business buyers now need to refine their processes, workflows, and digital strategies to take full advantage of e-procurement,” according to the report.
“Organizations should tackle the basics of digital transformation — such as adopting digital/online invoices and automating procurement processes — before tackling advanced technologies like voice or AI,” according to the report. “Laying a strong digital foundation helps procurement departments confidently and effectively tackle advanced capabilities when they’re ready. Being prepared for the needs of tomorrow starts by taking small steps today.”
The report found that a little more than half of companies have plans to upgrade their technology over the next several years to support e-procurement. The report lists the following as the top four procurement technology investments over the next five years. By 2027, the percentage of companies planning these investments include:
- Automation of manual procurement processes, such as purchase approvals, 57%
- Digital/online invoices, 55%
- Voice technology, such as placing orders via a voice-activated technology device, 35%
- AI-driven optimization of purchasing decisions. This considers such criteria as a buyer’s related purchasing history, a supplier’s sustainability practices, and spending budgets, 34%.
Amazon Business’ tools to gauge procurement progress
Amazon Business provides B2B sellers with 16 certifications, which include Compact by Design and Pre-Owned Certified and the Climate Friendly Badge. For buyers, the Guided Buying feature allows Amazon Business Prime members to prioritize products and sellers with sustainability certifications, says Aster Angagaw, vice president, head of strategic and public sectors for Amazon Business. Members can filter out products that don’t meet their organization’s policies and goals. In addition, they can designate which items are approved for purchase; their employees can submit purchase requests for items in restricted categories.
Data can also play a critical role in optimizing buying processes and encouraging sustainable purchasing, said Angagaw.
Tools to visualize trends
“The Spend Visibility feature on Amazon Business improves visibility into purchasing trends with out-of-the-box dashboards, allowing teams to track progress toward their ESG goals,” she says.
The Amazon Business Analytics tool provides data that buyers can use to create spending reports, configure visual dashboards, and track progress towards spending goals in real time. Business buyers can create exportable order reports to track spending against sustainability certifications.
Companies can also set up guardrails with digital purchasing to ensure they’re meeting sustainability goals while staying within their spending budget, she says.
The Budget Management tool on Amazon Business gives procurement teams more budgetary transparency and control checkpoints like pre-purchase approvals. “If there is a specific limit on spending in certain categories, buyers on Amazon Business can set those parameters to work within,” Angagaw says. Members can also filter for suppliers with the required sustainability certifications.
“Digital purchasing lets small businesses filter for products that are both budget- and climate-friendly. It ensures they can meet their purchasing goals,” Angagaw says. “This ability to cross reference is a simple but powerful tool. It gives buyers full control over what they purchase and how they impact the environment while doing so.”
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