For years, business-to-business (B2B) e-commerce has been the distant cousin of business-to-consumer (B2C) e-commerce—less understood and appreciated, asked to wait in the other room while consumer-facing businesses from Amazon to Warby Parker soaked up all the adulation.
But as B2C e-commerce and its supporting ecosystem matures, the potential for B2B e-commerce is generating new interest. Projected to reach $1.8 trillion by 2023 and forecast to be twice the size of B2C e-commerce, B2B e-commerce is attracting a growing number of investors, vendors, and stakeholders who are beginning to kick the tires on new or shifting B2B business models, operations, and distribution channels.
Despite these projections and the enthusiasm around the segment’s potential, the actual work of the industry is still locked into business processes and technologies developed during the heyday of disco.
At first blush, this Stone Age approach to workflow and technology in such an enormous and important industry is staggering. At the same time, it’s exhilarating. The potential to deliver improvements in efficiency and revenue is equally enormous.
Today’s growing decision-making responsibility in the hands of digital natives is forcing B2B businesses to rethink how they manage workflow and support everything from vendor selection to sales forecasting.
Unfortunately, even the enterprise versions of many common workflow services do not provide the flexibility, communication tools, or collaborative options necessary to support a B2B business.
At the same time, new centralized resources and vertical-specific marketplaces are emerging to serve distinct industries with needs that cannot be met by more generic offerings like Amazon businesses. These new marketplaces are driving dramatic increases in sales volume while also professionalizing basic interactions and processes.
As paperless workflows and centralized marketplace-managed transactions become more mainstream, the industry needs a new set of digital systems and tools custom-designed for the needs of B2B e-commerce operators. As this vertical marketplace shift continues to accelerate, many of these new solutions will end up expanding away from small-and-medium size business to more enterprise-grade tools.
This same migration away from time-intensive—traditionally paper, postal, and fax-based—processes is also transforming the world of B2B financing and credit. Today’s buyers and sellers must increasingly navigate a shift to real-time credit, payments, and transactions. In fact, 63% of supply-side organizations have said they prefer being paid electronically.
Modern B2B e-commerce businesses need a new system of automated net terms that more closely resemble payment solutions instead of credit offerings. This streamlined and real-time flow with customizable payment terms can help power volume purchases, faster turnaround, and a lower cost of doing business for both suppliers and distributors.
Nearly half of today’s B2B buyers are millennials, driving a change in purchasing behavior where buyers prefer less interaction with sales teams and more of a shift to self-service.
At the same time, many noted direct-to-consumer brands that have built successful B2C business like Casper and Peloton are now turning to B2B strategies to overcome saturated distribution networks. Take for instance Casper’s recent partnerships with Target and Costco.
Taken together, this expectation of, and experience with, anytime, anywhere purchasing—mobile, storefront, Web—translates into dramatic changes for traditional sales and marketing teams. It also disrupts legacy relationships between sales teams and their customers.
A digital B2B industry also changes how items are marketed and supported throughout the sales funnel. Instead of giant trade shows, mailers, and site visits, marketing teams will focus on digital lead-generation campaigns and search-engine optimization. Like B2C interactions, B2B customer and sales support will become automated or funneled through digital self-service channels.
—Chris Tsai is cofounder and chief executive of Resolve Corp., San Francisco.