2012 State of B2B E-Commerce

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1 2012 State of B2B E-Commerce Executive Summary As digital commerce has transformed all commerce over the last decade, customers have been offered increasing control over their buying experience. Ease of use, mobility, and consumerization of technology has increased customer demand for curated and personalized experiences, whether it is business or consumer commerce. But where is the biggest gap in meeting these demands? It is in the B2B marketplace (specifically the purchasing process between business professionals and their suppliers), which is being pressed to offer the kind of digital experiences that shoppers in the consumer marketplace now take for granted. This paper provides insights into the preferences of today s procurement professionals or business professionals that buy products on behalf of their company, and offers strategic guidance on the required commerce technology capabilities and potential operations improvements that emerge from these insights. According to hybris 2012 State of B2B E-Commerce study, the vast majority of B2B procurement specialists prefer suppliers that provide both digital commerce and traditional physical commerce (e. g., print catalogs, sales reps and call centers) over providers that offer only traditional sales channels. However, most buyers indicate that the quality of the B2B e-commerce experience is inferior to what they have grown accustomed to as consumers, highlighting gaps in digital capabilities between shopping experiences in B2C commerce and procurement processes in B2B commerce. Despite similarities, there are differences in scale and complexity between B2C and B2B e-commerce strategies, particularly in dedicated service for customer relationships and customized 1

2 transactions. The complexity to support the B2B ecosystem, which often varies by industry verticals, presents important challenges that must be addressed through a combination of commerce technology solutions and operational capabilities. Going forward, having digital commerce capability that is seamless with physical commerce will be a core, defining factor for B2B success. In addition to generating revenues and margin improvements through better tailoring to customer needs, there is clear potential for cost efficiencies and productivity gains that come with a well structured and thought-out e-commerce strategy. This enables B2B vendors to take advantage of marketplace opportunities that are simply beyond the scope of traditional sales and service interactions. By investing in a first-rate digital commerce experience, B2B decision-makers can equip their organizations with the tools they need to meet their customers increasing expectations. B2B Procurers Prefer Suppliers with an E-Commerce Channel Data from the hybris 2012 State of B2B E-Commerce study shows that online and mobile channels are extremely important to procurers and supplier relations professionals, underscoring the need for B2B vendors to embrace digital selling strategies. 1. Online Purchasing According to the study, 81 percent of B2B procurers would choose a supplier that offers an online ordering option over an equal supplier that only offers print catalog ordering. The preference for online purchasing vehicles is especially relevant in enterprise organizations. More than four out of five procurers with budgets in excess of $1 million indicate that they favor suppliers that offer online ordering. When asked why they prefer e-commerce suppliers, B2B buyers reported that online purchasing enables them to conduct business at their convenience, to save time and to easily monitor the status of their order. The quality of the B2B e-commerce buying experience is also important to procurers 89 percent believe that the online purchasing experience should be just as compelling and easy as it is for consumers. This figure increases to 91 percent for B2B procurers with budgets over $1 million. However, procurers are not completely satisfied with the current state of B2B e-commerce. Survey data indicates that 94 percent of buyers believe suppliers need to invest more in making the online purchasing experience as easy as consumer websites. 2. Mobile & Social Channels Other findings from the research demonstrate the connections between online procurement, social media and mobile technology. Armed with the latest mobile devices, procurers have the ability to forge anytime, anywhere connections with suppliers. Statistically, 89 percent of procurers who own a smartphone research purchases through vendor websites and three in five perform research on outside websites like Amazon Supply or ebay. The popularity of mobile and online technologies offers convenience while providing opportunities for sales representatives to enhance relationships with clients and customers. Although 85 percent of procurers find it easy to make purchases online, the majority of procurers (87%) still rely on the assistance of a sales rep to make purchases. B2B procurers who embrace mobile technology are equally adept at using social media. Seventy-eight percent of procurers who own a smartphone use social media more than once a week and 49 percent use social media at least once a day. B2B buyers want the ability to make purchases online. As the demand for web-based procurement options continues to grow, any business with a B2B component will need to have a go-tomarket strategy that includes an e-commerce channel. Additionally, B2B companies must address the growing opportunity and preference for a mobile channel and social media interaction. Biggest drawbacks of ordering from a print catalog Catalogs are outdated Difficulty finding product information (too many products to sort through) Difficulty tracking orders Difficulty placing orders Difficulty tracking inventory Source: hybris 2012 State of B2B ecommerce study 2

3 Crafting an E-Commerce Strategy The creation of a truly robust e-commerce program is critical for companies that compete in the B2B space. To drive sales and maximize the return on digital commerce investments, firms must create online experiences that rival the best B2C e-commerce experiences while complementing their existing physical commerce infrastructure. Consequently, B2B companies need to focus on a dual approach that emphasizes technological capabilities and operational improvements across the organization. Technological Capabilities Technology is the engine that drives successful B2B e-commerce. When evaluating candidate technologies, it s important for company decision-makers to identify advanced features that improve customer experiences and generate additional positive outcomes for the business. Seamless Channel Integration. E-commerce cannot be separated from the rest of the enterprise; it must be viewed in the context of the company s physical commerce operations. The best B2B e-commerce platforms offer features that promote commerce integration, coordinating e-commerce with the company s other online and offline sales channels. To deliver on an omni-channel strategy, the solution must offer real-time, consistent product information, inventory availability, order status, and seamless customer experiences across multiple touchpoints that are tailored to the B2B procurer s specific needs. Pricing and messages that customers receive from conversations with sales representatives must be reflected when they access or purchase the product online, ensuring consistency across the brand s diverse channels and touchpoints. Centralized Management of Product Data. Compared to sellers in the consumer marketplace, B2B companies utilize exceptionally large and detailed product catalogs. The volume and complexity of product data create new challenges for online sales, which requires the use of e-commerce technology that can distribute updated product information across all channels in real-time. The e-commerce platform should integrate with the organization s ERP solution to populate the system with rich product data and other information. The addition of rich media to further enhance the marketing of B2B products online also requires a data repository capable of supporting this type of product content. It must also be adept at providing rich media across multiple channels and geographies. For example, an electrical wholesaler that discovers the specifications for a certain insulated wiring product have changed should be able to update product information in a single location and know that the new specs will seamlessly transfer to the company s mobile website, traditional website, catalog, sales reps mobile tablet and other product access points. Personalized Experiences. In the consumer online marketplace, individuals expect highly personalized buying experiences. Since B2B procurers are also individual consumers, they expect relevant, personalized experiences from their online B2B suppliers. Strong e-commerce platforms include advanced features that allow buyers to check personalized pricing, view order status, track order history, receive customized promotions based on previous offers/orders and perform other personalized activities. Personalization strategies are a key differentiator for B2B suppliers to create and scale customized relationships. For example, if the sales representative offers to supply a product at a unique price to a specific customer, the sales rep should be able to go online including face-to-face situations using a mobile tablet or smartphone and modify the customer s order to ensure that conversation is recorded digitally. This personalized experience builds the foundation for an ongoing relationship between buyer and seller. Order Management & Fulfillment. Seasoned B2B firms recognize that closing a sale is only part of a successful B2B buying experience. The company s ability to effectively manage orders is a determining factor in the quality of the B2B customer experience. In fact, order status is probably one of the most critical components that buyers require in a B2B procurement scenario. B2B suppliers have traditionally used back-office systems for tracking inventory and orders, and these processes must change before they become customer-facing. In addition to offering customers a variety of shipping and return options, first-rate e-commerce technology should integrate with inventory management systems to provide a universal view of stock levels and streamline the organization s entire fulfillment process. This information must be available to buyers at any time and just as importantly, in real-time providing on-demand visibility to delivery schedules, inventory levels and other insights that are essential to the buyer s operation. Speed-to-Market. In the B2B sector, speed-to-market translates into competitive advantage. With so much at stake, B2B e-commerce technology has to address one of the fatal flaws in a physical environment where print catalogs become out of date as new product introductions, or discontinuations, 3

4 are rolled out faster than catalogs can be distributed. The complementary nature of e-commerce allows a company to quickly and accurately roll out new products or product lines and to notify likely customers in a timely manner. Global Ready. If the company s e-commerce strategy includes multi-country B2B sales, e-commerce technology will need to be capable of servicing the particular needs of regional markets. Common global ready features include multiple language support and transactional features capable of effectively managing local currencies, national/ regional taxes and geo-specific regulations. Operational Effectiveness Technology is just part of the B2B e-commerce equation. Busi - ness processes and an awareness of operational effectiveness opportunities must also be in place to maximize the impact of e-commerce technologies. sales reps, a robust e-commerce platform can automate the process and streamline a common organizational workflow. As B2B e-commerce is implemented, change management must also be put into place across all departments in the organization in order to easily adopt and embrace an e-commerce site. Cost Efficiencies. In most cases, cost efficiencies are one of the primary payoffs of e-commerce investments. If investments are supported by a carefully crafted e-commerce strategy, the company can enhance customers online buying experience while simultaneously reducing costs in call centers, customer service departments and other areas. Rather than spending time administrating customers, sales reps can devote more time to identifying and converting new customers, further improving the company s bottom line performance. Revenue Conversions. The right e-commerce strategy provides B2B sellers with opportunities to dramatically improve conversions often through the extended service hours and product alternatives that are enabled for customers and sales teams. An example of this is a major wholesaler that markets to small chains. After implementing a commerce platform, order volume will increase substantially when customers are given the ability to shop online during non-business hours. Also, if buyers were presented with an out-of-stock item, the platform can present them with an alternative product, rather than simply ending the sale. Margin Enhancements. With the improved tailoring and update frequency of online catalogs, along with personalized content in and other communications, B2B sellers can manage margins more effectively throughout a product s lifecycle, for example, giving selected customers early access to new products at peak margins while also reducing margin reductions on pending discontinuations by offering deals that clear out products prior major discounts at end of life. Customer Retention. E-commerce presents can also help B2B sellers improve customer retention by giving customers value-added benefits. Customer self-service tools like how-to videos or project management resources can be seamlessly integrated into the company s e-commerce ecosystem, strengthening a customer s relationship with the business. Such capabilities also give sales reps more time to communicate with customers in value-added, consultative manner that anticipates customer needs. Streamlining and Automating Workflows. Since many B2B sales processes involve complex and company specific workflows, B2B e-commerce has the potential to streamline them through automation and integration. For example, if the company currently receives orders by fax, phone and Print vs. Online When you order supplies for your business, how easy is it to Easy or Very easy Print 70.7 % Find Product Information Online 84.4 % 62.7 % 88.6 % Track Orders Online B2B e-commerce advantages Do you think the following are advantages of ordering products from suppliers websites? Able to do business with my suppliers when it s convenient for me Able to save time Better informed about the status of my order Better informed about the products I am purchasing Alerted to products I was not aware of Yes No 89.4 % 10.6 % 84.6 % 15.4 % 80.7 % 19.3 % 76.5 % 23.5 % 71.6 % 28.4 % Source: hybris 2012 State of B2B ecommerce study 4

5 Summary The B2B e-commerce revolution is being driven by business procurers preference to use online technologies and self-service features to enhance the buying experience in a complementary manner to their existing physical commerce relationships. Addressing the complexity of product information and customized customer transactions with digital commerce capabilities differentiates a B2B seller. This is done in much the same way as the best B2C companies manage their brand and consumer engagement in a highly personalized manner that generates greater customer loyalty and improved customer satisfaction. However, buyer demand isn t the only dynamic behind the e-commerce trend among B2B businesses. Increased revenue potential, higher or preserved margins, improved retention rates, streamlined workflows, and cost efficiencies all present opportunities that B2B organizations can leverage for competitive advantage. About the 2012 State of B2B E-Commerce Study The 2012 State of B2B E-Commerce study contains results from 224 B2B procurement specialists on their preferences for conducting business through suppliers across a variety of channels. Respondents consisted of those with budgets ranging from less than $100,000 to greater than $5 million. As the top-rated provider of omni-channel commerce software, hybris works with many well-known B2B brands to enhance their omni-channel commerce capabilities.. As the use of online strategies has dramatically increased in the B2B sales process, hybris conducted this study to provide insights into the preferences of today s procurement professionals and offers strategic guidance on the required commerce technology capabilities and potential operations improvements that emerge from these insights. Going forward, a successful go-to-market strategy for many B2B companies lies in the ability to seamlessly integrate digital and physical commerce. The digital wave has arrived and as the results of the 2012 B2B E-Commerce study show, procurement executives clearly favor companies that embrace digital commerce solutions in their business models. For such are the tools required to be competitive and differentiated in today s fast-paced and customer-centered B2B sales environment. About hybris software hybris software, an SAP Company, helps businesses around the globe sell more goods, services and digital content through every touchpoint, channel and device. hybris delivers OmniCommerce : state-of-the-art master data management for commerce and unified commerce processes that give a business a single view of its customers, products and orders, and its customers a single view of the business. hybris omni-channel software is built on a single platform, based on open standards, that is agile to support limitless innovation, efficient to drive the best TCO, and scalable and extensible to be the last commerce platform companies will ever need. Both principal industry analyst firms rank hybris as a leader and list its commerce platform among the top two or three in the market. The same software is available on-premise, on-demand and managed hosted, giving merchants of all sizes maximum flexibility. Over 500 companies have chosen hybris, including global B2B sites W.W.Grainger, Rexel, General Electric, Thomson Reuters and 3M as well as consumer brands Toys R Us, Metro, Bridgestone, Levi s, Nikon, Galeries Lafayette, Migros, Nespresso and Lufthansa. hybris is the future of commerce. Version: December 2013 Subject to change without prior notice hybris hybris is a trademark of the hybris Group. Other brand names are trademarks and registered trademarks 2012 State of of the B2B respective E-Commerce companies. Whitepaper 5

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