CONSUMERIZATION OF B2B ECOMMERCE David Barr Executive Vice President March 2015
LYONSCG White Paper: Consumerization of B2B ecommerce 1 INTRODUCTION: THE CONSUMERIZATION OF B2B ecommerce ecommerce has traditionally been considered the domain of business-to-consumer (B2C) retailers. The leaders in Internet Retailing magazine s 2014 top 500 1 online stores are nearly all well-known consumer brands, including Amazon, Walmart, Apple, Sears, QVC, and Macy s. The handful of firms that serve the business customer Staples, Office Depot, Dell are really dual-purpose online retailers. Their sites are built to sell to individual consumers as well as provide information and content to business-to-business (B2B) users. Recently however, B2B companies have come to realize the advantages of having an ecommerce presence. More and more businesses are shifting resources from traditional or catalogue sales channels to ecommerce initiatives, and in doing so are creating a consumerization of B2B ecommerce. Providing distributors, wholesalers, purchasing agents, clients and other vendors with Internet-based access to purchase goods and services can expand presence in the marketplace, strengthen relationships between trading partners, enhance supply chain efficiencies, reduce operational costs, and free up your sales force to focus on developing new business. It s no wonder why, according to a recent study conducted by Forrester Research, 89 percent of B2B providers stated that adding ecommerce increased annual revenue, with an average increase of 55 percent! 2 As B2B companies increasingly look to ecommerce as a way to simplify current and future business transactions, it s important to recognize the unique challenges this move presents. Where B2C ecommerce channels focus on a relatively straightforward individual transaction, B2B merchants face several challenges unique to the supplier/distributor relationship. Multiple sales channels, unique pricing and content structures, differing types of data communications, higher levels of security, and support for multiple user levels are just a few of the considerations facing B2B business operators as they focus on the world of ecommerce. Bringing B2B operations online opens the door to new opportunities that drive revenue growth. In this paper, we ll explore some of the ways B2B merchants are handling online sales, including examples of best practices. First let s take a brief look at some of the factors underlying the growth of B2B ecommerce. 1 Internet Retailer magazine https://www.internetretailer.com/top500/top10/ 2 Hardison, T. (2014, July 28). 4 big trends changing B2B e-commerce. The Future of Commerce.
LYONSCG White Paper: Consumerization of B2B ecommerce 2 TRENDS DRIVING B2B ecommerce THE NUMBERS DON T LIE As surprising as it seems, Internet Retailer reported that US companies would generate $1 trillion in annual B2B ecommerce sales in 2014 almost four times the size of the B2C market in 2013. 3 B2B ecommerce is actually growing faster than its B2C counterpart (about 19% a year versus 17%). 4 B2B commerce is shifting online for a host of reasons, including a desire to eliminate costly catalogs and printed product data; growing comfort with the online purchasing process by individual buyers; and the increasing adoption of corporate credit cards in the hands of front-line workers. The growth in B2B commerce means that many merchants are coming to realize the simple fact that they can't compete by sticking with their traditional models steeped in expensive manually-driven sales processes. To be profitable, they need to leverage a more cost effective model that enables them to really scale their business with fewer resources. I WANT TO BE LIKE AMAZON If B2B merchants first response to the rise of online sales is that they want to sell online, their second thought is that they want to sell online just like Amazon. In the early stages of ecommerce discovery or if undertaking a site refresh, firms often look at Amazon as the benchmark for online selling. ecommerce professionals know, however, that Amazon has developed a very complex implementation to meet the needs of consumers. Applying their model to the B2B ecommerce space is more challenging than first thought. B2B ecommerce doesn t fit nicely into a single approach, like B2C, because the selling process and environment differ so broadly across business types. Sales cycles can be measured in weeks or months, rather than the quick conversion consumers make once they ve decided to buy. Pricing strategies and discount schedules need to be tailored to individual buyers. Product variations and order configuration pose a challenge for purchasers. Partner and vendor integrations need to be addressed. Often, fulfillment for B2B buyers means the merchant or vendor has to go deep into the supply chain to gain a view of production schedules and inventory. 3 Demery, P. (2014, October 27). A first look at the $1 trillion B2B e-commerce market no one knows. Internet Retailer. 4 Ibid
LYONSCG White Paper: Consumerization of B2B ecommerce 3 ANY DEVICE, ANY TIME As recently as five years ago, B2B merchants designed bespoke applications for a windows-based desktop if they even offered online purchasing. The proliferation of mobile devices has changed the office computing environment. Businesses now allow employees to bring their own laptops, tablets, and smart phones to the office where they use them to read company email or conduct business. Many companies even provide workers with cell phones and tablets to use on the job. With B2C merchants seeing a rapid rise in mobile traffic, it s no wonder the same trend impacts B2B customers. According to Cisco Systems, by 2016, 26% of all B2B transactions will be via mobile. 5 That amounts to a huge increase in online commerce conducted over mobile devices. B2B ecommerce is moving to a wherever, whenever mobile model. If you re selling in the B2B space, you re just as likely to find that your buyer has a Mac computer, uses Chrome as their browser, or does research on a smartphone or tablet. Customers are working and purchasing around the clock, so if B2B merchants don't serve them in the way they ve become accustomed to from their B2C shopping experience, they'll go elsewhere. EXAMPLES OF B2B ecommerce ecommerce channels offer new possibilities that extend the B2B buyer/seller relationship. Selling online enables merchants to provide personalized shopping environments by individual or company; support sales associate pages; deliver detailed product information; handle bulk; and offer new options for retail replenishment. Let s take a look at how several successful B2B merchants are growing their ecommerce business. We ll discuss how ecommerce easily translates to a B2B setting; to leverage a platform to serve multiple channels; and in some cases, serve both B2B and B2C from the same online store. 5 Sheldon, P., Hoar, A., Widger, Z., & Varon, L. (2013). The Forrester Wave: B2b Commerce Suites, Q4 2013. Forrester, 2-2. Retrieved from http://www.slideshare.net/fred.zimny/forrester-waveb2b2051606
LYONSCG White Paper: Consumerization of B2B ecommerce 4 WINCRAFT WINS AT B2B WITH B2C ECOMMERCE LOOK WinCraft is a leading manufacturer of licensed and promotional products for retailers, professional sports teams, concessionaires, colleges, businesses, distributors, and schools. WinCraft.com appears to be a consumerfocused site since you can browse the products. However, you ll easily see one thing is missing prices! Only WinCraft s customers have access to pricing info, which is tailored to their account. Before they can log-in to shop, a potential customer must request an account which requires a standard credit check. This is because B2B customers, unlike B2C consumers who pay at the time of purchase, are invoiced. The WinCraft site features mega menus, which make it easy to shop by sports category, team, or event type. This functionality, which is a very consumer-centric design aspect, makes it easy for WinCraft to merchandise to retailers in ways they couldn't previously. Once a team is selected, you see the best practice of filtered navigation on the left rail, where someone can continue to drill down to a smaller set of products. In this case, they can sort by type of product: hats, banners, flags, etc. One other choice a user can make is shipping point a very B2B-specific attribute which enables a customer to indicate the warehouse from which the order should be sent. On the site s product detail pages, they leverage consumer-oriented best practices to create a very rich experience. Product images are high-quality, with the ability to zoom-in. The customer can view the item in use. A compare to feature is even available. If there s a minimum order quantity, that information is clearly shown. Similar to many B2C sites, WinCraft shows related products which creates the chance for cross-selling and up-selling. The most basic B2B site leverages best practices customers are familiar with from B2C ecommerce such as filtered navigation, rich content, compare, and search. Responsive design makes it easily viewable on a smartphone or tablet.
LYONSCG White Paper: Consumerization of B2B ecommerce 5 FURNISHING A DUAL USE ECOMMERCE SITE FOR BLU DOT Blu Dot, a designer and manufacturer of modern home and office furniture, sells through multiple channels. They sell to consumers through the Blu Dot web site and branded retail stores. They sell to other businesses, which range from small independent designers to large-scale merchants like Target Corporation, through a B2B online channel. Their initial online offering of home and office décor products to consumers launched several years ago. The B2B site providing options for channel replenishment to their retail partners came later. Blu Dot s B2B buyer in Blu Dot s world that would be another retailer selling the Blu Dot line uses a site designed to be similar to the B2C buyer. This is done so the B2B buyers whose employees are in essence selling the product on Blu Dot s behalf can experience the brand in exactly the same way that Blu Dot s B2C customers do. For example, a customizable dresser on the consumer website provides the visitor with the ability to select different color drawers and doors, and the website instantly updates a visual display as the changes are made. The only difference for a B2B buyer is that the price displayed will be wholesale, not retail. To make in-store sales easier (and increase potential revenue) Blu Dot takes an integrated, omni-channel experience. The catalog retailers receive is the same one consumers get, so when a customer comes into the store looking for an item, they have a common point of reference. Store associates can browse the site with consumers on tablets provided by Blu Dot; make product selections; and complete the sale right there with a swipe of the customer s credit card. Check-out on the Blu Dot B2B site mimics the consumer site since the retailer is in effect a customer. A clear call-toaction encourages them to fill their cart with Blu Dot merchandise and drives them to checkout. The only difference between the two sites at check-out relates to payment options. B2B buyers have options that include "prepay with a check," "prepay with wire transfer," or "credit card". Many firms want to sell online to both B2C and B2B customers. Blu Dot achieves this through the use of a common code base.
LYONSCG White Paper: Consumerization of B2B ecommerce 6 CATCH OF THE DAY: A MULTI-PURPOSE SITE FOR SIMMS FISHING Located in idyllic Bozeman, Montana, Simms Fishing is a premier manufacturer of fly-fishing apparel and equipment. Simms wanted to take their site beyond an online catalog in which customers were directed to Simms distributors to purchase products. The company wanted to drive their own online sales, while not disrupting the retail channels and existing relationships they d already established. For B2C buyers, the firm provides three different purchase options which are clearly called out and can be employed on the product landing page. First is a straightforward online store for B2C buyers who can browse products with full detail and buy directly from Simms. Second, Simms will identify a local provider in the consumer s location based on zip code. Finally, Simms provides a link for consumers to buy that particular product/size/color combination directly from an online dealer. The Simms site displays channel partners who currently have the item in stock based on their daily inventory feed. By giving the local and online purchase options equal weight to buying directly from Simms, the company supports their B2B channels. Their B2B site, which enables their retail channel to order new products or replenish inventory, is a blend of a B2C look-and-feel with B2B selling capabilities. Products display all the different size/color combinations, and a green/yellow/red status indication provides a visual display of wholesale inventory availability. As one might expect, green denotes there s plenty of stockon-hand. Yellow means inventory is starting to run low. Red shows an out-of-stock condition. The Simms Fishing website demonstrates how firms can be responsive to complex custom retailer and vendor relationships when setting up B2B ecommerce sites.
LYONSCG White Paper: Consumerization of B2B ecommerce 7 B2C FUNCTIONALITY/COMPLEX REQUIREMENTS As the prior examples illustrate, consumer-oriented site design can readily translate to B2B sales for relatively straightforward transactions. However, factors unique to B2B, such as product configurations or special delivery requirements, can add a great deal of complexity to the process. We ll now take a look at cases where deeper B2B functionality can benefit as well from the application of B2C design methods. ORDER MANAGEMENT This wireframe is for an online B2B store of a branded manufacturer of furniture who sells to designers and architects working for hotel chains. These customers are planning rooms for multiple properties, resulting in large quantities of numerous products. The catalog is presented in a typical B2C style, with a beautiful, elegant product display. This makes it easy for designers and architects to specify items they want to use. Ordering in large quantities for several projects at once, customers can take advantage of discounted pricing. Because they re dealing with different deadlines for each design project (i.e. hotel location), customers need visibility to their order status. An ecommerce site offers customers several benefits over traditional sales process. First is convenience they can check order status online 24/7. Next, customers can view the order in its entirety or drill down by a single project or product. Finally, an integrated calendar offers a single view of order information and deadlines. This example also illustrates another of the other notable differences between B2C and B2B order flow. While it tends to be linear in a B2C transaction, in a B2B environment, buying may require a user to loop back to get approval from several people; make a separate request to finance or accounting to arrange payment; or address changes based on a manufacturing schedule that will impact delivery. The flexibility to today s ecommerce software enables and supports very complex ordering sequences, opening up new and innovative ways for B2B companies to serve their customers.
LYONSCG White Paper: Consumerization of B2B ecommerce 8 COMMODITY GOODS AND FIELD-BASED PURCHASING Many industries sell highly-commoditized products, where price is the main differentiator. Buyers will comparison shop for the best available deal. To increase sales in a price-driven market, a business needs a way to stand out from the competition. ecommerce offered a steel manufacturer the ability to do just that! When it came to building their site, the company knew that mobile would be a huge part of its ecommerce efforts since many buying decisions are made at the project site where just-in-time delivery is a critical factor. Being able to use a smartphone or tablet in the field would better serve the buyer, who doesn t have the time (or need) to interact with someone, when placing an order. Designing for a multi-screen implementation requires a mobile first approach. A standard practice in B2C ecommerce, this describes designing for the smallest screen, then scaling the site up to present a unified experience across other devices. Optimizing content for mobile is a major consideration since B2B commerce, especially in the case of a commodity good that s an input for a larger production process, requires a great deal of information. Besides individual product specifications and available inventories, B2B buyers have to obtain pricing quotes, know when a product is coming off of the line (wait time), see how long delivery will take, and other critical buying criteria.
LYONSCG White Paper: Consumerization of B2B ecommerce 9 CONCLUSIONS The shift to B2B ecommerce has started and there s no holding it back. Smart organizations recognize the value ecommerce delivers when it comes to increasing sales; reducing operating costs; expanding a company s presence in the marketplace; and developing stronger relationships with trading partners. ecommerce can even be a competitive advantage when selling commodity goods. If you sell to business organizations today, chances are your customers want the same ease and simplicity of buying online they re already used to from B2C commerce. Companies need to leverage best practices such as rich and interactive displays, personalized content, effective online merchandising, and guided search while meeting the complex requirements of running an efficient B2B ecommerce business. Getting the mobile experience right is critical. Increasingly, business is conducted in many places far beyond the office. To avoid losing customers and sales, take a mobile-centric view design for ecommerce. Adaptive or responsive design ensure your site will accommodate a large variety of screen sizes and operating systems. B2B ecommerce is the way to maximize sales and customer satisfaction. If you re not providing your goods and services on the web now, your competitors are (or soon will be).
LYONSCG White Paper: Consumerization of B2B ecommerce 10 Thank You About LYONSCG LYONSCG is the industry s premier ecommerce digital agency, serving brand, retail, and B2B organizations with tailored ecommerce solutions that maximize online potential. Headquartered in Chicago, the firm offers a full range of services beginning with digital strategy and digital marketing and extending through experience design, platform implementation, application development, hosting and support. The approach is holistic to provide every client with a creative, robust and increasingly profitable ecommerce website. LYONSCG is ecommerce Realized! LYONSCG 20 N. Wacker Drive, Suite 1750 Chicago, IL 60606 P: 312.506.2020 F: 312.506.2022 W: www.lyonscg.com