Over the past quarter-century or so, there has been an undeniable revolution in Business-to-Consumer (“B2C”) sales. Unless you’ve been living under a rock that whole time, we’re guessing you’ve not only noticed, but also taken part in that revolution. Of course, we’re talking about the proliferation of online sales, largely through mega-marketplaces like Amazon or Walmart.com. Online shopping is so prevalent, in fact, that experts predict 91% of American consumers will be online shoppers by 2023.
Q4 2019 hedge fund letters, conferences and more
When it comes to Business-to-Business (“B2B”) sales, on the other hand, many brands have outright ignored the eCommerce revolution. Indeed, when it comes to B2B commerce, many of us still conjure up images of the sort of cold-calling, back-slapping, and golf-playing tactics portrayed in television shows like “The Office.”
The ACAP Strategic Fund's managers see a "significant scarcity of attractive asset allocation choices globally," but also a strong environment for fundamental stock picking. Q2 2021 hedge fund letters, conferences and more According to a copy of the fund's second-quarter investor update, which ValueWalk has been able to review, its managers currently hold a balanced Read More
In reality, however, business consumers are just regular consumers at work. In other words, they’ve grown accustomed to eCommerce in their personal shopping pursuits, and now they want that same level of convenience when making business purchases.
Nonetheless, many B2B brands are woefully behind when it comes to embracing eCommerce conveniences -- and they’re beginning to pay the price. According to Joey Moore, Head of Evangelism, EMEA & APAC at Episerver, “While some B2B organizations are wondering how to get a buy button on their sites, others are offering exceptional digital commerce experiences − making it easier for the business buyer to research, build their order and ultimately, complete the transaction.”
So, what separates modern B2B brands from antiquated ones? Read on.
Senior Management Needs To Embrace Change
Interestingly, B2B brands seem to have only half-heartedly embraced the realities of eCommerce. For example, most companies have hired so-called digital managers (aka eCommerce managers). Nonetheless, many of them lack the resources or top-level support they need to bring their brand’s online presence up to snuff.
This, despite the fact that in a recent industry survey, 84% of B2B decision makers reported that “that increasing digital online expectations from their customers or partners is their top external threat to their business.” A vast majority also stated their belief that within the next five years, the majority of B2B sales will happen online. These managers know and understand that today’s consumers -- whether B2C or B2B -- expect to be able to price shop, research, and ultimately purchase products online.
Shockingly, however, their bosses aren’t seeing it. Indeed, that same study revealed that “50% of the B2B decision makers say they lack funding from senior management to execute digital transformation and brand protection programs.” Perhaps these senior executives should try shopping on their own brand websites.
An Exemplary eCommerce Failure
The case for updated eCommerce sites was made crystal-clear to me recently when I decided to purchase five ceiling fans for my new home. Like most consumers, I started with online research that included pricing, availability, and the overall reputation of the retailer. After much studying, I decided to purchase the fans at my local Lowe’s.
A short time after my purchase, I was notified that the fans had been delivered to the nearest location -- in fact, the website told me they had 18 of my particular fans in stock. Naturally, I headed right down to the Lowe’s Customer Service Department to pick up my items.
When I got there, I learned that that store only had one of my fans in stock. Not only that, they couldn’t find any record of my online order (apparently, the platform was antiquated and had bad data). So, for the next 45 minutes, I stood there while the service rep tried to solve the problem online with the help of the company IT department. As my patience grew thinner and thinner, I was told that my fans were actually shipped to another Lowe’s store, located about 7 miles away. I got an apology and was shown the door.
When I got to the next store, I experienced the same exact problem. They didn’t have my fans in stock and all they could tell me was that it would be days before I would receive them. I asked for a refund, collected my money, and went across the street to Home Depot, where I was able to easily make the purchase.
What this experience taught me was that Lowe’s online purchase platform is merely a ruse to make consumers believe they care about customer experiences. In truth, however, the company did not have its eCommerce act together at all. Consequently, my days of shopping at Lowe’s are over. And while the company will undoubtedly get its eCommerce bugs worked out eventually, how many consumers will they lose in the meantime? In this day and age, it just doesn’t make any business sense to put your company’s eCommerce capabilities on the back burner.
Today, only those companies that can make website-to-delivery a seamless experience will win consumer loyalty. And again, this will hold true in both B2C and B2B arenas. Nonetheless, in the study of B2B decision makers referenced above, brands proved they weren’t even thinking in these terms.
Indeed, when they were asked “What are the top 3 ways B2B companies can make it easier to do business with them online,” speed and ease of delivery wasn’t even a consideration. Instead, they cited things like website pricing (44%), self-service functionality (41%), and easy scheduling with a salesperson (37%). While those things are undoubtedly important, none of them matter if the consumer can’t order products easily and have them delivered on time and without incident.
Shortcuts Aren't The Answer For B2B Brands
Some B2B brands want to shortcut the online sales process altogether by selling through mega online marketplaces like Amazon. Why not piggyback on their existing infrastructure and traffic volume to make sales? While the temptation is understandable, the reality is rarely pleasant for these brands.
Many, for example, simply do not understand that they will not be in control of their own product pricing in those venues. In fact, if they don’t have the right trademark, monitoring, and enforcement strategies in place, Amazon’s 300,000+ army of third-party retailers (and sometimes Amazon itself) will compete against the brand by selling its products at prices far below the Manufacturer’s Advertised Pricing (“MAP”). The only way to compete for those sales is to erode your own pricing structure. It’s a losing game for brands unless and until the senior executive team becomes willing to embrace strong enforcement strategies.
Interestingly, the above-referenced study also showed that nearly three-quarters of B2B brands expect that within five years, 41% or more of their revenue will come from their own eCommerce websites -- and not from sales in someone else’s online marketplace. As noted, however, this strategy will take time, resources, and -- perhaps most importantly -- a willingness to change on the part of leadership.
Ultimately, those brands that embrace eCommerce over the next few years will emerge as market leaders. This includes new and emerging brands who, unlike the household names of the past, are more nimble and willing to take risks. If anything, senior management at these old-guard companies need to sit up, take notice, and give their teams the resources they need to compete in the ever-growing digital world.