While much attention has been allocated to business-to-consumer (B2C) ecommerce, the opportunities for companies that operate in the business-to-business (B2B) sphere are rapidly expanding. As in B2C, the B2B ecommerce space is quickly becoming a critical driver for revenue growth and evolving as the new normal for business-to-business transactions.
Implementing an effective B2B ecommerce platform in-house can be an expensive, time-consuming endeavor and can drain IT resources. While many ecommerce platforms offer online portals to process individual orders, issue one-off payments and receive funds, such models remain driven by manual processes and are not practical as transaction volume scales. Businesses can solve this dilemma by partnering with a B2B connectivity provider that can more readily process transactions and enable streamlined connectivity to trading partners. Forward-thinking companies are leveraging the expertise of a cloud-based integration technology provider to maximize the revenue potential of B2B ecommerce.
As individuals came to rely more on the convenience and reliability of B2C electronic transactions, they began demanding similar capabilities in B2B ecommerce. Although some businesses were initially slow to implement the types of processes and infrastructure required to provide similar B2B functionality, this pattern is rapidly evolving.
Businesses in China were early adopters with Alibaba earning a billion dollars in revenue in 2014 in the wholesale market. Amazon launched its B2B platform Amazon Supply in 2012 and within two years was carrying over two million products in 17 categories. In 2015, Amazon Supply became part of Amazon Business and included hundreds of millions of products from both large and small businesses. Forrester estimates that B2B ecommerce will top $1.1 trillion and account for 12.1 percent of all B2B sales in the U. S. by 2020. Intershop says 57 percent of B2B companies are shifting from traditional offline to on-line transactions.
Key Drivers of B2B Adoption
A number of key benefits is fueling the dynamic growth of B2B ecommerce including:
Improved Customer Experience - Customer expectations formed in B2C settings have carried over to the B2B purchasing arena. Businesses must deliver superior customer experiences to stay competitive. Implementing effective B2B ecommerce platforms enables them to make that happen. Organizations can provide business buyers with relevant information and services to support their purchasing needs. Providing product-related information and offering personalized self-service buying portals can dramatically enhance the B2B purchasing experience.
Reduced Costs - Gartner predicts that, by 2018, 40 percent of B2B digital commerce sites will use price optimization algorithms along with configure, price, quote (CPQ) tools to dynamically calculate and deliver product pricing. B2B buyers are demanding CPQ capability because of the complexity of the products being purchased, multi-site requirements, and fluctuating prices throughout any given quarter. They want to be able to take advantage of end of quarter deals and leverage their buying power across all channels based on their distinct business situation.
Increased Ordering Efficiency - Many businesses are transitioning to B2B ecommerce to improve their ordering efficiency. Streamlining cumbersome paper-based processes frees up buyers to spend more time making the most cost-effective purchasing decisions. An electronic-based purchasing process is also essential to support the just-in-time needs of most businesses today.
Electronic Data Interchange (EDI) remains as the most frequently used technology in B2B ecommerce. The format standardizes digital communication between trading partners and serves as the medium to exchange electronic documents such as purchase orders and invoices as well as messages and status updates. Multiple EDI standards are used across the B2B space, including American National Standards Institute (ANSI) X12, Electronic Data Interchange for Administration Commerce and Transport (EDIFACT) as well as Extensible Markup Language (XML) based protocols such as RosettaNet and more.
EDI has been in use across a broad spectrum of industries since the 1980s including logistics, telecommunications, retail, finance, manufacturing and many others. The key to maximizing the benefits of EDI is seamless system-to-system integration. With the right technology in place, transaction costs that can reach as high as $100+ per purchase order can be reduced by as much as 80% (Source, Gartner).
Enhanced Visibility - Implementing a B2B ecommerce model quickly provides purchasing professionals with the information needed to make the right buying choices. They can get a single view of inventory across multiple sites. A robust B2B platform also meets buyers’ enhanced fulfillment demands such as next day delivery or providing estimated time of delivery. Being able to track and trace product shipments is becoming a baseline capability for most businesses.
Boost Customer Loyalty - Businesses have discovered that providing an enhanced buying experience through a B2B ecommerce solution helps drive customer loyalty. Offering optimized pricing, ease of ordering, order visibility, and outstanding service encourages high levels of repeat business. More importantly, failing to offer this level of service can put companies at a severe competitive disadvantage in the marketplace.
Descartes & B2B ECommerce Integration
Discover how Descartes solutions can help you realize the benefits of B2B ecommerce through better trading partner integration. Our cloud-based connectivity and applications platform can seamlessly connect to customers, suppliers, manufacturers, carriers, intermediaries, networks and more regardless of IT capabilities, communications environments, data standards or unique business processes. With a flexible turnkey structure, our solutions can rapidly onboard new trading partners, easily accept a broad range of message types, reduce manual processes and minimize transaction costs across the entire value chain.