As a supplier of MRO or indirect materials, your customers likely fall into one of three categories: those already engaged in e-procurement, those who haven’t yet adopted but want to/intend to, or those who haven’t yet adopted and believe their transaction volume is too small to bother or they assume the investment is beyond their budget.
What does that mean for you, Mr./Ms. Supplier? Well, at very least, two out of three of your customers are or want to conduct their B2B purchases online. So, if you are not yet capable of digitally integrating with their procurement systems, you are leaving a lot of business on the proverbial table. And we mean a lot of business.
According to Forrester Research, the B2B e-commerce market is set to grow to $1.8 trillion by 2023. Yet, even at about $1 trillion currently, Forrester reports that this represents only about 12% of all B2B sales, which means that if you are among the 88% still conducting B2B business via traditional/offline methods, there is still time to establish your business as an e-commerce leader.
First, however, we need to dispel four common myths about the benefits and challenges of developing and maintaining a punchout-enabled e-commerce storefront. If not done well, it can derail the supplier journey before it even gets started.
Myth 1: To be successful in B2B, you must provide customers with the “Amazon experience.”
Reality: There is no question that Amazon.com has, in many ways, set the bar for the e-tail customer experience. And while Salesforce.com reports that 82% of business buyers say they want the same experience as when they’re buying for their personal use, there is more to successful B2B than just making the transaction simple and intuitive. We have found that B2B buyers are often less motivated to comparison shop at work than they are at home. B2B may require variable pricing, catalog customization, approval management and integrating with systems such as invoicing and accounting. It’s important to work with a platform provider that has a solid understanding of the B2B process, including both the technical and business requirements to successfully integrate punchout catalogs, purchase orders and invoicing transactions.
Myth 2: E-commerce will commoditize my business, and I will lose the relationships that I have spent years, sometimes decades, nurturing.
Reality: A survey of businesses without cloud-based e-procurement by PayStream Advisors revealed that frequent off-contract or off-budget spending, disjointed and outdated systems, and a lack of visibility and control over spending were among the most common pain points in their purchasing programs. By adopting an e-commerce platform you are embracing your customer’s desire for tighter integration of procurement systems across the enterprise. Working with a provider, like EqualLevel, suppliers can create a full-featured, customizable punchout catalog site with quote-to-cart capability, support for purchase orders, advanced ship notices and invoices, thereby increasing customer options, reducing errors and maximizing overall satisfaction. An A.T. Kearney study found that B2B suppliers offering a personalized, seamless experience generate average revenue growth at twice the rate of competitors with less-developed digital platforms.
Myth 3: The cost to set up and maintain an e-commerce site is only justifiable for B2B suppliers serving large customers with high transaction volume.
Reality: Open source technology, like XML, is enabling cloud-based systems and flexible integration with leading marketplace and ERP solutions, making it relatively easy and cost-effective for suppliers to adopt e-commerce. The EqualLevel Network, for example, offers suppliers a full portfolio of commerce and transaction management tools that complement existing sales and marketing investments without costly overhead and transaction fees. Partnered suppliers who do not already have a punchout-enabled e-commerce store can set up a punchout catalog site with buyer-specific prices, item management and custom landing pages, through EqualLevel GO, at no charge.
Myth 4: Dynamic pricing is just the flavor of the month and will pass.
Reality: B2B customers’ appetites are shifting from traditional fixed-price corporate agreements to open-market-based strategies. Even negotiated contracts are often subject to dynamic pricing. Companies not able to actively manage price are leaving 200-400 basis points in operating profit on the table, according to Bain and Company. The EqualLevel Marketplace allows suppliers to execute real-time pricing and product updates.
Orville Bailey is the CEO of EqualLevel Inc.