Should your busi­ness be mov­ing sales online?

Com­pa­nies re­port­edly gain 44% in or­der value by go­ing online. And global B2B online re­tail is pro­jected to reach nearly R85tr by 2020. Could your busi­ness also ben­e­fit from e-com­merce?

Finweek English Edition - - ENTREPRENEUR - BY JES­SICA HUB­BARD

“THE ONLY BAR­RIER IS FOR MAN­AGE­MENT TO UN­DER­STAND HOW B2B E-COM­MERCE CAN SER­VICE THEIR PAR­TIC­U­LAR MAR­KET.”

While much has been writ­ten on e-com­merce from a busi­ness to con­sumer (B 2 C) per­spec­tive, lit­tle at­ten­tion is be­ing paid to t he busi­ness - to - busi­ness ( B2B) e-com­merce sec­tor. In­deed, B2B is of­ten thought of as the un­fash­ion­able older brother of B2C e-com­merce – yet the po­ten­tial scope and growth op­por­tu­ni­ties this mar­ket presents are any­thing but dull.

In its Fu­ture of B2B Online Re­tail­ing re­port, re­leased in De­cem­ber, an­a­lyst firm Frost & Sul­li­van pro­jected that global B2B online re­tail would reach a stag­ger­ing $6.7tr (R84.5tr) by 2020.

BE­LOW THE RADAR

Neil Wat­son, the CEO and found­ing part­ner of lo­cal agency Dig­i­tal Planet, says the lo­cal B2B e-com­merce mar­ket is po­ten­tially huge, but ex­plains that many trans­ac­tions are “be­low the radar” – mak­ing it dif­fi­cult to quan­tify just how big the lo­cal mar­ket re­ally is.

“It’s big, but no­body knows how big,” says Wat­son. “B2C is es­ti­mated to be worth about R6bn [in SA] and I’ve heard es­ti­mates for B2B e-com­merce which are three to four times that… we have one B2B cus­tomer that is big­ger than all our B2C cus­tomers com­bined.”

Rian Bornman from FlightSite Agent, a reg­is­tered online travel provider, cites his in­dus­try as one ex­am­ple where the online B2B mar­ket­place is boom­ing.

“Our es­ti­mates put the size of the in­de­pen­dent work-from-home travel mar­ket at ap­prox­i­mately R3bn per an­num,” he says. “Fur­ther­more, it is the fastest grow­ing seg­ment of the ap­prox­i­mately R37bn South African travel in­dus­try.”

Bornman notes that B2B as a busi­ness model “has ex­ploded” pri­mar­ily be­cause of the f lex­i­bil­ity and po­ten­tial fi­nan­cial up­side it of­fers will­ing en­trepreneurs.

“Lo­cally, I be­lieve B2B plat­forms – not only in travel – of­fer the unique op­por­tu­nity to un­lock value through job cre­ation, skills trans­fer and stake­holder trans­for­ma­tion; all equally im­por­tant goals in a South African con­text,” he says.

SMART BUSI­NESS STRAT­EGY?

Ac­cord­ing to Dig­i­tal Planet’s Wat­son, there are two main rea­sons that com­pa­nies are start­ing to ex­plore B2B e-com­merce. “One is growth into new mar­kets as you get abil­ity to lever­age your e-com­merce plat­form to ser­vice mar­kets you couldn’t be­fore,” he says.

“The sec­ond is to al­low low-cost trans­ac­tion ef­fi­cien­cies. Com­pa­nies are quickly re­al­is­ing that they can’t ser­vice all their cus­tomers in the same way, so the smaller cus­tomers are of­ten pushed to a low-touch self-ser­vice e-com­merce plat­form which al­lows the sales reps to fo­cus on the large key cus­tomers.”

With­out doubt, the need for in­creased ef­fi­cien­cies and cost sav­ings are prov­ing to be a ma­jor fac­tor and stud­ies are in­di­cat­ing that when har­nessed cor­rectly, B2B plat­forms can cer­tainly achieve this.

In its 2015 re­port on the B2B mar­ket, eCom­merce In­sights.com found that lever­ag­ing B2B e-com­merce “could have lu­cra­tive re­sults for the or­gan­i­sa­tion”. The re­port showed that com­pa­nies have seen a 44% in­crease in av­er­age or­der value; 50% of or­gan­i­sa­tions have re­duced ac­qui­si­tion costs; and 52% re­ported de­creased sup­port costs. It also found that the more chan­nels cus­tomers buy from, the more money they spend (and the more loyal they are).

THE SKILLS GAP

Yet, as with any ma­jor shift, busi­nesses will have to over­come a few key chal­lenges i n or­der to t r uly get to grips with e-com­merce.

In Wat­son’s view, there are a few bar­ri­ers to en­ter­ing the online B2B mar­ket. He points to the fact that the tech­nol­ogy “is easily avail­able, ev­ery or­gan­i­sa­tion has band­width and busi­ness peo­ple are on the In­ter­net”.

“The only bar­rier is for man­age­ment to un­der­stand how B2B e-com­merce can

Rian Bornman

FlightSite Agent

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