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?
“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