Why we never talk about B2B e-commerce
When it comes to reporting on the state of the economy, retail gets all the airtime. Indicators like consumer confidence, inflation and interest rates are used to measure the current situation and to inform predictions on future spending and saving patterns.
So too, when we talk about e-commerce, it is generally as it applies in a business-to-consumer (B2C) context. This is largely because consumer behaviour continually changes to reflect the introduction of new technologies. Online is increasingly the sales channel of choice for consumer shoppers, with e-commerce a fully established an integral element of the average retail business’ arsenal.
Wholesaling – a bigger piece of the pie
All of this makes complete sense of course, but what about the 65,000+ companies in Australia that are targeting wholesalers and selling business-to-business (B2B)?
According to the Australian Bureau of Statistics, wholesale business generates around $495 billion in income each year, versus the $380 billion made from retail transactions. It’s clearly a bigger piece of the pie, so why any reticence to embrace e-commerce for a faster and more efficient means of selling to wholesale customers?
Part of the reason is the long-held belief that selling B2B is somehow the antithesis of B2C. While there may be minor dissimilarities when it comes to purchasing decision drivers, business sales are still conducted by — and with — people.
From that perspective it becomes a fair assumption that the changes in buying behaviour seen in a B2C environment, such as growth in online, will be mirrored in wholesale markets as business buyers expect the process to be as simple as making a consumer purchase.
If in doubt, look no further than the United States. Back in 2015, research gurus Forrester predicted an average 9 per cent growth rate (year-on-year) for B2B ecommerce sales until 2020. That growth will put the total B2B ecommerce figure at about US$1 trillion in the next two years, or over 12 per cent of B2B sales in total (up from about 8.5 per cent in 2014).
As a channel, wholesale e-commerce is on the rise, as are B2B marketplaces. Of course, Amazon has only recently opened its doors in Australia, but its B2B offering — Amazon Business — is well established in the US and eBay has a B2B portal as well. It’s only a matter of time before Australian B2B e-commerce for wholesalers reaches the same levels.
But take note – only some of the same rules apply
There are some basic principles that apply across both B2B and B2C ecommerce platforms. For the customer, it’s all about ease of use. For the wholesaler, it’s about simplifying order management and processing. There is however a key difference; whereas one retail customer transaction is pretty much like the next, wholesale customers vary greatly, so you’ll need suitable flexibility to address the needs of each.
There are certain capability areas you’ll need to concentrate on when building out your B2B e-commerce capability so make sure you can easily implement the following:
• Customer groups: being able to classify customers into groups means that you can assign different pricing rules and content access privileges to suit.
• Wholesale registration capability: implementing an online wholesale registration form with a built-in approval process means registrants can be automatically assigned to a specific customer group.
• Multi-level pricing: customer pricing can vary – opt for a solution that allows you to adapt pricing based on the quantity breaks for volume or bulk discounts.
• Credit limits and invoice terms: no two customers are alike, so you’ll need facility for customisation of credit limits and invoice terms, allowing your most trusted customers to buy on account and pay later.
• Login to view pricing/content: while visibility of retail pricing is a given for B2C, you may wish to limit pricing and other sensitive areas of your website, requiring login credentials for access.
• Dropship on behalf of your customers: an increasingly common practice, if you’re going ship directly on behalf of your customers, you’ll need the ability to automatically replace your logo with theirs on paperwork, as well as provide up-to-date .CSV or .XML product and price lists.
• Custom invoice/order templates: assign different invoice/order templates to different customers, allowing you to control the content and layout of emailed and printed documents per customer.
• Customer specific discounts: set up customer-specific discounts. Apply a set percentage discount to an entire account or set up rule-based discounts.
Internally, you’ll need full visibility into the performance of your sales team, so make sure you can assign customers to specific sales reps and track results, including commission payment reporting. Customer contacts should contain communications logs, so details are easily recorded and extracted.
With an increasing number of sales avenues available, smart B2B wholesalers are growing their businesses faster and managing all channels through one integrated platform, centralising operations and improving efficiencies from inventory to fulfilment. If you aren’t, it’s time to ask why.
Ryan Murtagh is founder and CEO of retail management platform Neto. Initially a retailer himself, Ryan understood the industry pain points and sought to provide a platform that could be applied to businesses of all sizes and change the way merchants sell online.
In 2017, Ryan and Neto scooped a number of accolades including being named in the Australian Financial Review’s (AFR) Top 10 Most Innovative Companies and Ryan being recognised as Brisbane’s Young Trailblazer of the Year.