Practical Ecommerce

B2B Ecommerce Success Starts in the Boardroom

Business-to-business ecommerce revenue in the U.S., at $780 billion in 2015, is roughly twice the size of B2C, according to Forrester Research. But that amount represents less than 10 percent of total B2B transactions. Much growth and disruption remains for B2B companies as they migrate online.

Implementing ecommerce fundamentally changes a B2B company. That’s because B2B sales have historically occurred via sales representatives making direct, in-person appointments or taking orders over the phone. Shifting to ecommerce will eliminate much of that process.

Implementing ecommerce fundamentally changes a B2B company. That’s because B2B sales have historically occurred via sales representatives making direct, in-person appointments or taking orders over the phone.

But, in my experience, companies that strategically invest in ecommerce increase revenue in all channels, as well as their overall profitability. As a result, manufacturers and distributors — as well as healthcare and financial services companies with a B2B focus — are scrambling to assess their strategies around digital commerce.

There are currently hundreds of B2B ecommerce implementations underway in North America. Over the next few years, there will be thousands.

Who will be the winners in the various B2B market segments? It will be the companies that make difficult, strategic decisions in the boardroom.

Implementing B2B Ecommerce Often Difficult

There are many reasons that B2B ecommerce is challenging. Here are the keys that I have observed in the last 18 months working for a B2B platform.

  • Channel conflict. Shifting revenue from offline channels — sales reps, dealers, distributors, and physical stores — is difficult to implement. Elimination of traditional sales channels is occurring at an increasing rate as manufacturers sell directly to consumers and new competitors like Amazon aggressively enter theB2B market.

However, business buyers now prefer to purchase online just as consumers do. So the rate of online adoption is increasing even for more complex products.

  • Lack of internal resources. Small to mid-size businesses generally do not have deep digital expertise in house. Creating an overall digital strategy — marketing, content, merchandizing — is the first challenge. But even when that is in place, the resources to implement are generally lacking. Support for complex system integrations and site development also may be in short supply.
  • Content. Manufacturers generally have extensive content for their products, such as specifications, descriptions, photos, and videos. But syndicating that to both digital and offline channels is typically a problem. Product content is frequently maintained in various silos within a B2B company. Distributors generally struggle to create original digital content and look to manufacturers to provide it. All of this causes B2B companies to be less aggressive in investing in ecommerce.
  • Integration with backend systems and processes. Manufacturers and distributors generally have sophisticated legacy processes that support their business model. Backend systems generally support those processes, which include mission-critical functions like order to cash, inventory control, supply chain management, customer relationship management, human resources, and financials.

Ecommerce platforms must integrate with those systems to present customer catalogs and pricing, submit orders — and check order status, accounts payable, order history, availability, and so forth. This integration is typically time consuming. With larger platforms like SAP, high levels of customization create complex integration projects.

  • Lack of executive and board-of-director support. I’ve seen many small to mid-sized manufacturers in the last 18 months where a vice president initiates an ecommerce project — from the bottom up. Most of them fail to get off the ground when senior executives and board members realize that ecommerce will change the way the company does business.

What starts out as a simple project to launch an online store suddenly affects sales reps, channels, content, customers, customer support, inventory control, fulfillment — the entire organization, in other words. Unless the CEO or business owner is on board early, initiatives often stall when the total investment and implications are identified and presented.

Strategic Board Initiatives Necessary

The B2B companies emerging as market leaders make strategic decisions at the board-of-director and senior-executive levels. Recent projects I’ve participated in include the CEO and CFO and the leadership team from IT, marketing, sales, and operations. In many cases, the board has directed the CEO to deliver a digital strategy and roadmap. Sometimes this is in support of other growth or acquisitions strategies. The decision cycle is typically compressed —less than four months — and the appropriate investment has been secured.

Instead of stalling, like many bottom-up projects, these strategic board initiatives are being funded appropriately with very aggressive timelines. Such a project may look something like this.

  • Digital strategy and roadmap. The CEO will often engage an outside agency or consulting firm to work with the executive team to develop a 3-to-5 year digital strategy. This starts with analyzing the market opportunity and challenges based on current positioning. A set of business objectives are identified and a project is launched to define requirements.
  • Discovery. A discovery project is generally conducted to evaluate the requirements of a digital, ecommerce solution. This includes the identifying the best target market and products, customer impacts and requirements, channel implications, organizational changes, and so forth.
  • Business case. Generally a business case and roadmap are developed to determine priorities and establish goals and timelines. Companies identify specific business outcomes — generally to increase revenue, reduce costs, or gain digital experience. Budgets are created, with a return-on-investment analysis.
  • Technical solution. A key part of this process is to select the vendors to support the ecommerce initiative and requirements. This includes the ecommerce platform and adjacent solutions like content management, product information management, marketing automation, customer-relationship management, and so forth.
  • Partners. In addition to platform selections, many companies will also use a system integrator for the actual implementation. Generally, B2B projects take 6 to 12 months to complete and include thousands of hours of design, development, and testing.

In short, B2B ecommerce success requires an executive commitment, not just a project. Those companies that view digital commerce as transforming will become the market leaders.

Dale Traxler

Dale Traxler

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Comments ( 4 )

  1. Isaiah Bollinger May 18, 2015 Reply

    I wish more B2B businesses actually took the time to create a 3 to 5 year digital strategy road map. From my experience this is not the case.

    Business to business companies are typically underestimating the investment they need to make to be competitive online.

    The challenges to being successful with B2B eCommerce are far more expensive than B2C eCommerce although the upside is much higher.

    http://growwithtrellis.com/blog/the-challenges-of-b2b-ecommerce/

  2. Tommy Holt May 18, 2015 Reply

    Fantastic article that highlights some of the real challenges organisations are facing around their channels, integrations and strategies.

    We work with a range of organisations who are dealing with the exact circumstances you describe. It’s a challenging process, and one that needs C-Suite buy-in and support. It’s also not something that can be done on the cheap.

    The potential for the channel is also huge, and we have supported businesses as they’ve reduced investment in non-eComm channels, simply because they don’t compare from a revenue perspective. The world is heading towards online buying, and so should your business.

  3. Mark J May 21, 2015 Reply

    Great article that describes the strategic challenges of nudging B2B towards Ecommerce. I think a worthwhile follow-up article should talk about how a B2B enterprise can address the elephant in the room (disruption to existing offline channels).

    How will the existing channels co-exist with the new direct ecommerce channel?

    What examples of B2B enterprises are there that show this happy co-existence?

    What are the pros/cons for each leg in the offline channel as a result of the addition of ecommerce?

  4. Eli feruch May 29, 2015 Reply

    Took me 6 months, in a foreign country, with zero experience, zero help, and a unbelievingly hostile board to gather major F500 and gov customers. which I never met once, except for two of them, in a matter of four years: pure code for money on the net.

    This article is as a dream. sounds to me as a rolls royce demo in the third world! must be great to have a valuable team. Never knew that in my whole life: the judge has only his eyes to see!