Pricing Pitfalls And The Professional Buyer

Consumers have certain expectations of their shopping experience that are simply non-negotiable.  While willing to be flexible site design, selection and pricing—it is hard to imagine someone sitting down to purchase something in a retail context and finishing the transaction knowing neither exactly how much they paid or when the payment is going to process exactly.

If this were the consumer experience, one can imagine capitalism grinding quickly and loudly to a halt—but it’s not.

It is however, in some respects painfully reminiscent of the process B2B buyers have faced until very recent memory.

“B2B payment is just broken. Unlike consumer payments where there has been all sorts of innovation over the past number of years, in B2B payments the actual payment of funds happen some 30, 45 or 60 days after the actual delivery of goods or production of the service that is rendered,” Ariba’s Financial Solutions Marketing Director Drew Hofler told PYMNTS.

While Hofler stated it somewhat more strongly than most, his sentiments are born out by recent research on the subject.  Earlier this year, Oracle released its annual survey of B2B procurement experts, and the results when it came to pricing were mixed.

While there was a clear focus on it among most respondents, the difficulties—primarily the lack of transparency also plays heavily on their minds.

“Consumer expectations continue to change the way both B2B and B2C businesses sell online,” said John Andrews, Vice President of Product Management, and Oracle in a released statement. “…B2B organizations are still under increasing pressure to adopt B2C commerce best practices.”

Pricing Is The Pain Point
Across the board, complexity was a central concern of B2B buyers—98 percent reported it in some form or other– and those concerns across a spanned across issue. Of particularly concern were navigating web procurement portals-which unlike their B2C counter-parts are not designed as acutely with user experience in mind, thus resulting in questions about what exactly is being purchased.

Back-end complexity was also a leading concern, as several users noted that linking together the various systems internally within their organizations buying mechanisms were not seamlessly integrated.  These issues become exponentially more complex when attempting to tie backend systems with the systems of other businesses.

However, leading edging out concerns both with web navigation—which concerned 52 percent of respondents and back-end integration, which bothered 45 percent of survey participants, the leading concerns were about pricing complexity and transparency with a  full 60 percent noting it as a primary pain point.  Not know exactly how much and when they will be paying disrupts—in a bad way—the ability to plan, set budgets and manage inventory successfully.

Moreover, B2B buyers don’t simply want systems that are transparent—if anything that is a minimal baseline that buyers that leads double-lives as consumers are simply beginning to demand—they are also looking increasingly for pricing that is customizable.  According to Oracle’s study—45 percent of buyers surveyed said that custom pricing, more than anything else is what B2B purchasers are looking for in a buying experience.

Rising To The Challenge

As B2B buyers are looking for experiences that more closely align with their experiences as consumers, the marketplace is changing to fulfill that need.

Ariba, the company whose executive identified B2B payments as broken, is one of the innovators moving forward in making pricing something that can at least be predictable for B2B buyers.

“In B2B payments, oftentimes payments are made, ad people don’t’ know what that’s for they don’t know when they’re getting paid because remittance information is slim,” Ariba’s Drew Hofler noted.

Ariba’s move to promote transparency is to tie the payment to the remittance data, so that buyers and suppliers can see—down to the line item—what exactly is being paid for in a transaction.

Clearer marketplaces, and better web navigation is another path that some B2B suppliers are moving toward to normalize the pricing pain point for corporate buyers.  SupplyBid caters specifically to contractors and manufacturers, and their central focus as they gear up to take on mega-players like Amazon and Home Depot is to offer the transparency edge for businesses.

“We wanted to build a b2b platform that provided transparency and visibility for buyers, and everything we designed was inspired by our experiences in the lighting industry,” founder Sam Sinai told TechCocktail.

SupplyBid is focused on its back-end and making it easier for any potential user, buyer or seller, to navigate the marketplace and negotiate a transaction.  Though there are others in the space, Sinai believes their strength lies in building the right platform for the specific market they serve—a market they feel is largely underserved.  In fact, Sinai notes, there is only one direct competitor for what they do—albeit a competitor that is the largest B2B company in the world.

“If you look at eBay, you see that it’s focused on consumer electronics. SupplyBid, on the other hand, is industrial focused and driven. The only other company that does that is Alibaba, but we’re going to do what they do better; we’re going to be the Alibaba on steroids.”