B2B Payments

B2B and B2C: Not One-In-The-Same

There is so much talk about the need for B2B procurement to move from legacy processes and into a more advanced, B2C-like experience. Call it the “Amazon Factor,” if you will: Today, innovators want to make corporate buying as easy as it already is to do personal shopping through online marketplaces like Amazon.

But according to Christian Lanng, the CEO and co-founder of electronic B2B invoicing platform Tradeshift, what these players really mean when they say they’re pursuing a B2C-like experience for B2B is more about the way a procurement platform looks, not how it operates.

B2B procurement, Lanng told PYMNTS in a recent interview, is a far cry from B2C purchases. And it’s these differences that led the company to its recent launch of Tradeshift Buy, a solution that provides an end-to-end service for corporate procurement officials. Still, there are elements of B2C – like product information and mobile compatibility – that can make procurement a more sophisticated experience.

B2B and B2C: Not One In The Same

“There are so many people that want to create an Amazon-like buying experience [for procurement],” Lanng said. “But they really only want the surface of that buying process. They only mean that it should look nice.”

According to Lanng, the B2C model cannot always be applicable to procurement. Consumers aren’t dealing with purchase orders and invoices, for example. And for B2B, Lanng said, “it’s much more about the relationship between buyer and seller.”

Today, he said, procurement is about lessening the focus on the purchase order and invoice, and instead shifting that attention to this relationship. “It’s about the importance of actually agreeing, on a business level, what you want,” Lanng said. “It is collaborative. You chat and collaborate with the supplier back and forth. The invoice or the PO is just an output of that relationship.”

[bctt tweet=”Today, procurement is about shifting attention to the buyer supplier relationship”]

Meet In The Middle

There is one aspect of Tradeshift’s new procurement solution that meets in the middle of B2C and B2B.

Unsurprisingly, the way businesses pay their suppliers usually takes a different path than B2C eCommerce. Lanng called payment “a massive pain point” in procurement. To remedy some of this friction, Tradeshift Buy turned to the virtual card to facilitate payments, offering buyers a one-time-use v-card for their purchase.

“That’s a completely new innovation in procurement,” Lanng said, adding that it facilitates a link between the purchase, the receipt, and the payment.

But there are aspects of the way a virtual card is used by corporates that has its roots in the world of B2C, Lanng said. While that’s not always mainstream in B2C commerce, Lanng said that v-cards are a large part of facilitating mobile procurement and payments for businesses. Consumer solutions like Apple Pay, he pointed out, have been developed around virtual card technology, and as the payment technology sees adoption by businesses, it could mean mobile procurement and payments will take off, too.

Lanng added that there is a strategic reason for making Tradeshift Buy entirely compatible and functional for a mobile device, and that virtual card technology is a key component of it.

Lessons From The B2C World

“The question is, should we imitate B2C with B2B?” asked Lanng. “I think certainly not.”

But, he added, there are lessons from B2C eCommerce that can be applicable to corporate procurement.

One of the most dramatic changes in B2B procurement, Lanng said, is the move away from the product catalogue – something that is following in the path of consumer catalogues, which “pretty much died with the invention of the Internet and Amazon.”

That shift from a product catalogue into a digital, searchable database of products for businesses has been key to launching better procurement systems – and was a large driver behind Tradeshift Buy’s searchable product database, Lanng said. Plus, on a more widespread scale, the shift from procurement systems onto the Internet has also been crucial.

But perhaps the most impactful change in the last two decades or so has been a renewed focus on product and procurement quality.

Lanng gave an example of a recent conversation he had with the chief procurement officer of a company that needed to purchase drill bits. And for that company, like so many others, it’s not necessarily the actual drill bit that the procurer cares about – it’s the buying experience.

“What they care about is quality,” Lanng said. “We are moving from a PO-centric, catalogue-centric world, where now we need to put the quality of supplier service first.” These changes mean buyers want their suppliers and the products they offer all on a single platform, and they want more robust billing and payment options, he added. That, he said, is one of the most prominent ways B2B procurement has demanded a B2C-like experience.

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